How to invoice a client clients as a freelancer?
The process of invoicing clients can be broken down into several stages: from setting rates to the issue of an invoice, via the calculation of social security charges. In short, it is a complex and often poorly defined process for freelancers. That is why we have provided this step-by-step guide of what to do when invoicing your clients!
Understand your freelance status
The ability to set your rates (by the hour or day) and, therefore, to invoice a client assumes that you understand your freelance rights and the regulations that apply to you. Indeed, whether you are self-employed under French law, or are registered in the United States, completely changes the nature of the task. No matter what, your clients must simply be invoiced in line with the obligations that relate to your legal freelance status. Many freelancers, when setting their rates, overlook the need to pay social security charges and other taxes that they must pay, both in their own right and on behalf of others: and this often turns out to be a very costly mistake!
Self employed status (“autoentrepreneurs” in France)
A freelancer who is classed as “self-employed” and who is in the “retail” sector must pay social charges at a rate of 13.10%. These peak at 22.5% for the “liberal professions.” However, self-employed workers do not charge VAT because they are not under subject to the statutory VAT regime. When issuing an invoice, therefore, there is no difference between the amounts excluding and including taxes.
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Professional services company (“entreprise individuelle” in France)
A professional services company pays taxes and social security charges on its profits. The amount due therefore depends on the value of the profit that it earns. In addition, it is important to understand that professional services companies are subject to VAT. However, there are two possible options:
In the USA
In the United States, freelancers (“self employed persons”) are subject to a specific social security regime and must pay a specific tax which amounts to 25-30% of their annual turnover.
In summary, therefore, setting your rates means considering the tax and social security charges that you will have to pay each year.
Useful billing software
There’s no doubt that billing software is an essential tool for every single freelancer, no matter the field in which they work or their legal status. This software results in a substantial time saving and provides a high-level overview of the entire business. With a range of different features, they allow you to account for the social security charges and taxes that apply to each legal status, offer special promotions to your clients, and automate the process of sending out quotations. As such, we have put together an overview of billing software products, genuine powerhouses of competitiveness and efficiency, in our dedicated article.
MonAE is one of those software packages. It is of interest because it is specifically designed for the self-employed, offering the ability to custom edit invoices that are due to be sent to overseas clients.
Online Invoices is particularly valuable for managing invoices to be sent all over the world. It is a complete, free, software package, even though there is also a chargeable version.
Invoicera is the third online billing platform that we recommend and it, too, is aimed at issuing invoices to clients of all nationalities.
Obtain the support of an accounting service
It is in no way mandatory to use the services of an accountant if you are self employed. Nevertheless, it is recommended that you do seek this assistance, especially when just starting out. If, on the other hand, you are the founder of an EURL (entreprise unipersonnelle à responsabilité limitée = one person limited liability business) or SARL (société à responsabilité limitée = limited liability corporation), with more complex management requirements, the help of an expert is essential, at least occasionally. Preparing the annual accounts, for example, is far from straightforward and mistakes can turn out to be very expensive.
A wide variety of tools is now available to help freelancers to bill their clients for the services that they provide. No matter your field of business, it is always worthwhile getting some support, whether that takes the form of an expert advisor or simply some computerized tools!