How to do bookkeeping for Freelancers (Template Included)

How to do bookkeeping for Freelancers

In this article we are going to discuss how to use the “Freelancer Bookkeeping Template” developed in Notion to perform “Bookkeeping for Freelancing Businesses”.

This template is handy for Freelancers who are looking for an easy and effective way of managing the financials and day-to-day affairs of the client work under one dashboard.

This can also be equally helpful for other types of businesses as we will see in the tutorial video attached below.

Let’s get started…

What is a Freelancer Bookkeeping Template?

This template is primarily meant for people looking for a bookkeeping template to manage their bookkeeping activities as a Freelancer in an easy and intuitive way.

How to download Freelancer Bookkeeping template

Click Here to gain access to the Freelancer Bookkeeping Template

Features of Freelancer Bookkeeping Template

Here are the core features we are looking to achieve using the Freelancer Bookkeeping Template:

• Gain access to the 3 important financial statements as a Freelancer, i.e. Balance Sheet, Profit and Loss Statement and Cash Flow Statement.
• Track Income, Expenses, Assets and Liabilities associated as a Freelancer.
• Find Tax Liabilities for each quarter, assess Net Worth and find Cash Flow Movement as per different activities being a Freelancer.
• Track Debt Payments, Bills Payments, Subscription Expenses, do Budgeted Analysis, calculate Savings Estimates, track investments performance and much more.

How to Use Freelancer Bookkeeping Template

In order to use the Freelancer Bookkeeping Template we need to go through the following 2 steps:

1. First we need to set up the necessary accounts as a Freelancer i.e. Income, Expenses, Assets and Liabilities.
2. Create transactions related to Income, Expenses, Assets or Liabilities in the template.

Let’s look at each in detail.

Setting up the Accounts for a Freelancing Business

Here are some of the most common types of accounts related to income, expenses, assets and liabilities that a Freelancer would need:

1. Income — Common accounts include Client Projects, Affiliate Income, Consulting Fees etc
2. Expenses — Common accounts include Office Supplies, Utilities Bills , Subscription Expenses, Membership Fees, Advertising etc
3. Assets — Common accounts include Cash and Bank balances, Inventory, Property, Investments etc.
4. Liabilities — Common accounts include Accounts Payable, Loans Payable, Taxes Payable etc.

In order to use the above template we need to add all the above possible sources of income, expenses, assets and liabilities as a Freelancer (as shown below).

Setting up Accounts for the Freelancers Bookkeeping Template

What factors to consider while adding accounts for a Freelancing Business

Factors to consider while adding accounts to the Freelancers Bookkeeping Template

Here are some of the key factors to consider while adding accounts as a Freelancer for the Freelancing business:

1. Name of the Account — Specify the name of the account correctly, such as “Accounts Receivable” to be added under Assets.
2. Opening Balance — Add the Opening Balance of Assets or Liabilities as at the start of the financial year (if any).
3. Classification — Classify your added account under Debt, Bills, Savings, Subscriptions etc for correct reporting. You can add your own classification as desired.
4. Payment Frequency — If there’s an account where payment is made or received on a periodical basis, add that payment frequency to the account added. A typical example is Salary which is received on a “Monthly” basis.
5. Opening Units — If there’s an account which has a Opening Balance and a specific number of units at the start of the financial year, then it can be added for the account. A common example is investment in “Shares” which has an Opening Balance of let’s say, $1000 for 100 units being held at the start of the Financial Year. Thus 100 units would be the Opening Units in this scenario.
6. Asset Class — If the account is related to an asset and is related to either “Inventory” or “Investment”, specify that in the Asset Class section. Once the accounts are set up correctly we are ready to start using the template as required for our bookkeeping needs.

Adding Transactions as a Freelancer

There can be 4 possible types of transactions that can be added as a Freelancer:

1. Income Transactions — All transactions that are related to generating revenue for the business will fall under the Income Transactions.
2. Expense Transactions — All transactions that are related to expenses for the business will fall under the Expense Transactions.
3. Assets Transactions — All transactions that are related to assets of a business will fall under the Assets Transactions.
4. Liabilities Transactions — All transactions that are related to liabilities of a business will fall under the Liabilities Transactions.

How to add a Transaction to the Freelancer Bookkeeping template

Entering Transactions to the Freelancer Bookkeeping Template

In order to add an Income transaction using the template, we need to click on the “Add Income” button (as shown above).

Once we click on the button, this automatically inserts a new income transaction with today’s date (by default).

Factors to consider while adding transactions to the template

Here are other things to consider when we add an income translation to the list of transactions:

1. Date — Specify the date of the transaction of the entry. This is always specified as today’s date (by default).
2. Period — Specify the period of transaction, i.e. Month and the year of the period of the transaction. If you don’t find a specific period, you can manually add a period for the added transaction as well.
3. Description — Specify the description of the transaction, for each added transaction.
4. Category — This is automatically added while you add a transaction under income or expense or asset or liability.
5. Account — Specify the account of your requirement for the added transaction, it can be either income or expense or asset or a liability account as per your requirement.
6. Payment Mode — Choose the payment mode of the transaction, i.e. Bank or Cash for the transaction that is added.
7. Transaction Type — Select “Inflow” for money that comes into the business or “Outflow” for the money that goes out of the business.
8. Amount — Enter the amount of the transaction, specified in dollar (by default).
9. Document — Attach any bill or receipt in the document field for the transaction entered for.
10. Tax Rate — Specify the tax rate (if any) for the tax payments that are to be made for any incomes or any tax credits that are to be received for the expenses made.
11. Tax Amount — This is automatically calculated for the amounts entered and the tax rates added for each transaction entered for.

The above process needs to be followed for entering transactions related to income or expenses or assets or liabilities as a Freelance owner using the template.

For each transaction there is a separate button assigned for the same to add the transaction as per the desired requirement.

Once the transactions are entered, here’s how we can assess the Financials Overview of the business.

How to assess the Financials Overview of Freelancer Business

Under the Financials Overview, we can find 3 things as mentioned below:

• Balance Sheet
• Profit and Loss
• Cash Flow Statement

Balance Sheet

Assessing Balance Sheet for Freelancer Bookkeeping Template

Balance Sheet gives a quick reflection of the Assets, Liabilities and the Net Worth of the Freelancing Business.

Simply click on the dropdown under the Financials Overview on the left-side of the template to get a complete overview of the Balance Sheet.

Profit and Loss

Assessing Profit and Loss for Freelancer Bookkeeping Template

Profit and Loss gives a quick reflection of the Income, Expenses, Gross Profit, Taxes and the Net Profit of the Freelancing Business.

Again this can be navigated with the same method as explained earlier.

Cash Flow Statement

Assessing Cash Flow Statement for Freelancer Bookkeeping Template

Cash Flow Statement gives a quick reflection of the Opening Balance, Cash Inflow, Cash Outflow, Closing Balance of cash flow of the Freelancing Business.

How to assess Key Business Analytics of a Freelancing Business

Under the Summary section on the right side of the template, we have 4 key important things:

1. Finances

How to Assess Finances for Freelancing Business

Shows the Assets, Liabilities, Income and Expenses of the Freelancing Business in detail with each account that has been added.

Along with the amount of each account that is added, it also reflects the percentage of each account to the total category.

We can also add accounts as per our requirement under Income, Expenses, Assets or Liabilities under Finances view.

2. Cash Flow Overview

Assessing Cash Flow Overview for Freelancing Business

Indicates the Cash Inflow, Cash Outflow and the Net Balance specified under 3 activities i.e. Operating Activities, Financing Activities and Investing Activities.

3. Tax

Assessing Tax Payments for Freelancing Bookkeeping Template

Shows the Tax Payable, Tax Credit Available and the Tax Liability for each quarter of the Financial Year in one glance.

4. Net Worth

Assessing Net Worth for Freelancing Bookkeeping Template

This shows how much of the Net Worth has been achieved for the Freelancing Business so far with the targeted Net Worth that was set at the beginning of the Financial Year.

Other things to consider for Business Analytics for Freelancer Business

Other Key Business Analytics for Freelancing Business

On the left side under the Business Analytics section, we have the following sections to explore further:

1. Accounts — Here we can add accounts as we require under a specific category as discussed in the first step.
2. Net Worth Goal — Set up your Net Worth Goal that you want to achieve in your business.
3. Debt Payments — Shows the Debt Payments divided into 2 categories, i.e. “Last Paid” and “Future Due”. Any payments classified under “Last Paid” means that the next payment due date falls prior to today’s date. So any payments reflected under this means you have missed an installment which was supposed to be paid earlier. Similarly any payments classified under “Future Due” means that the next payment due date falls after today’s date. So any payments reflected under this means you have a future installment which is supposed to be paid later. Under each of the Debt Payment sections, it reflects the Principal Repaid, Repayment in percentage to the total loan amount, Total Loan Amount and the Next Payment Date.
4. Bills Payments — This follows the similar principles to Debt Payments but reflects the bills payments of the business along with addition of the Payment Frequency assigned earlier.
5. Budget Analysis — This shows the budgeting aspect of income and expenses of the business. For the expenses, it shows the total expenses of the business in comparison to the total budget set for the expenses. For the income, it shows the total income earned in the business in comparison to the total targeted income set for the income.
6. Subscription Payments — This shows the subscription payments classified under “Last Paid” and “Future Due” as described earlier in the Debt Payment section. Along with the Payment Frequency, it also shows the Subscription Status being Active or a Canceled Subscription.
7. Savings Estimate — This shows all the savings accounts added by the business along with the amount of each of the savings.
8. Investment Performance — This shows all the investment made by the business showing the amount of the investment, along with investment units available, profit and loss incurred by the investment and percentage of each of the investment.

Summary

This concludes how a Freelancer can use the Freelancer Bookkeeping Template to manage the financial affairs with ease.

The template has been designed keeping the needs of a person even with zero experience of accounting and bookkeeping.

Click Here to gain access to the Freelancer Bookkeeping Template.

You can reach out to me at notionformyuse@gmail.com if you face issues after gaining access to the template.

Thank you for your time and consideration.