Invoicing + Expenses + Estimates: A Simple System for Staying on Top of Self Assessment

Quick Answer

The self-employed finance workflow is: invoice clients → track when paid → record expenses → see estimated tax → export summaries. When these pieces connect, you always know where you stand—and January becomes a formality, not a panic.

Disclaimer

This tool provides estimates and organisation help only. It's not financial advice. Always check HMRC guidance or a qualified accountant for your situation.

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The Problem: Disconnected Pieces

Most self-employed people piece together their finances from:

A Word doc for invoices
A spreadsheet for income
A shoebox for receipts
Mental notes for what's paid
A calculator for tax estimates
Panic in January to make it all add up

Each piece works in isolation, but nothing connects. You don't know your real profit until you manually reconcile everything—usually at the worst possible time.

A connected system fixes this. Each step feeds the next, and your tax position updates automatically.

The Connected Workflow

Here's how the pieces should flow together:

Create Invoice
     ↓
Send to Client
     ↓
Mark as Paid (when money arrives)
     ↓
Income logged automatically
     ↓
Import Expenses (bank CSV)
     ↓
Profit calculated
     ↓
Tax estimate updated
     ↓
Export summaries when needed

Let's walk through each step.

Step 1: Create and Send Invoices

Why Professional Invoices Matter

Legal requirement: You must keep records of what you've earned
Cash flow tracking: Know what's outstanding vs paid
Client professionalism: Proper invoices get paid faster

What Every Invoice Needs

Field	Why
Your name/business name	Identifies you
Your address	Professional requirement
Client name and address	Who you're billing
Invoice number	Unique identifier for tracking
Invoice date	When issued
Due date	When payment expected
Description of work	What you're charging for
Amount	How much
VAT (if registered)	Required for VAT businesses
Payment details	Bank account or payment link

Creating Invoices Efficiently

Instead of manually formatting each invoice:

Save client details – Enter once, reuse forever
Save common items – Your standard services with default rates
Use templates – Consistent branding, automatic numbering
Generate PDFs – Professional, ready to send

A good invoicing tool handles all of this. Type the details, click generate, send.

Step 2: Track What's Paid

The Outstanding Problem

Creating invoices is only half the job. You need to know:

Which invoices are paid?
Which are outstanding?
Who's late?
What's your actual income (not just billed)?

Simple Status Tracking

Mark invoices with status:

Status	Meaning
Draft	Not yet sent
Sent	Awaiting payment
Paid	Money received
Overdue	Past due date, chase needed

When payment arrives, mark as paid. Your income figures update.

Why This Matters for Tax

You're (usually) taxed on cash basis – when money hits your account, not when you invoice. So "Sent" invoices aren't income yet. "Paid" invoices are.

A connected system only counts paid invoices in your tax estimate. No manual adjustment needed.

Step 3: Import and Categorise Expenses

The Bank CSV Approach

Your bank already tracks every business expense. Export it, import it, categorise it.

Download CSV from your bank (monthly is ideal)
Import into your expense tracker
Review categories – Fix any auto-categorisation errors
Set business percentages – For mixed personal/business items

Categories That Work

Keep it simple:

Office & Equipment
Software & Subscriptions
Travel
Professional Services
Marketing
Communications
Training
Bank & Finance
Other Business

Handling Mixed Use

For items used partly for business (phone, internet, vehicle):

Set a business percentage (e.g., 70%)
The tool calculates the allowable amount
Only the business portion reduces your tax

Step 4: See Your Tax Estimate

The Live Calculation

With income and expenses tracked, your profit is:

Profit = Paid Invoices − Allowable Expenses

From profit, your tool calculates:

Income Tax
Class 2 National Insurance
Class 4 National Insurance
Total estimated tax bill

This updates automatically as you add data. No manual recalculation.

What-If Planning

Want to see the impact of:

A new client worth £5,000?
Claiming £1,000 more expenses?
Hitting the higher rate tax band?

A good planner lets you test scenarios before they happen. Adjust the figures, see the tax impact, make informed decisions.

Step 5: Export Summaries

For Your Records

At any point, export:

Invoice list – All invoices with status
Expense summary – Totals by category
Quarterly figures – For MTD preparation
Full year summary – For tax return or accountant

For Your Accountant

If you use an accountant, they need:

Total income (from paid invoices)
Total expenses by category
Any adjustments (capital allowances, etc.)

A clean export saves them time (and might save you money).

For HMRC

When filing your return:

Self-employment section: Your profit figure, broken down by income and expenses
Evidence: Kept for 5 years in case of enquiry

The connected system gives you exactly what HMRC wants.

The Monthly Routine

Here's how this workflow plays out in practice:

Weekly (5 Minutes)

Send any pending invoices
Mark received payments as paid
Glance at outstanding invoices

Monthly (15 Minutes)

Import bank CSV for expenses
Review categorisation
Check month's totals
Note any issues

Quarterly (15 Minutes)

Review income vs expenses vs profit
Check tax estimate is on track
Lock quarter figures (if preparing for MTD)
Adjust savings rate if needed

Year-End (1 Hour)

Final expense import
Review full year figures
Export summaries
File tax return (or send to accountant)

Total annual time: Under 15 hours. Compare that to a January scramble.

Avoiding Common Mistakes

Mistake 1: Counting Unpaid Invoices as Income

You've invoiced £50,000. Great. But if only £40,000 is paid, your income is £40,000. The rest is outstanding—not yet taxable.

Fix: Only count paid invoices in your tax estimate.

Mistake 2: Forgetting to Track Cash

Bank imports miss cash transactions. That £50 for a taxi, the market stall receipt, the parking meter.

Fix: Add cash expenses manually. Keep those receipts.

Mistake 3: Not Setting Business Percentages

Using your personal phone for business? You can't claim 100%. But forgetting to claim anything is also wrong.

Fix: Set a realistic percentage and apply it consistently.

Mistake 4: Waiting Until January

The system only helps if you use it. Waiting until year-end defeats the purpose.

Fix: Do monthly imports. 15 minutes a month beats 15 hours in January.

Mistake 5: Ignoring the Tax Estimate

Seeing an £8,000 estimate and not adjusting your savings? Recipe for January stress.

Fix: Review the estimate quarterly. Set aside enough.

How Dude, What's My Tax? Helps

We've built a connected system specifically for this workflow.

Professional Invoicing

Saved customers: Enter once, reuse
Saved items: Your services with default rates
Automatic numbering: Never duplicate an invoice number
PDF generation: Professional, ready to send
Status tracking: Draft, Sent, Paid, Overdue

Expenses CSV Import

Bank import: Monzo, Tide, Revolut, Starling, or any CSV
Auto-categorise: Based on merchant names
Business percentages: Per-item or default
Duplicate detection: Import safely, no double-counting

Live Tax Estimate

Always current: Updates as you add data
Full breakdown: Income Tax, Class 2, Class 4
Personal allowance tracking: Know when you're approaching thresholds
What-if scenarios: Test changes before they happen

MTD Quarterly Mode

Lock quarters: Final figures, no accidental edits
Quarterly totals: Income, expenses, profit per quarter
Export summaries: PDF ready for records or submission

History & Analytics

Compare years: This year vs last year
Spot trends: Is income up? Expenses down?
Category analysis: Where's your money going?

HMRC Companion

Side-by-side guide: File your return with our figures alongside
Field mapping: Know which number goes where
Confidence: File accurately, no guessing

Getting Started

Don't try to implement everything at once. Build the system in stages.

Week 1: Set Up Invoicing

Add your business details
Create your first invoice template
Add your top 3 clients
Add your common services/items

Week 2: Import Expenses

Export this year's bank CSV
Import and categorise
Set business percentages for mixed items
Review monthly totals

Week 3: Review Your Position

Check your estimated tax
See profit breakdown
Identify any missing data
Set up your savings plan

Week 4: Build the Habit

Create next invoice using the system
Schedule monthly expense imports
Set quarterly review reminders

FAQ

Do I need accounting software as well?

For most sole traders, no. Our system covers invoicing, expenses, and tax estimates. Full accounting software adds complexity most people don't need.

What if I have multiple income sources?

Add employment income, dividends, or other income separately. The system combines everything for your total tax estimate.

Can I use this with my accountant?

Yes. Export summaries for your accountant. Some people handle everything themselves; others use the system for tracking and send year-end figures to their accountant.

What about VAT?

If you're VAT-registered, you'll need additional VAT tracking. Our core system is designed for non-VAT-registered sole traders. If you're VAT-registered, consider whether you also need VAT software.

How do I handle expenses paid by credit card?

Import your credit card CSV alongside your bank account. Just watch for duplicates if you pay off the card from your main account (that payment isn't an expense—the original purchases are).

What if a client doesn't pay?

Keep the invoice as "Overdue" or "Cancelled". Don't include it in your income. Bad debts don't count as expenses until you've genuinely given up hope.

Can I import from multiple banks?

Yes. Import from as many accounts as you use. The system combines them.

What about mileage?

Add mileage as an expense (45p/mile for first 10,000, 25p thereafter). Keep a mileage log as evidence.

Next Steps

Start connecting the pieces. Your future self (and your January peace of mind) will thank you.

Open the Dashboard →

Start with professional invoicing, then explore expense tracking and build your quarterly routine.

Back to the Learn hub.

This guide is for general information only. Tax rules change, and everyone's situation is different. Always check the latest HMRC guidance and consider speaking to a qualified accountant if you're unsure.