The session that I attended today was called 'How to Become Self Employed' and featured a guest speaker called Russell Smith, a self employed accountant from Leeds who specifically works with creative industry professionals. Due to his experience, Russell had valuable insights to offer us on both how to become self employed and how to manage your accounts when you do.
Some of the main topics that covered in the session are listed below;
SUBJECTS COVERED -
- Becoming self employed.
- Registering as a company.
- Calculating profit.
- Income & expenses.
- Records - What needs keeping.
- Paying Tax.
The session presented me with so much relevant information and simultaneously inspired me on many levels. Throughout the talk I recorded any important information I thought could be of use or have relevance to my future career decisions.
Notes taken during the session are displayed below;
IMPORTNAT POINTS -
- Becoming self employed is easy - help is available for the newly self employed by calling 0845 915 4515.
- Newly self employed people get a National Insurance Class 2 tax code.
- You can be self employed and employed by another employer at the same time.
- Becoming self employed is easy but leaves you susceptible to personal bankruptcy - becoming a limited company is much more complicated and expensive but protects you from becoming personally bankrupted.
- One route is to initially be self employed then list yourself as a limited company as you grow.
- Limited companies need accountants - Yearly fees are around £3-500.
- When becoming self employed split your money into accounts - Personal and Business.
- Business expenses cannot be claimed on taking clients out for meals.
- Fill in the note sections on tax returns, it looks like you are trying to disclose more and helps to avoid becoming investigated by HM Revenue & Customs.
- Profit = Income - Expenses.
- Businesses are taxed on profit not income when you are self employed so claim as much as you can on your expenses!
- Grant based income is not usually taxed.
- Changingcourse.com - useful information on becoming self employed.
- Record everything, Keep everything for tax returns.
- If you have expenses before starting the business that are then brought into the business you can claim on it under expenses.
- When you care self employed you must remember to keep enough money to pay the tax man - By keeping 18% of the income all tax should be covered + give you a little bonus.
- Some business owners use three bank accounts - Personal, Business and Tax.
- Vat is only relevant after £81000.
- Making your payment terms clear and ensuring they are understood by the client makes collecting payment much easier.
- Profit does not always mean cash if you are not collecting it from your clients. You could earn £20000 but it may not be in your account until the clients pay - Problems such as this can lead to bankruptcy.
- Manage finances on the worst case scenario.
- A fine can be given if you start a business and don't register it within the first three months of operating.
- Tax year starts on the 5th of April - Tax paid on the 31st of Jan of the following year.
- If you earn over £13000 in your first year you will be taxed a year and a halves worth of tax.
- Pensions - we all get a state one, but this is hardly enough to survive - As soon as you can start paying into your pension do it as there are many benefits later down the line.
- Grants and funding can be gained from wealthy people with cash to spare.
- Common problems with becoming self employed - Cash Management - Caught out by tax - Unable to make enough money.
Russell finished the session by enlightening us with his 10 business tips, all of which are listed below -
10 BUSINESS TIPS -
- Don't read the papers and watch the news everyday - they are depressing and you need to be very positive.
- Surround yourself with positivity and experienced people.
- Who customers buy from is more important than what they buy - Sell yourself, sell your company.
- Get good at sales and marketing as quick as you can.
- Don't undervalue yourself, don't try to be the cheapest, get your prices right.
- Pay attention to your attitudes towards money.
- Keep on top of your costs - always consider how you can make more money.
- Read, listen and learn as much about business as you can.
- Network everywhere you go.
- Get a great accountant who understands the creative sector.
Overall, I found the session invaluable, it presented me with a huge body of relevant information all of which had direct relevance to both starting a business and progressing into the creative industry. The session was engaging, inspirational and is something I would recommend to anyone thinking of becoming self employed.