Receipt and expense tracking for freelancers

A freelancer is their own finance team. The work is small if you do it as you go and large if you leave it for the week before your tax return is due. The method below takes a few minutes a day and one short session a month.

Sorayli is our receipt scanner and expense tracker. It is not accounting software, and this is not tax advice. Where the rules matter, we quote the tax authority.

01What your records need to show

In the US, the IRS says supporting documents for a business expense "should identify the payee, the amount paid, proof of payment, the date incurred, and include a description of the item purchased or service received that shows the amount was for a business expense." It adds that a combination of documents may be needed to cover every element.

In the UK, GOV.UK tells sole traders to keep records of all sales and income and all business expenses, with proof such as receipts for goods and stock, bank statements, sales invoices and till rolls.

So one receipt rarely does the whole job. The missing piece is usually the business purpose, which only you can write down.

02Capture every purchase the day it happens

Record each business purchase the day you make it, with a line saying what it was for. Photograph paper receipts before they fade, and type in online purchases from the order email.

In Sorayli you either scan the receipt or type the purchase. A scan reads the shop, the date, each item with its price, the tax and the total, and nothing is saved until you have checked it. Typing needs an amount, a title and a category, and it is unlimited on every plan. Add the business purpose in the note, or put it in the title if you want it in the Transactions CSV too (more on that below).

Here is the receipt that trips people up: a supply run where one item was personal.

The four work items add up to 71.75. The birthday card, 4.75, is yours. A tracker that saves only the total files 82.62 as one lump. Sorayli saves a receipt with several items as one entry per item, grouped under the receipt, and you pick each line's category before anything is saved. With the default list, the card goes to Gifts & Donations and the work items to Shopping, mixed in with your personal shopping. A business category of your own fixes that.

Then check the tax. On a receipt with several items, each entry is saved at its printed line price, and the tax line is not saved on its own. Here your entries would add up to 76.50 against an 82.62 card charge. Use Add item on the review screen to put the 6.12 back. Split at the same 8%, 5.74 belongs with the work items (71.75 × 8%) and 0.38 with the card (4.75 × 8%), which adds back to 6.12. A receipt with a single item is saved at its total, tax included, so it needs no fix.

03Categories your accountant will recognize

Pick a short list of business categories and use the same one every time, because the monthly close and the export both group by category.

A new Sorayli account starts with everyday expense categories such as Shopping, Transportation, Subscriptions and Fees & Charges, and no business expense category. On the income side, Freelance and Business Income fit client payments as they are. Add your own business categories on the web or on iPhone; custom categories work on every plan.

Make each business category a top-level one whose name starts with Business, such as Business software or Business travel. The category filter on the Transactions page matches one category and not its subcategories, but the search box matches category names: type Business, set the type to Expenses, and every entry in those categories shows at once, plus any with Business in its title.

When you log a client payment as income, the add form on the web, iPhone and Android has two optional fields, Client name and Invoice number. Fill them in to match each payment to its invoice later.

Uneven client payments make budgeting harder than tracking; budgeting with irregular income covers that side.

04Close each month in one sitting

In the first week of each month, close the month before, in this order:

1. 1Empty your wallet, bag and desk drawer. Scan or type every receipt still dated last month.
2. 2Search your email for order confirmations and software bills, and type in anything that left no paper.
3. 3Log every client payment received as income, with the client name and invoice number.
4. 4Open your card and bank statements. In Sorayli, filter the transactions to Last month and Expenses to see how many entries match and their total. Where the numbers differ, go line by line: a missing tax line, a tip added after the receipt printed, or an unlogged refund.
5. 5Check that every business entry has a category and a purpose, and fix the ones that do not.
6. 6Export the month and file the paper receipts in one envelope or folder with the month on it.

Monthly software bills need one extra step, because Sorayli does not find recurring charges for you. Mark a charge as recurring and it counts toward your subscription totals, and a reminder email lists the ones that renew in the next 3 days. You still log each charge when it arrives. How budgets and subscription reminders work has the details.

05What to hand your accountant

Most accountants want a spreadsheet of the period with dates, payees, amounts and categories, plus the receipts behind it. On the web, Pro and Family can export four ways. Export is not included in the Free plan on the web. The iPhone and Android apps have their own export in Settings, as a spreadsheet or a JSON file.

A practical package for a year: the Transactions CSV with the date range set to your tax year, which names the category on every row; the Spreadsheet CSV for notes and base-currency amounts; and an Analytics report for the same custom date range. The Transactions CSV has no notes column, so if the business purpose has to travel in that file, write it into the title.

If a client pays you in another currency, the entry keeps that amount and currency and is converted to your base currency at a daily rate from that date or up to 7 days before. The Spreadsheet CSV carries both figures. How multi-currency tracking works explains the rate.

06What Sorayli does not do for a freelancer

Before you rely on it for a business, know where it stops:

• No bank or card connection, so the monthly check against your statements is what catches a missed charge. Tracking expenses without linking your bank sets out that routine.
• No invoicing. It records payments you receive but does not create or send invoices.
• No mileage tracking, expense reports or accounting software integrations.
• No tax calculations. It does not work out what you can deduct or owe.
• No separate business account. Sorayli has no accounts, so business and personal spending share one ledger and your categories keep them apart.

On price: Free includes 10 receipt scans and 10 spending questions a month and 2 budgets, and typing is unlimited. Pro is $9.99 a month or $69.99 a year, with unlimited scans under a fair-use cap of 300 a month, and export on the web. Compare the plans.