A self-employed hours invoice is for professionals, such as freelancers, that charge their clients on an hourly basis for their services. If using logging or time-tracking software, generate a report and attach it to the invoice for additional documentation.
Tracking Self-Employed Hours
Professionals choosing to charge for their services by the hour is not a new phenomenon. Attorneys have been using this method for many years, and charging by the hour is a standard for most of today’s lawyers.
Up until recently, tracking the hours worked by a self-employed person was no easy task. Contractors would report their hours, and clients would have to trust that those hours were indeed worked. But partly as a result of a growing freelance market, there are now plenty of tools to help clients effectively track the productivity and hours worked by their freelancers.
Tracking hours of a self-employed person can only be done for those that work on their computer. For other types of self-employed professionals, such as carpenters and painters, it’s typically only possible to track hours if they are working on-site and can be observed.
How to Keep Track of Work Hours
Freelance websites such as Upwork offer freelancers the ability to toggle on and off log time while working for clients. While logging is turned on, the software takes 6 screen captures per hour, which allows clients to see the freelancer working in action.
Clockify – Computer software that allows self-employed professionals to earn trust with clients by showing them a detailed breakdown of their work and the time spent.
Self-Employed Hourly Rate and Taxes
A self-employed person’s hourly rate is calculated based on their area of expertise, experience, and the market’s demand. For freelancers, the higher the number and quality of reviews received, the more they can charge for their services as time goes on. Self-employed professions are able to charge as much as the people in the market are willing to pay.
After receiving payment from a client, the self-employed professional is responsible for paying their own taxes. The self-employment tax rate is 15.3%, which is a result of Social Security and Medicare taxes. Wages up to $128,400 are subject to this tax rate.
Depending on the state where the self-employed individual works, additional taxes may apply. Self-employed professionals must file a Schedule SE (Form 1040) with the IRS every year.