How much to charge, and how to create a sole trader invoice

Freelancing is an adventure. You can set your own hours, create custom service packages and work from any location. Rates and accounting are tricky, though. Many self-employed people find it hard to determine their own wages, and find sole trader invoices confusing.

We’ll begin this guide with a brief list of average salaries in different fields, and then we’ll show you how to calculate your own salary. Finally, we’ll break down a standard sole trader invoice.

Deciding how much to charge can be one of the most difficult parts of setting up a freelance business. Are you asking too much, or too little? The following UK-centric freelance and vocational salaries are based on Glassdoor estimates, and on a 37.5-hour working week:

• Freelance accountants make an average of £37,106 a year, or £19.03 per hour.
• Freelance business consultants make an average of £42,612 a year, or £21.85 per hour.
• Freelance writers make an average of £23,768 a year, or £12.19 per hour.
• Freelance graphic designers make an average of £39,052 a year, or £20.03 per hour.
• Freelance programmers make an average of £53,054 a year, or £27.21 per hour.
• Freelance recruiters make an average of £31,579 a year, or £16.19 per hour.
• Freelance tutors make an average of £32,494 a year, or £16.66 per hour.
• Freelance physiotherapists make an average of £38,438 a year, or £19.71 per hour
• Self-employed plumbers make an average of £32,441 a year, or £16.64 per hour.
• Self-employed electricians make an average of £34,157 a year, or £17.52 per hour.
• Self-employed joiners make an average of £27,088 a year, or £13.89 per hour.

If you have a great track record and plenty of hands-on experience, you can charge more than someone new in your field. As you become more established, you can increase your rates. The amount you charge might also depend on where you live: you might make more in a large city than in a country setting, for instance.

You know the average salary for someone in your industry — but what about your salary? How much should you charge your clients? If you’re stuck, begin with the following questions:

1. How much do you want to earn per year? Review the average salary for someone in your profession and factor in experience to come up with a fair annual salary.
2. How many days a year do you want to work? Take annual leave and weekends into account.

Once you know how much you want to earn per year, you can calculate your day rate and decide if you want to charge by the hour, or by the project. Next, we’ll explore those options in a little more detail.

To calculate your day rate, take your newly determined yearly salary and divide it by the number of days you intend to work each year. Don’t forget to give yourself the equivalent of at least 28 days paid holiday per year. Here’s an example:

• John, a self-employed plumber, wants to pay himself £33,000 per year. Taking weekends and 28 days of holiday into account, John will work 225 days a year. His day rate is £146.67 (£33,000/225 working days).
• If John works a standard eight-hour work day, his ideal per-hour rate is £18.33.

Next, you need to decide if you’ll charge per hour, or per project. If you’re unsure, check out your competitors’ pricing structures. If they charge per project, consider doing the same thing to make it easier for potential clients to compare rates. 

If you decide to charge per project, don’t underestimate completion time. Consider unexpected complications, possible revisions and the complexity of the job before issuing a quote. 

Invoices have to include specific data in line with UK government regulations. Essential items include:

• Details about your business: Your business name, physical address, telephone number, email address and website.
• Details about your client: Your client’s name, physical address, telephone number and email address.
• A unique payment reference number: This number sits at the top of the invoice, and makes it easier to track.
• Main work-related dates: The invoice date, the project completion date and your payment deadline.
• An itemised breakdown: All the individual services you performed for your client. 
• VAT: If you have an annual turnover of more than £85,000, you’ll need to charge your clients VAT on top of your hourly or per-project rate.
• Payment information: Ways to pay you — your business bank details or your payment portal, for example.

Many self-employed people include a friendly note at the bottom of their invoices, too. This isn’t essential, but it can help you build a better relationship with your customer. If you do decide to write a note, make it short and to the point — something like “Thank you for your business!” or “Hope to work with you again soon” is ideal.

The benefits of being your own boss are too numerous to list — but self-employment is busy work. Searching for clients, completing projects and keeping track of accounts can feel overwhelming at the best of times. Why not take the pressure off with Countingup? 

A business current account and accounting software rolled into one, Countingup makes bookkeeping simple. Create comprehensive sole trader invoices in seconds, track payments and estimate tax — in the office or on the road. To find out more and sign up for a free trial, click here.