Skip to Content

Freelancers

Common tax mistakes that put freelancers and small businesses at risk

Working alone has an invisible cost: nobody checks your work. In a company somebody notices that an invoice never arrived; when you are the company, the only person who could notice is the one who is busy doing the actual work.

That is where almost every tax problem of a freelancer comes from. Not from the rules — from being one person. These are the mistakes that repeat, and what each one really costs.

Using one account for everything

It is the first mistake and the one that causes the others. With a single account, no deduction can be proven cleanly, no income can be separated from a transfer between your own pockets, and the day you need to show what the business earns — to a bank, to a client doing due diligence — you are reconstructing it from a statement full of personal spending.

It costs nothing to fix and it is almost never fixed, because the account already works. Open the second one anyway.

Treating any expense as a business expense

The test is not whether you paid for it. It is whether it belongs to the activity, and whether you can show that it does. A laptop you work on is one thing; the family dinner where you talked about work is another, and the second one will not survive a question.

The real damage is not the expense that gets rejected. It is that a set of expenses nobody could defend puts everything else in doubt, including the ones that were perfectly legitimate.

Not looking at what arrives

Issuing gets attention because the client asks for the document. Receiving does not, because ignoring it has no immediate consequence. But vouchers issued against you accumulate on their own, including ones that are wrong, duplicated or not yours at all, and the first time anyone looks it is because the figures no longer match.

Reviewing what arrives is a few minutes a week. Reconstructing a year of it is a job.

Filing nothing because you invoiced nothing

A month with no income is still a month with an obligation. Silence is not a filing, and the gap does not close by itself: it sits there until something else brings it to the surface, usually when you need to prove you are up to date and in a hurry.

Keeping everything in the inbox

An email folder is not an archive. It depends on one account, it has no order anyone else could follow, and it disappears the day the provider closes the account or you lose the password. The invoices you issued and received, and the acknowledgements of what you filed, need to live somewhere that survives you forgetting about them.

Thinking that being registered means being up to date

Registration is a starting point, not a state. What matters afterwards is whether the recurring obligations are met, and plenty of people discover the difference when a client asks for proof of compliance before releasing a payment.

It is worth checking your own position once in a while, calmly, instead of finding out on the day somebody else needs it.

Waiting to be big enough to get organised

This is the expensive one, because it sounds sensible. The reasoning is that order can wait until there is volume. But order is cheap when there are five invoices a month and expensive when there are two years to rebuild, and the moment you need it — a loan, a serious client, a partner — arrives without warning.

Nobody needs a full accounting department on day one. Everybody needs a separate account, invoices in one place and a monthly habit.

What to do if several of these sound familiar

Do not try to fix everything backwards at once. Start the correct habit from this month, and then decide how far back it is worth tidying. Going forward costs little; going backwards is a project, and it is better done knowing what it is for.

Five checks, today

  1. Does the business have its own account, and is it the only one being used?
  2. Can you say what you earned last month without opening your bank statement?
  3. Have you looked at the vouchers issued against you in the last month?
  4. Do you have the acknowledgements of what you have filed, somewhere you could find them?
  5. If a client asked you today to prove you are up to date, how long would it take?

If the last one has no quick answer, that is where to start.

At FusHer Services we work with people who are one person and with companies of a hundred, and the starting conversation is the same: looking at where you actually are. Write to us and we will take a look.