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I have been doing the odd portrait shoot for family, friends and friends of friends for almost a year now. I have never charged anyone, always been happy with gaining experience and building up a portfolio. I have now got to the stage where every shoot leads to a request for another and people offering to pay me. So I think its time for me to take things a step further.
At the moment, I want to keep this to friends and friends of friends, but I don't want to fall foul of the tax man! I have researched setting up as a sole trader, registering as self employed and filling out a SA tax form. That all seams fairly straight forward.
What I'm struggling with is keeping records. If I do a shoot, and someone pays me, apart from how much they pay, what should I keep a record of ? Any book keeping software I look at seems far to complicated for what I'm going to be doing. Its really going to be no more than a paid hobby for now! I'll be sup prised if I do more than 3 or 4 shoots a year.
Any help would be greatly appreciated.
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All you need to do at your stage by the sound of it is to declare your earnings on your tax form or contact your tax office to tell them of your extra earnings. They will either take it off on your PAYE or ask for the payment by a given date. I'm assuming here that you have other earnings at the moment which take you above the personal tax allowance level of £8,105pa.
Quite honestly, it doesn't sound to me as if you will really be paid as such - more that you are getting a reimbursement on your costs. If you are not earning from any other source, it sounds like you will be unlikely to reach your tax free allowance anyway.
But, if paid it is, then apart from the payment, you should keep records of all your outgoings, cost of transport to the shoot and parking, for example. Maintenance costs on your cameras, replacement costs. It all gets quite complicated - and you must have the receipts.
If I were you and you are really concerned, I would go and see an accountant. Depending on earnings and other things, you may be able to go on schedule D tax. That enables you to claim capital allowances on equipment, for example. Accountants fees are tax allowable too.
Note, though, that all of the advice from people here (like me) will be inexpert and potentially misleading (unless there is a qualified accountant on the forum willing to work for nothing).
Following wrong advice is not an excuse for tax offences as far as the taxman is concerned.
You can also talk to your tax office. They can be very helpful, though in my own dealings with them over the years I have found their guidance less than 100% accurate and I have always had my accounts done properly and professionally. It has saved me huge amounts of money in the long run.
Agree with Lemmy that if you are earning enough then get an accountant at the end of the year to do them for you, but if not do them yourself and use the tax office for all the advice you can get, I find them quite ok.
Other than that again as Lemmy says just keep a record of all your i/c's and o/g's and receipts and try to keep them in order as they go in/out rather than trying to sort them out at the end of the year.
I turned prof a couple of months ago and going to do it all myself.
Hope it goes well.
Apart from details of your income, you need to keep a careful record of ALL the expenditure you incur. That will include all direct expenditure related to the shoots - such as travel, printing, meals, etc - but also a proportion of general expenditure related to your photography. Normally the taxman will accept any apportionment that looks logical and can be evidenced. An easy one for someone freelancing and also having a hobby would be shutter count. Let's say that, in a year, you made 12,000 exposures and 1000 of those were on "paid" shoots. Then it would be reasonable to charge one-twelfth of all your photographic expenditure, including depreciation on "capital" items, against your income.
If proprietary book-keeping software seems like overkill, just run up a simple Excel spreadsheet to maintain a record of income and expenditure.
Thanks for the advice folks.
I am currently a stay at home Dad with 3 kids, One secondary school, one primary and one at home, so I have no other income. The majority (if not all) of my shoots will be at my home, so I probably will not have to much expenditure. I'll be very sup prised if I earn anywhere near enough to meet the tax threshold anyway. Has anyone used 'iWork numbers' for Mac ? Is it suitable for running a (Very) small business?
Also, at my sort of level, is it a good ideal to get public liability insurance ? My thoughts are that it probably is, to be on the safe side!
HMRC run useful (free) courses for the newly self-employed. I attended one myself, when I went freelance. You can book a course by contacting the appropriate HMRC Business Support Team - see here.
Also, there's some basic online info here.
In a former life, I used to be a VAT man .
I've seen all sorts of bookkeeping systems (and the second sets, `just for the taxman' ), but in the end, the simplest are the best. Most sole-props have little time to spend inputting data to a piece of software or spreadsheet. As a first step I would suggest you buy a simple cash book.
On the left hand side is your income (e.g. cheques or cash or bank payments received, by date and with a simple consecutive reference number as a reference point. If you have hard copy of anything, cross refer it to that number.
On the right hand side, list your outgoings by date and break it down in columns to explain what it refers to e.g. equipment, printing, travel etc.
At the end of each period, you just total it all up and then cross reference it to your bank statements. It might help if you have a separate account for the photography work, otherwise the taxman has an `in' to your private bank statements. again number each entry and cross refer it to a voucher or receipt.
keep everything for at least 6yrs.
Part-time photo businesses have a habit of growing without the owner realising.
I'd say you must keep good records if you ever advertise for work or cover events that are in the public domain such as weddings. One member of our old camera club was caught out when he met the VAT man who was a guest at the wedding that he photographed the day after an inspection visit.
HMRC are on the lookout for people who run a business "on the black" so if you have any doubt, register. You can claim for all sorts of things and, especially in the early years, you can even put business losses against any earnings.
Simple accounting software is cheap and easy to use. More important, it gives you an overview and allows to to set realistic prices. One recent delegate at one of our business survival courses thought that putting 10% on top of the lab price would make him a profit when it didn't even cover the postage costs. I still use Quicken for my business because it allows me to put expenditure in categories and print a report. I don't need anything fancy.
Public liability insurance is very wise even for one single job because we never know when somebody will get hurt and blame it on us. Damages claims can be huge and your household PL insurance won't cover when you're doing paid work. Insurance companies will look very closely when there's a big claim, so fiddling isn't an option.
Declare to the tax people and you will probably just have to fill out a 'short' tax form. Bascially 2 boxes. One for earnings and one for spending. I use a book from WHSmiths, quite simple and a small notebook for my mileage. (I just claim the 45p/mile).
Your house insurance will not cover your kit so you will require separate insurancYou are a professional.e which will come with public liability.
If you are likely to earn under £5000 (and it seams so) you can get an exemption for national insurance.
Once you have these set up you start to think differently.
Thanks everyone. That's all really useful.
?? Care to expand on that mrgoatsmilk ?
Goatsmilk's bookmarking the thread so he can come back to it as he's found it useful for his own ends
On a few points:
- Household insurance will want to know if you are running a business from home (don't know why though? - anyone?...) and you should tell them you are, no matter how small.
- Old Tom's idea is spot on for the short term. If things pick up though, speak to an accountant as they will save you thousands of pounds in the long run.
- PI and PL insurance can be got for under £400, though you may have to include your buildings value in with that if you're working entirely from home.
Doh ! Sorry Mr mrgoatsmilk thanks Andy
Tax Calc personal at £25.59 is brilliant. You answer the questions and fill in the appropriate amounts (PAYE and self employed) it then calculates your tax liability and you can print out or file directly on line. Whatever you do don't just hand a load of receipts and invoiced to an accountant to sort out, it will cost you a fortune.
I use MYOB accounts software and it is easy to set up and use. Unfortunately they were brought out by a bigger software company and it is no longer produced. This is okay but at some date in the future I'll have to get another accounts package as MYOB won't work on the latest Windows software.
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