Accounting for Freelancers & Contractors in the UK — ProKeeper
Freelancing and contracting gives you freedom and flexibility — but it also comes with a raft of financial and tax obligations that employed workers don’t have to think about. At ProKeeper, we specialise in accounting and bookkeeping for freelancers and contractors across the UK, giving you professional financial support so you can focus on your work.
The Financial Challenges of Freelancing & Contracting
As a freelancer or contractor, you face unique financial challenges that employed people don’t. You’re responsible for setting aside money for tax and National Insurance, understanding IR35 rules (if you operate through a limited company), filing self assessment tax returns, registering for and managing VAT once you hit the threshold, and managing irregular cash flow. Getting these things wrong can be costly. Getting them right — with the right support — can save you thousands.
Our Services for Freelancers & Contractors
- Sole Trader or Limited Company Advice — we assess your situation and advise on whether trading as a sole trader or through a limited company is more tax-efficient for you
- Self Assessment Tax Returns — accurate, on-time filing for sole traders, including all allowable expense claims. See our Self Assessment service.
- Limited Company Accounts & Tax Returns — full accountancy service for contractors operating through a limited company, including annual accounts and corporation tax
- Director Payroll & Dividend Strategy — we set up the most tax-efficient salary and dividend mix for limited company contractors
- IR35 Assessment & Advice — we review your contracts and working arrangements and advise on your IR35 status, helping you avoid unexpected tax bills
- VAT Registration & Returns — we handle VAT registration when you hit the threshold and manage your quarterly VAT returns
- Bookkeeping — we keep your invoices, expenses, and bank transactions reconciled so your books are always in order
Understanding IR35 — What Contractors Need to Know
IR35 is the most complex tax issue facing UK contractors. The rules determine whether HMRC views you as a “disguised employee” — and if they do, your income can be taxed like employment income, wiping out the tax advantages of contracting through a limited company. Since April 2021, responsibility for IR35 determination has shifted to medium and large private sector clients. However, if your client is a small company, you still make your own IR35 assessment.
ProKeeper can review your contracts and working practices, advise on your IR35 status, and help you structure your arrangements to legitimately fall outside IR35 where possible. This advice alone can be worth thousands per year.
Allowable Expenses for Freelancers
Many freelancers don’t claim all the expenses they’re entitled to. Common allowable expenses include home office costs, professional subscriptions, equipment and software, travel and subsistence (for temporary workplaces), marketing costs, and professional development. We make sure you claim everything you’re legally entitled to.
Pricing for Freelancer & Contractor Accounting
Our freelancer accounting packages start from £75 per month for sole traders needing bookkeeping and self assessment support, up to £200+ per month for limited company contractors needing full accountancy, payroll, and VAT services. Book a free consultation and we’ll create a bespoke package for you.
Frequently Asked Questions — Freelancer & Contractor Accounting
Should I operate as a sole trader or through a limited company?
This depends on your income level, risk appetite, and whether IR35 applies to your work. Generally, a limited company becomes more tax-efficient once you’re earning above approximately £30,000–£40,000 per year, though the exact breakeven varies. Our accountants will analyse your situation and give you a clear recommendation.
How much should I set aside for tax as a freelancer?
A common rule of thumb for sole traders is to set aside 20–30% of your income for tax and National Insurance. The exact amount depends on your income level and allowable expenses. We’ll calculate your estimated tax liability so you always know exactly how much to put aside.
Get Expert Accounting for Your Freelance Business
Let ProKeeper handle the numbers while you focus on your clients. We work with freelancers and contractors across London and the UK.