After discovering the Coconut bank account and banking app, I had to share it with you along with tips on how to manage your freelance finances using the app.
It’s official! I’m 100% no longer a student so I can’t use that as an excuse for not really working. But truth be told, I’ve been working freelance even when I was working full time; I just had to limit how much I was doing and now all my time is mine again, I can take on more work. ‘Cos a girl has got bills to pay.
Anyway, for the past year or so, I’ve been using Coconut – a mobile banking app – to manage all my freelance finances. Keeping them separate to everything else was the best idea I’ve had in a long time!
What Is Coconut Banking?
I couldn’t say it better than Coconut do themselves. Coconut is the business current account that takes care of your accounting and tax. Designed for freelancers, self-employed people and small business owners.
So that includes bloggers, fitness professionals… basically anything that isn’t covered by PAYE (when the tax man dips his hand in before the money reaches your account).
Below, I’ve tried to cover the main areas that you and I would need as freelancers; the things that will make our admin less and lives easier… it is possible…
“How do I create invoices?”
This function has been a game changer for me. Previously I was spending ages creating word documents and converting them into PDF’s or using PayPal to create and store (not always send) my invoices. It meant invoices were all over the place whereas now, they are all stored on the app and easily downloadable if I need copies.
You can email invoices straight to your client from the app and send a copy to yourself at the same time. On the free version of Coconut you can send 3 invoices per month. Otherwise you can upgrade to their Grow plan which is £5 per month and a heck of a lot cheaper than a business bank account.
I currently have the Grow plan free for 12 months as I invested in their business when they went though crowdfunding. When those 6 months are up though I will happily pay the monthly fee as long as I am still working freelance at that time.
“I never get paid on time”
Dammit, now isn’t this the bane of our freelance lives?! When you create an invoice in Coconut banking, you choose the due date – i.e 14 days, 30 days, 60 days or custom. Thirty days is the standard by law, remember that. Below is some text you should include in every invoice you send which will be your back up if payment is late.
You Should Include This Text On All Invoices:
Payment is expected within a maximum of 30 days. Late payments will be charged interest at the Bank of England base rate plus 8% in addition to reasonable debt recovery costs (£40) if deemed necessary.
You can then track invoices in the app to see when they are due or if they are overdue. One recent update means you can send an invoice again and edit the email to remind them you are due payment and politely ask that they pay swiftly so you don’t need to change the invoice and add the late fees.
“How can I keep track of expenses?”
When you’re self employed you get to claim expenses against your income which means that income (well, expenditure) isn’t counted when it comes to calculating how much tax you owe.
Things like travel, equipment, professional fees all count – and Coconut helps you to know what can and can’t be counted. I wrote a guide chatting all things tax for fitness professionals which you can check out too.
In the app you can take pictures or attach files as receipts so they will all be in one place if or when you need them. The card that you get with your account is contactless so I’ve been able to use it for travelling and then add a note in the app saying what job it was related to.
Connect Your Coconut Account To Other Accounts
…or to other credit cards. This is quite a new feature which has been made possible by Open Banking. I don’t personally use it myself as of yet as I manage to filter 99% of business payments etc through my Coconut account. You can even connect to your personal accounts to make sure you capture all of your business expenses.
“How do I know which expenses are allowable?”
It tells you in the app. The app automatically categorises most of your spending but you can change if if needs be. When you go to change it there is an icon you can click on which tells you more about that expense category and whether it is allowable as an expense.
“I want something that makes my tax return simple”
I started using Coconut half way through the previous tax year so it made half of my tax return simple. The rest of it though, I had to do my usual trawl through spreadsheets and double checking of my personal current account and credit card.
But this current year (19-20) everything is in one place. The app also gives you an estimation of your tax bill at the end of the year based on what you have earned so far.
You’re able to edit your tax code if you need to, check a box if you have a Student Loan to repay, and add how much PAYE earnings you have received elsewhere.
You then click one simple button to see your tax report which has all your totals for expenses etc which you input directly into your Self Assessment.
Other Things You Can Do With Coconut Banking:
- Create standing orders / recurring payments
- Create Direct Debits
- Share account access with an accountant
- Make cash withdrawals (fees may apply)
- Get an account for a Limited Company
- Add VAT to invoices
You Need To Get Coconut Banking
The app and functionality is always evolving. Each and every monthly newsletter informs me of something I needed and probably never even knew I needed. If you have any questions feel free to drop me a comment below or get in touch with Coconut directly – they are on twitter here.
How are you currently managing your finances?