How to manage your finances as a freelancer

How to manage your finances as a freelancer

It’s tax return time for sole traders here in the UK and that means one of a few things; you’ve filed it and have to dig into your savings to find the money to pay, you haven’t done it and are panicking about where your expenses are or you’ve done it and feel smug, like moi.

In fact, I did it last October and that was late for me. *Realises anyone reading is now pelting rotten bananas at their screen*

I’ve been freelance for about five years now and I’ve only just realised how bloody good I am at managing my finances. Also, isn’t it great to start a post with an obnoxious brag? No? Woops.

I’m naturally very analytical and have always been pretty good with numbers, something I fought against for a long time because it meant I wasn’t creative – at least, that’s what my parents and school told me. You might relate to this, or perhaps you are in the camp of hating numbers or even being scared of them.

I’m lucky in that I’m not, I know that. Because even I found the most difficult element of switching from traditional employment to self-employment was the money bit.

I found it scary, confusing and overwhelming. I’ve been through three accountants because they are typically men who deal best with other corporate men, or women who earn a lot more than I ever have as a freelancer. And in more traditional forms of freelancing too. I’ve been patronised, ignored and laughed at but guess what? Those fools didn’t realise who they were dealing with, namely someone who used to manage millions of pounds for big name retailers, answering to stuffy, cross men in suits daily.

So, yeah. They all got TOLD is what I’m saying. I found a great accountant who has helped me plug the gaps in my knowledge and empowered me to manage my finances in a way HMRC won’t shout at me about.

So in this post I want to share my process with you, from tracking my income and pulling monthly profit and loss reports right through to what business accounts I use and recommend and finally, how I file my tax return too.

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Managing your finances as self employed freelancer TAX RETURN

Freelance Finances: My Process

I am a touch old school in that I have an excel spreadsheet, where I manually track my expenses, income (both projected and actualised) as well as an monthly profit and loss summary. This helps me plan for the year ahead and make tweaks ahead of time, avoiding the panic of overspending.

I also use an amazing accounts software system my accountant recommended where I create, send and track invoices, project proposals nd I can also file my tax return straight from it.

This might sound a bit unnecessary but the reason for having both systems is twofold: It means I don’t miss anything and therefore know I’m compliant, and I’m actually able to save money as an accountant doing my tax return is three times the price of my subscription.

Here’s what I do:


  • Add any incomings or expenses to my spreadsheet and ‘explain’ transactions in Free Agent.


  • Check exchange rate and update formula based on fluctuations.
  • Chase late invoices, create new ones etc.


  • Review profit and loss and make necessary adjustments to future months.
  • Based on the above I might decide to cancelling unnecessary direct debits or invest in training.


  • Proof previous quarters numbers against automated system
  • Plan next quarter: Do I need to increase my prices, drop a client or find more?


  • FILE MY TAX RETURN! (Ideally in June, but no later than October)
  • Pay Tax and NI contribution.

My favourite tools

Tiny Scanner

For changing receipts into PDF on my phone.

Excel/Google Sheets

I used to only use Excel but the cost of Microsoft Office wasn’t worth it so now I simply use Google docs and sheets.

Free Agent (affil)

Things like Honeybooks and Freshbooks are both much sexier, however I hated that neither were setup for UK accounts.

You can sync your bank account with Free Agent (affil) // (although not my Starling business account yet) and it’s a super sophisticated yet intuitive piece of software.A

Further Resources

This Guardian article is really helpful as is this blog post by Easy as VAT (which is, incidentally, an EXCELLENT resource for anyone self-employed.)

HMRC guidelines and videos are a bit snore but useful for the nuances of tax.

Lucy Lucraft
Lucy Lucraft

Lucy is a freelance journalist, blogger and podcaster based in Brighton, UK.

She started this blog in 2013 and is the host of blogging podcast What She Said.

Find me on: Web | Twitter | Instagram

This post contains (clearly marked) affiliate links. 

1 Comment

  1. 20th January 2019 / 10:36 am

    I’m not quite at this stage yet, but I’ve been wondering what I’d do when I got there. Thank you for spelling it all out! 😀

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