TPC Team
There are loads of reasons to start a portfolio career – freedom, flexibility, variety, travel, work-life balance.
But the financial and accounting side of portfolio work isn’t always straight forward. Diversity of projects and clients is brilliant when it comes to fuelling your passions and making each day different. But how does that translate into good financial health?
Some of you may be working across geographies. You may even have a part-time or full-time job alongside a thousand other things that you do.
In other words, all of our situations are different. But no matter what your career looks like, you need to make sure your finances are kept up-to-date and everything is done above board.
That’s why we recently teamed up with the experts at Crunch to host an in-depth Portfolio Career Accounting Clinic, diving into everything from record-keeping and IR35 to figuring out the right business structure.
Here’s a summary of all the brilliant advice from the Crunch team to help you build financial confidence and master the art of portfolio career accounting.
Why financial planning is important for portfolio professionals
When you work for yourself, you no longer have the comfort of a fixed income. The work fluctuates, which means the money does too. And that can be stressful.
Which is why it’s important to always look ahead. It helps to stop thinking about your finances in relation to your tax returns and start thinking of them as a business strategy.
There are two major factors that affect the financial wellbeing of the self-employed: security and choice. According to a recent survey from IPSE, portfolio professionals who are satisfied with their financial wellbeing are the ones who feel prepared to handle a major unexpected expense.
They’re the ones who are planning ahead.
Putting a solid accounting foundation in place not only gives you peace of mind, but it helps you:
Track your income and expenses accurately
Plan for growth and investment
Avoid compliance issues
Protect yourself legally and financially
In other words, treating your portfolio career like a business (because it is one) can be the difference between surviving and thriving.
So how do you build a solid accounting foundation?
It starts with good records. Think of record-keeping as your financial compass. Not only does it help you stay on the right side of the tax man, but it gives you clarity on how your career is performing. And it helps you plan for the quieter periods.
In the UK, poor record-keeping could land you with penalties of up to £3,000. But when you keep your financial records organised, you’re able to:
Track expenses with precision
Monitor profitability across different roles or clients
Be ready in the event of a tax investigation
💡 PRO TIP
Go digital. Tools like Crunch’s software, QuickBooks and Xero make it easy to log expenses, upload receipts and generate real-time reports. Some even allow for mileage tracking and client invoicing, so you can manage everything in one place.
Choosing the right business structure
One of the most common tax and accounting questions we come across in our community is: Should I operate as a sole trader or set up a limited company?
The answer depends on your goals, income level and appetite for admin. Let’s take a look at the pros and cons of each.
Limited company
PROS
CONS
Limited liability
Your personal assets are safeguarded
More tax efficient
You can accumulate profit for future years and extract funds through a salary and dividends
More credibility
A company often comes across as more professional
Way more admin
Tax returns are more complex and you have to do additional reporting
Your accounts are public
Anyone can access them
Sole trader
PROS
CONS
The simplicity
It’s easy to set up, accounting costs are lower and filing a self-assessment is straight forward
More financial privacy
Your tax info is confidential
Better take-home pay
You get to keep all the profits
Unlimited liability
Your personal assets are at risk if your business fails
Higher personal tax implications
You’re taxed on all profits, regardless of what you draw
When you’re just starting out, sole trader status is generally the easier option. But as your business grows, switching to a limited company might offer better flexibility and protection.
Why it’s important to keep an eye on cash flow
You might be profitable on paper, but if you can’t pay your bills, your business is at risk. Remember, cashflow is the lifeblood of your business, and it requires proactive, consistent management.
There are a few different forecasting techniques you can apply to stay on top of your cashflow:
Basic forecasting
Create a three-month rolling forecast and update it at least once a month. This will help you project income and expenses.
Advanced forecasting
This is the preferred method of the Crunch team. It’s when you track your cash flow daily, ensuring detailed transaction monitoring. It helps to build a 12-month forward projection.
The best way to ensure your cash flow is strong is to:
- Stay on top of invoicing - don’t delay in sending or chasing invoices
- Build a buffer for slow months or unexpected expenses
- Time your own payments strategically
- Be aware of seasonal income variations (the feast and famine months)
Consistency is key here. Find a rhythm and stick to it. And don’t put off looking at your finances until it’s too late. Of course, if you need extra help with this, reach out to a professional!
Understanding how IR35 affects you
IR35 is one of the most misunderstood areas for portfolio professionals, particularly those working through limited companies. It’s a piece of UK legislation designed to prevent disguised employment – but it can be a minefield.
Basically, if you work like an employee (even via a limited company), HMRC may still tax you like one.
To stay on the right side of the law, we recommend that you:
Work with multiple clients to demonstrate independence
Avoid contracts that stipulate working hours, supervision or exclusivity
Familiarise yourself with HMRC’s IR35 guidelines
If you’re unsure, it’s worth getting your contracts reviewed by an accountant or IR35 specialist. It could save you significant tax liability down the line.
💡 PRO TIP
Crunch’s Limited Company Premium package allows you to run your limited company outside IR35 contracts whilst providing access to Parasol’s umbrella services for contracts inside IR35. That means you can switch between the two and stay compliant with HMRC’s rules, no matter what you’re working on.
The four financial habits every portfolio professional should adopt
We understand that there’s a lot of information to unpack here. Managing your own finances is complicated – there’s a reason we trust the experts with our accounting! So don’t be afraid to lean on software and professional support, because there’s nothing worse than having the tax man knocking on your door.
Here are some of our top tips for building better financial habits:
Separate your business and personal finances
Set up a dedicated business account – it simplifies tax time and gives you clearer insight into your cash flow.
Use digital tools
Automate where you can: expense tracking, invoicing, bank feeds and tax calculations.
Understand your tax obligations
Know when you need to register for self-assessment, VAT or corporation tax. Don’t wait for a deadline to get informed.
Review your financial plan regularly
Make time each month or quarter to check in on your income, spending and savings. Even a 30-minute review can help you spot issues early.
Don’t forget: you’re the CFO of your career
Having a portfolio career means you’re not just a service provider – you’re the finance director. And while you don’t need to love spreadsheets to succeed, you do need to stay financially informed.
Think of these tips not as chores, but as tools that enable your professional independence. A bit of upfront effort in understanding your business finances can pay off in peace of mind, smarter decisions and long-term sustainability.
Got any other questions about taxes or accounting as a portfolio professional? Make sure to post them in our activity feed. And feel free to reach out to Crunch directly with any finance questions you have!
Want to catch up on Crunch’s webinar?
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Think this sounds like the right path for you? Come along to our monthly Community Welcome Call for new members to find out what a portfolio career could look like and how The Portfolio Collective can help you take those first steps towards professional success – and don’t forget to connect with our community!
