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Quick Guide – Xero Cloud Based Accounting

Freelancers should always try and stay on top of their accounts. This isn’t an easy feat considering the amount of other jobs that need to be completed everyday. You should ensure that your accounts are maintained in an orderly fashion and are kept up-to-date. One of the best ways to achieve this is to use a Cloud based online software package like Xero.

Organising your accounts

To organize your accounts the following should be performed to ensure that your accounts are maintained up-to-date. If you maintain this system, then in the long run Xero’s functions can help you produce reports which will help you run your business.

  • Set time aside to complete your accounts every week
  • This will prevent them piling up and they will continue to be up-to-date
  • An exact date and time in your planner should be set to complete accounts
  • Enter all documents into Xero’s software

Documents needed to maintain organised accounts

These documents are needed to maintain an organised accounts system. Note that by entering all these documents, your accountant will be able to complete your end of year accounts easily and quickly.

  • Client invoices
  • Business expenses
  • Personal expenses
  • Bank transactions and transfers
  • Payments from clients
  • Expenses paid to suppliers
  • Money owed to you
  • Total hours worked per project
  • Cost per hour per project
  • Client details
  • Materials used for each project

Expenses for Freelancers & Contractors

Self-employed freelancers may claim expenses and a record of them should be maintained.

  • Rent
  • Telephone bills
  • Travel expenses
  • Power bills
  • Computer hardware i.e. printers, PC’s or laptops
  • Some entertainment expenses

Collect Payments Efficiently

An up-to-date system will allow you to collect payments in an efficient manner, ensuring that late-payers are invoiced on time.

1. Invoices should include your cost per hour, hours per project and materials used per project.
2. Always send invoices via email given you written proof of date and time sent
3. Identify late payers by using an ageing summary report
4. Xero will indicate which invoices are unpaid and outstanding
5. Reminders are a great way to notify your clients when an invoice is due
6. Send automated emails to notify clients via Xero
7. Be professional but resolved with late payers

Planning for tax

A Self-Assessment needs to be completed each year and any tax owed needs to be paid to HMRC. Planning for this in advance will help you to cover any owed tax when it is due. A separate savings bank account should be used for this purpose.

Xero has a built-in function which will estimate your Self-assessment tax account. Xero will calculate what percentage of your monthly earnings you should set aside in your bank account. Note that a record of money put into your saving account for this purpose should be recorded in your accounts system.

Certified Xero Accountants

Pearl Accountants are Certified Xero Accountants, get in touch today for a Free Consultation

 

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Run your business on the go

Use our mobile app to reconcile, send invoices, create expense claims and view reports – from anywhere.

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Get paid faster

Xero cloud accounting allows you to send online invoices to your customers – and get updated when they’re opened.

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Reconcile in seconds

Xero imports and categorises your latest bank transactions allowing you to make the best use of your time. Just click OK to reconcile.

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Understand your real-time cash position

Know how you’re doing financially with daily updates from your bank accounts and credit cards.

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Protect your business data

Xero backs up your data and protects it with multiple layers of security including industry-standard data encryption and secure data centres. We also offer two-step authentication as an additional layer of protection for your Xero account.

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