Any good accountant will be able to offer you some level of support, but finding one who has experience working with freelancers will be useful. Whether you’re a sole trader or registered as a limited company, working as a freelancer is very different to working as a larger business, especially one with lots of employees. These differences tend to be reflected in your accounts.

It’s also worth considering whether you need an accountant who specialises in your particular industry. Contractors who work in the construction industry are an excellent example of this.

Not only are they subject to the confusing world of IR35, there are also tax considerations involving the Construction Industry Scheme. Neither are particularly straightforward, so it’s well worth looking for an accountant who has experience in your area.

Using an online accountant means you’re not restricted to the local area, giving you more choice and at a more competitive price. A freelancer based in central London isn’t restricted to using a London accountant; you could use an online accountant in Manchester if they’re more suitable for your needs.

To answer this properly, it’s useful to understand what the difference is between accountants and bookkeepers.

• Bookkeepers: Literally keep the books! It’s their job to record transactions correctly, create reports of your data, and generally keep your freelance finances up to date
• Accountants: Use the bookkeeping data to prepare accounts and tax returns, help you be more tax-efficient, and see where you could save money

Lots of accounting services include bookkeeping support, or you can use bookkeeping software to maintain your own records.

Freelancing is typically pretty flexible, so the idea of working online with clients that you never actually meet in person is probably nothing new. It’s a concept which has rolled out into the world of accounting, with online practises offering the same excellent level of services, but without the high-street business-rates price tag. You might not always need a local accountant.

You might not need every single service your accountant offers, so if they’re all bundled together in one package you might want to see if there’s any room for discounts. For example, leaving out payroll services if you don’t need them will help bring down the cost.

Back to the shoes analogy here! Just like it’s better to buy one decent pair of shoes than multiple pairs which fall apart faster, it’s better to pay for your accounts to be done properly.

Really cheap isn’t always the best road to take in the long term as it often also means you incur costs further down the line with ‘additional services.’ Shop around, and compare quotes for accountancy fees before committing to anything.

Most use specialist accounts software, but more and more also provide simple bookkeeping software which their clients can use. It can help you save quite a bit of money, and can making working together on real-time data easier too. Double bonus points if it’s MTD-friendly!

This is basically about checking what the fee includes. If your accountant charges a flat fee for the service, but then bills you each time you pick up the phone, any questions or issues can quickly become rather expensive! Some practises offer unlimited access to your accountant throughout the year, which is pretty useful.

It’s also worth checking if you will have direct access to your accountant, or if you’ll be allocated an account manager. Ideally, you should be looking for direct contact.

As well as income tax, you will need to pay National Insurance contributions too. Self-employed people pay Class 4 National Insurance at a rate of 6% on earnings above £12,570, and then 2% on any earnings over £50,270.

Freelancers pay tax on the profits they make, so it’s important to make a note of all your business expenses because these can be deducted from your income and you’ll be charged less tax. But what can you claim as an expense?

The short version is that anything you use wholly and exclusively in your business is allowable. The reality is a bit more complicated than that, so we created a separate guide which gives you more detail.

Learn more about expenses for freelancers

Freelancers normally need to send a Self Assessment tax return to pay tax. The process for sending this information is changing with the introduction of Making Tax Digital for Income Tax (MTD IT for short), but the rollout is happening in stages so double-check if you’re affected!

Read more about paying tax

You can only charge VAT if you become VAT-registered, and you won’t need to do that until your taxable sales hit the registration threshold of £90,000 in a 12-month period. Some people decide to register voluntarily because it’s tax efficient. It can be a bit complicated, so we explain VAT for freelancers in a separate guide!