If you’re a freelancer working with international clients (Upwork, direct clients, agencies abroad), your accounting is slightly more advanced because you deal with:
- Foreign currencies (USD, EUR, etc.)
- Exchange rate differences
- Platform and transfer fees
👉 This guide helps you keep your reports accurate even when currency values change.
✅ Step 1: Set Up Your Income Accounts
Service Income (Use Design Income)
Your main income account.
Why you need it:
- Tracks all earnings from clients
- Used in Profit & Loss reports
👉 Rename:
- Design Income → Service Income / Freelance Income
Other Income (Optional)
Examples:
- Bonuses
- Referral income
Why it’s optional:
- Keeps your main service income clean
✅ Step 2: Set Up Your Asset Accounts
Bank
Your local bank (PHP).
Why you need it:
- Tracks actual money you can use
- Matches your real withdrawals
Foreign Account / Wallet (Optional)
(You can use another Bank account)
Examples:
- PayPal
- Wise
- Payoneer
Why you need it:
- Tracks money before conversion to PHP
- Helps separate USD balance vs PHP balance
Accounts Receivable
Money clients owe you.
Why you need it:
- Tracks unpaid invoices
- Important for remote work
Undeposited Funds (Optional)
Why you need it:
- Helps match platform payouts
✅ Step 3: Set Up Your Expense Accounts
Stripe Fee / Platform Fees
Examples:
- Upwork fees
- PayPal fees
- Wise transfer fees
Why you need it:
- Shows the real cost of getting paid
👉 Very important—fees can be significant.
Bank Charges
Why you need it:
- Tracks local bank deductions
Office / Software Expenses
Examples:
- Tools like Notion, Slack, Adobe
Internet / Telephone Expenses
Why you need it:
- Essential for remote work
✅ Step 4: Set Up Foreign Exchange Accounts
This is what makes this setup different.
Gain/Loss on Foreign Exchange
What it means:
- The difference caused by exchange rate changes
Example:
- You invoice $1,000
- At invoice date = ₱55,000
- When paid = ₱56,000
👉 You gained ₱1,000 due to exchange rate
Why you need it:
- Keeps your income accurate
- Tracks currency impact separately
Unrealized Gain/Loss on Foreign Exchange (Optional)
What it means:
- Value change of money you haven’t converted yet
Why it’s optional:
- More advanced
- Not required for most freelancers
✅ Step 5: Set Up Your Liability Accounts
Accounts Payable
Money you owe.
Why you need it:
- Tracks unpaid tools or services
Income Tax Payable
Why you need it:
- Tracks taxes owed to BIR
- Helps you prepare for filing
❌ Accounts You Usually DON’T Need (And Why)
Inventory / COGS
Why not applicable:
- You sell services, not products
Manufacturing Accounts
Why not applicable:
- Not a production business
Sales Tax
Why not applicable:
- Most freelancers don’t charge this
Complex Liability Accounts
Why not applicable:
- Not needed for simple setups
⚙️ Optional Advanced (Use Only If Needed)
- Bad Debt → if clients don’t pay
- Unearned Revenue → if you get retainers
- Interest Expenses → if you have loans
🚀 Simple Setup Summary
If you want a clean international freelancer setup, start with:
Income
- Service Income
Assets
- Bank
- Foreign Wallet (optional)
- Accounts Receivable
Expenses
- Platform Fees
- Bank Charges
- Software / Internet
Other
- Gain/Loss on Foreign Exchange
✨ Final Tip
For international freelancers:
Your real income is not just what you earn—it’s what you receive after fees and exchange rates.
Most common mistakes:
- Ignoring exchange rate differences
- Not tracking platform fees
- Mixing USD and PHP values
👉 This leads to inaccurate income reporting.