Yesterday and today have been largely spent doing accounts. Three months worth of VAT return and my tax return for 2010/2011 (year 3 as a freelance this time around). I feel pretty confident that I have got the numbers right thanks to a combination of decent invoicing software (Billings), some easy to use spreadsheets (Numbers) and a very nice calculator that was a free gift from Canon a few years ago (thanks Canon UK). All of this software and hardware is great but the one piece of advice that I would give to anyone starting out as a freelancer here in the United Kingdom is to book yourself onto as many of the free workshops and seminars that Her Majesty’s Revenue and Customs lay on as you can.
When I was having a month off between leaving my staff job and starting out as a freelancer I managed to get myself onto three of these very handy courses. The first was led by a former Tax Inspector and the theme of the seminar could have been subtitled “how to avoid getting a visit from one of my former colleagues”. The other people on the course were a couple of cab drivers, eBay traders, a golf teacher, a musician and a freelance administrator. Put simply, it was a half day course on the basics of being self-employed:
- What records to keep
- How to invoice people legally
- What you could set against tax
- What you couldn’t set against tax
- The pros and cons of using a bookkeeper
- What an accountant can do for you
A very useful day and at the end of it we were given the business card of the HMRC seminar leader so that we could ask him follow-up questions.
The second course was all about VAT and VAT registration. If you aren’t from the EU and you are wondering what VAT is, well it is Value Added Tax – similar to US sales tax I guess. The seminar leader on this one went through the advantages and disadvantages of registering voluntarily for people whose business turnover is below the limit at which you have to become registered as well as the various different schemes for calculating how much you have to pay the Government four times a year. There were people on the course who had no intention of registering unless that were forced to but the course is still useful because we all pay VAT on everything we buy and knowing how the system works is a big advantage.
The final course that I did was about how to fill in your annual tax return. These forms are legendarily complex and half a day spent with an expert gives you a fair amount of confidence that you can do it. Of course the other angle is that knowing about the form makes it easier to deal with an accountant if you use one. Again, the various options are covered and I left that course wanting to use the on-line systems for everything I do with HMRC.
You can get a couple of the course handouts here and you can book courses at your local tax centre on the telephone. Three half-days doesn’t make you a bookkeeper or an accountant but what they do provide is a sound basic grounding from which it is a lot easier to move forward. The vast majority of photographers that I know are, or have been, self-employed and almost all of them would have benefited from doing these seminars.