Discover Bizyness, invoicing software for freelancers

When you launch your project as a freelancer, your first task is to set up a sole proprietorship. Only this status allows you to invoice your clients. The accounting obligations that follow depend on the legal status you have chosen. In all cases they remain basic and do not require you to hire an accountant or a chartered accountant. However, it turns out essential to use freelance invoicing software for your bookkeeping, but also for other reasons detailed in this article.

The accounting obligations of freelance workers

A sole proprietorship requires few administrative formalities, unlike commercial companies. Whatever your status, it is essential to strictly comply with the legislation. If you are caught at fault, you expose yourself to severe penalties from the tax authorities in the event of an audit.

Moreover, if your bookkeeping turns out to be faulty, a malicious client can take advantage of it to create a dispute and avoid paying what they owe. It may simply be that you omitted certain details on your accounting documents, which can invalidate your invoices.

The legal obligations of a sole proprietorship

The sole proprietorship status is the simplest. You set up as a micro-entrepreneur (sole trader) or as an EIRL (Limited Liability Sole Proprietorship). Your business has no legal personality and you run it in your own name. Setting it up takes just a few clicks, by filling in a start-of-activity declaration form, downloadable from the CFE (Business Formalities Centre) website of Urssaf. A few supporting documents are requested, and you can start your activity instantly.

If you are worried about putting your personal capital at risk, you should protect yourself by separating it from your business assets. Either you file a declaration of unseizability, or you set up an EIRL. This status also lets you opt for corporate taxation instead of income tax.

Legal accounting obligations

The accounting obligations of a micro-entrepreneur are as follows:

• keep regular accounts;
• maintain two mandatory accounting ledgers: the revenue journal and the expense ledger;
• prepare annual accounts.

You must also declare your revenue online to Urssaf, either monthly or quarterly. You do not need to file annual accounts with the commercial court registry.

VAT for freelance workers

When you operate as a micro-entrepreneur, you are subject to two thresholds: your revenue threshold and the VAT threshold. If you cross the first threshold, you must change your legal status: see our article on choosing VAT status as a sole trader. For the second, you must update your invoicing, previously excluding VAT, to include it.

The thresholds are as follows:

1 — For merchants

If you are a merchant:

~ your revenue cap stands at €176,200;

~ the VAT exemption threshold is €85,800;

~ the increased VAT threshold is €94,300.

2 — For craftspeople and liberal professions

If you carry out a craft activity or a liberal profession:

~ your revenue cap stands at €72,600;

~ the VAT exemption threshold is €34,400;

~ the increased VAT threshold is €36,500.

The accounting obligations of an EIRL

If you operate under the EIRL status, your accounting obligations are the same as those of merchants. This requires you to keep accrual-based accounts. This means chronologically recording all transactions affecting the business’s assets: purchases, sales, payments, expenses, etc. You must also keep a daybook and a general ledger.

At the close of each financial year, you must prepare:

• a balance sheet;
• an income statement;
• an appendix.

However, if you do not exceed two of the following three thresholds, you can settle for a simplified presentation:

~ €1,000,000 in total balance sheet;

~ €2,000,000 in revenue;

~ a total of 20 employees.

The vast majority of freelancers do not cross these thresholds, which allows them to keep light accounting obligations.

The value of invoicing software for freelance workers

As we have just detailed, freelancers benefit from simplified obligations when it comes to their declarations. However, they must still deal with complex invoicing standards on a daily basis.

Every invoice must include mandatory details, and numbering is subject to strict rules. This is where freelance invoicing software comes in, as it lets entrepreneurs automate their bookkeeping, be certain their documents are legitimate, and make sure nothing is forgotten.

Time is often a major obstacle for freelancers who work alone and don’t have enough hours in a day to handle everything their business demands. Broadly speaking, a freelancer’s work revolves around three main areas:

1. building a business strategy to find clients and then retain them;

2. taking on orders and fulfilling them;

3. handling all administrative tasks.

Freelance invoicing software reduces the third point to a minimum amount of time. It is also a valuable help for the first point, and therefore for the growth of the business.

Producing all accounting documents with freelance invoicing software

The major benefit of invoicing software is that it simplifies the creation of your accounting documents, the invoice being the central one. Upstream, you may need a quote and a purchase order. Once the order is fulfilled, you can issue a delivery note before invoicing.

All these documents are linked, since their content is similar. With your software, switching from one document to another takes just a click. Along the way, you can make changes if needed. It also handles sending documents to clients, according to the settings you define. If you manage your books manually, using text files and spreadsheets, you waste a huge amount of time because nothing is automated.

Furthermore, it is essential that your accounting documents include all the required information, so they cannot be disputed. The list is long, and only software can manage it flawlessly. You also need to keep up with changing regulations, which the software handles for you, sparing you a real headache with every change.

Invoice details managed by freelance invoicing software

• A header stating the word “Invoice.”
• The entrepreneur’s identity, with full name and contact details.
• The VAT number, if liable for VAT.
• The Siren number, followed by the mention: registered with the RCS or RM of city X. (If the business is being registered, state “SIREN registration pending.”)
• The client’s identity, name and address.
• The invoice issue date.
• The delivery date.
  Click to see all mandatory details

Stating the payment due date is not mandatory, but recommended. In its absence, you are subject to the default deadline, which is 30 days for France and 60 days abroad, counted from the delivery date or the end of the service.

Invoice numbering

Numbering your invoices is mandatory. Software like Bizyness lets self-employed workers save time thanks to automatic numbering. You need to define a template and stick to it throughout the year. Depending on how many invoices you issue, your template will be more or less complex.

For a small number, you can simply state the year, following the pattern 2021-1, 2021-2, etc. If you issue more invoices, or want to date them more precisely within the year, you can include the month: 2021-01-1 for the first invoice of January. The second would be 2021-01-2. When you move to February, you reset the last digit: 2021-02-1, 2021-02-2, etc.

If your invoice spans several pages, each one must be numbered, following the pattern n/N, where n is the page number and N the total number of pages.

Your numbering must always increase, and you must never skip a number, so no gap ever appears in the sequence. Once you have issued an invoice, you cannot simply destroy it — it must be the subject of a credit note. Finally, you must respect chronological order.

Client records and their importance for your business strategy

Your freelance invoicing software does more than produce your accounting documents — it also helps you day to day with client management and shaping your business strategy. Beyond the free time it gives you through task automation, it lets you juggle your client records with ease.

You have tools that let you access client history, select clients and prospects, and generate reports to track how your figures evolve, among other things. It is essential that you analyze the data collected, in order to adjust your sales and promotional actions in real time.

If you are a merchant, and even more so an e-merchant, you need to make use of your order history to shape your communication plans. Advertising is only effective if you precisely target the people likely to respond to your message.

Moreover, when you launch an advertising campaign on a platform like Facebook, you can adjust the amount invested day by day, as well as the criteria defining your target audience. If you use freelance invoicing software like Bizyness, your store is synced with your accounting. This way, you can track your results in real time and adjust your advertising campaign’s settings to make it more relevant.

Bizyness even lets you sync as many stores as you like, letting you run your advertising campaigns simply and without wasting time.

Keeping investments under control

When you need to invest, you must make sure you have the means to do so. With accounting software, you know your cash position in real time and can factor in forecasts. Indeed, you record your fixed expenses (rent, subscriptions, etc.) as well as one-off costs that must be deducted from your cash on hand at any given moment, so you know the true state of your finances. You also should not forget the charges you owe to the tax authorities. The Bizyness app calculates upcoming charges on each of your invoices, further refining your budget forecast. It also lets you quickly find your past payments.

Exporting your accounting data for outside collaborators

The flexibility of accounting software lets you select the criteria of your choice to shape reports tailored to whoever you’re dealing with.

These documents can support you when seeking financial partners and investors. If you need to meet your banker to apply for a loan, you have a solid basis to make your case.

These figures-based reports are useful when you seek advisors. A consultant or a chartered accountant can help you if you’re unsure about decisions regarding your business’s future, but they need accurate data to do so.

Finally, if you want to take on partners, you must present a transparent financial statement to your prospective future collaborators.

Choose accounting software suited to your freelance activity and take the time to explore it during the trial period. This lets you assess its features before committing. The more your business grows, the more you will appreciate this indispensable daily help.