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Looking at doing photography business part time tax problems?


Im looking at doing weddings and portraits on the side of my two other jobs, one is free lance photography for car dealerships and the other is retail work, how to i got about making sure I'm pay correct tax if doing free lance weddings ect?
scottishphototours 17 2.6k 2
17 Jun 2014 4:52PM
If you work for an employer then your wages paid to you will taxed as you earn (PAYE) and so this should not be an issue.

The money you make from photography will be have to be collated as a proper profit and loss report (P&L) at the end of the tax year, and then you'll have to fill in a separate tax form every year, declaring your earnings and how much tax you're paying to HMRC. On top of that, if you're making a profit and paying tax on that then HMRC will expect you to pay some of NEXT years tax you owe too (they recommend you pay 50% of your projected tax owed....).

However, there are MANY benefits to be had for your business if you contact an accountant and get your business off on the right footing. Discuss this with him/her.

By the way, have you declared your status as a "self-employed" person to HMRC yet? - you should do so within 3 months of starting your business and failure to do so can lead to all sorts of problems.....you should also be paying a self employed National Insurance contribution as well as the NI contributions made by your employer.

Hope this helps.

Andy
I'm hired by manheim free lance photography company, I'm assuming they sort my tax? I pay normal national insurance and tax in my retail job.
thewilliam 12 6.1k
17 Jun 2014 5:35PM
You need to check your contract.

Freelances are paid a fee rather than wages and most contracts state that freelances are responsible for paying their own tax and NI. Most have a clause that states that you're a contractor rather than an employee so you don't have any rights under the employment protection legislation.
Ah thanks i will check that when my contract arrives
keithh 17 25.8k 33 Wallis And Futuna
17 Jun 2014 6:51PM
Manheim advertise for self employed photographers. They pay you your commission and everything else is down to you.
Sooty_1 10 1.5k 221 United Kingdom
17 Jun 2014 11:29PM
The best people to talk to are.......believe it or not, HMRC! I've always had good advice from them direct.

Generally, if contracted by someone else, you will have to manage your own tax and NI. Being self-employed gives you the freedom in exchange for no responsibility on behalf of the fee payer. No holiday/sick pay etc

You will have your annual personal allowance (10000 or so) on which you pay no tax, then over that you pay 20% until you reach the higher rate of tax (32000 ish). Depending on which job pays what, and how you wish to allocate your allowance, you normally have a "primary income" on which your allowance is based, then other jobs at base rate 20%.

For example:
if you annually earn 20000 for one job and 5000 for a second, you will have your personal allowance on your first job, meaning you pay 20% of whatever you earn over that threshold (ie 20% of 10000, or 2000), and your second job taxed at base rate 20% (ie 20% of 5000, or 1000).
NI is taken from your primary wage, usually.

If you add another job, you will pay tax again at the base rate of 20%. The problem comes when you don't know exactly how much you will earn in the future if you don't get a regular wage. You have to estimate it and pay tax accordingly, the difference will be ironed out at the end of the year. Thus you can either over estimate, pay too much tax and get a rebate, or under estimate and get stung with a bill at the end of the year (better in your bank than theirs, perhaps?). Either way, if you know how much you are likely to earn, you can set aside enough.

The good thing is that if you are self employed, you can write some expenses off against tax...eg to replace a worn out camera, if you use it for your business, for example.

The hmrc.gov.uk site is pretty self explanatory.

Nick
mikehit 11 8.0k 13 United Kingdom
18 Jun 2014 8:51AM
I agree with Nick - the HMRC may have severe problems with working out what you need to pay but their advice is first rate, and the guidance documents on their websites have improved immensely over the last few years.
You will need to look at tax self-assessment and also VAT liabilities - and sometimes it seems from my (limited) experience that VAT shortfalls are treated far more seriously than tax/NI liabilities so set your priorities!!
puertouk 9 1.1k 17 United Kingdom
18 Jun 2014 10:29AM
My advise, get yourself a good accountant. He/she will give you all the advice you need on being self employed and what you need to do. Your accountant will go through all your expenditure and what you can claim against your tax bill. You'd be surprised what you can claim. A good accountant can save you a fortune in tax, so don't settle for the first one you come across. Ask other business people about their accountants. Tax is a complicated thing, get an expert to sort it out.
mikehit 11 8.0k 13 United Kingdom
18 Jun 2014 12:41PM
I have become quite cynical about accountants over the years as most of them see their role as merely rubber stamping the numbers you give them and very few offer worthwhile advice - those that do, often charge for it. As a result they are often not providing enough returns to warrant hiring them in the first place (their fees should come out of the tax savings they get you).
I am sure there are good accountants out there offering an excellent service; the problem is finding them.


Quote:A good accountant can save you a fortune in tax

At the level Alice seems to be, I am not sure there is enough tax on which to save 'a fortune'. For simple business structures I think the HMRC guidance documents are good enough.
KevSB 17 1.5k 5 United Kingdom
18 Jun 2014 1:46PM
To start with start a book/ledger, recording every outgoing related to the photography, and Incomings from the agency/Photography(Keep bills and receipts plus payment notes), at the end of the year you should get a self employed form to fill in,(As stated above, inform HMRS that you are self employed), which you transfer those year end figures too, this will make it clear how much you owe or are owed. will receive a p60 from work at the same time which you also transfer the figures

Its not as hard as you think and at the level you will be doing certainly not wise to employ an accountant unless again like above becomes your main source of income. at its simplest you fill in 5 boxes with these figures, sign and send off or do online and that's it.

Just keep an itemised ledger


I
Well I've informed HMRS about being self employed, i spoke to manheim who said i have to produce my own invoices every month for them, however working out both jobs combined i doubt i will be paid enough to pay tax but will keep a record to make sure.
Evertonian 8 729 England
18 Jun 2014 3:39PM
You will need to fill in a self assessment document or else have your accountant do it on your behalf. An accountant will be an enormous help as there are lots of allowances you will be permitted to apply to your work like new equipment purchases on a depreciating scale dependent upon price, over a number of years, (Cameras, computer , software etc) Secretarial help, perhaps a family member, husband preferably then the cash stays within the family, travel mileage for your car, you can even claim for part of your house and its utility bills - but take care with this one (accountant advice good again here) because it may well become classed as business premises then.
Some people will recommend you just take the cash but remember if you are caught the fines can become rather large. If you want to be able to sleep at night knowing everything is above board, get an economic accountant and ensure that the fees are reasonable before you employ them.
Most of all make sure you enjoy your work, I loved working for myself and the rewards were certainly there, time wise and financially as well. when I say time wise, I remember with one rather large job, I would start working in my office in my jimjams and dressing gown. I could get a day's work in before I had woken up!!!!
thewilliam 12 6.1k
18 Jun 2014 5:18PM
Any reasonably numerate person should be able to cope with a tax form. I have the advantage of a engineering degree.

That said, Einstein couldn't cope with his tax affairs!
mikehit 11 8.0k 13 United Kingdom
18 Jun 2014 6:02PM

Quote:You will need to fill in a self assessment document or else have your accountant do it on your behalf. An accountant will be an enormous help as there are lots of allowances you will be permitted to apply to your work like new equipment purchases on a depreciating scale dependent upon price, over a number of years, (Cameras, computer , software etc) Secretarial help, perhaps a family member, husband preferably then the cash stays within the family, travel mileage for your car, you can even claim for part of your house and its utility bills - but take care with this one (accountant advice good again here) because it may well become classed as business premises then.
Some people will recommend you just take the cash but remember if you are caught the fines can become rather large. If you want to be able to sleep at night knowing everything is above board, get an economic accountant and ensure that the fees are reasonable before you employ them.
Most of all make sure you enjoy your work, I loved working for myself and the rewards were certainly there, time wise and financially as well. when I say time wise, I remember with one rather large job, I would start working in my office in my jimjams and dressing gown. I could get a day's work in before I had woken up!!!!



Let's do some maths

Suppose an accountant costs 500 and you are happy to pay them half of the tax they save you. So they need to save you 1,000 in tax.
In a simple business model, let's say the saving is 10% of your total tax payable. So you total tax payable = 10,000
Assume that tax is 20% of income so you would have to be earning 50,000 just to make it worthwhile employing an accountant. At your level of income you don't even need to have an accountant sign off your books.

With a simple structure like you have, the forms and everything are really easy to follow (I know - I do self assessment every year) and they even tell you what you can write off and what you can't. Given your level of income the accountant would have to be saving you some 30% of your tax liability and that is unlikely.

There are reasons for hiring an accountant but getting them to save you tax is not one of them.

[I know the above numbers are simplistic, but they illustrate how you need to break these costs down in the same way you break down any overhead]

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