Self employment - where to start?

lloyd

Don't be put off by going into wedding photography, my mate has just got into it and is doing well, if you're good you'll get work-it's like anything.

She did a photography degree and worked in a photographers for a year, she's bloody good (to my eyes) to be fair.

I'd repeat what's been said, networking is probably the most important aspect of starting any business or most kinds of ventures.

The old adage "it's not what you know...." is almost always bang on the money.

jellyroll

Great photos @raymondlin

ThePrettyDamned

This is all true. 

I was really hoping for information on actual *how* to do it, such as writing off expenses, tax, registering etc. The actual nuts and bolts so to speak. 

I think I'm good at photography - I am always improving, always critical of my work and always looking for new things to try, so I don't worry too much about that side of it. I will keep pushing for more experience though - perhaps I'll offer some friends an engagement shoot for free. They get nice photos, I get a beginning of a portfolio... 

ThePrettyDamned

@RaymondLin as ever, stunning photos. 

Budgie

ThePrettyDamned said:

This is all true. 

I was really hoping for information on actual *how* to do it, such as writing off expenses, tax, registering etc. The actual nuts and bolts so to speak. 

Just use an accountant for that. I think mine costs about £400 per year and it's money well spent as it frees up the time it takes to put accounts together, reduces the stress and they do it far better than you will be able to.

ThePrettyDamned

Budgie said:

ThePrettyDamned said:

This is all true. 

I was really hoping for information on actual *how* to do it, such as writing off expenses, tax, registering etc. The actual nuts and bolts so to speak. 

Just use an accountant for that. I think mine costs about £400 per year and it's money well spent as it frees up the time it takes to put accounts together, reduces the stress and they do it far better than you will be able to.

Everyone has said this - I'm definitely getting one. I didn't realise exactly how much they can do. 

Perhaps I'll build a small portfolio and see if I can arrange an initial discussion with an accountant. If anyone in the Cambridgeshire area has any recommendations, feel welcome to pm me. I suspect that would give me a good sense of direction and an idea of what needs doing - and doesn't. 

Top advice from all, as ever. 

lloyd

ThePrettyDamned said:

This is all true. 

I was really hoping for information on actual *how* to do it, such as writing off expenses, tax, registering etc. The actual nuts and bolts so to speak. 

I think I'm good at photography - I am always improving, always critical of my work and always looking for new things to try, so I don't worry too much about that side of it. I will keep pushing for more experience though - perhaps I'll offer some friends an engagement shoot for free. They get nice photos, I get a beginning of a portfolio... 

Go on te Gov website and spend some time on it, it's pretty clunky but has all the info you need.

Budgie

With the networking side, definitely use social media as much as you can. I was in a similar position some years back in a related field (painting) and Twitter has helped make lots of contacts and has been invaluable for what I do. Post really interesting content and follow accounts that you want to work with and it will come together over time. I use Twitter and Instagram mainly and they both work for getting your work out there. I imagine that a dedicated Facebook page would work well for wedding photography.

Fretwired

ThePrettyDamned said:

I'm really considering self employment - I'm very keen on photography, and currently work as a photographer (sadly temporary, but hoping to secure more short term contracts). I'm enjoying the work - all aspects of it - and I am quite good at it. 

So I'd like to spend my time scoring as many temporary contracts as I can (or last resort, any old job) while I save for equipment, build a portfolio and learn about starting a business.

Where would you start? Any books or courses to recommend? I have "beyond the lens" which is a good guide for photography as a business, but I want to get as much prep as possible. 

Where are you based?

I know a guy who did this two years ago - he has a wife, mortgage and two kids - and he now has a decent business doing weddings and family portraits (this pays the bills) - he's averaging 35 weddings a year at about £2K a wedding. He has built a reputation for doing things differently. I'm seeing him next week I could ask if he'd be happy to chat to you. He also teaches photography on the side.

http://www.rafeabrook.co.uk/

hywelg

How to do it....

Self Employed or limited company (I'm assuming a Partnership isn't on the cards). Self employed means lower accounting costs, but not as many tax breaks, depends on how big you're going to be. Limited Company if you're aiming big and plan on employing people and selling to corporate clients. Self Employed, you need to inform HMRC when you start (ideally before).

VAT or not VAT registered. If you're planning on working for private customers and your materials/overheads costs are a small proportion of your turnover, and you wont be turning over above the threshold, then Not VAT registered, it saves you a load of paperwork. If on the other hand you are planning on having mostly business clients then they dont care if you are VAT registered or not, in fact they probably prefer to to be registered as it implies you're a bigger player and can handle bigger contracts, plus you can claim all your VAT back for materials, etc.

Cash or Accrual accounting. Cash is way simpler, you dont spend what you dont have. You need a buffer though. Accrual requires proper Invoice handling and an accounting application to manage it. Both methods need a lot of work, don't ever let it get behind, always know exactly how much you have in the bank, what invoices are outstanding and what your liabilities are. If at all possible avoid Bank Loans but you might have to when starting out, they will make you jump through hoops with a business plan before giving you one. Bank charges can seem extortionate but shop around, I bank with Santander and its free business banking if you pay in more than £1k per month.

Capital Expenditure. Always remember, no matter what gear you want (or really do need!) you will only ever get back the rate of Income Tax you pay on the value of the expense, and even then only over 5 years (some capital expenses can be written off in the first year). If you're VAT registered you get that back of course, but if you sell it you have to pay the VAT on the sale, no matter who you sell it to.

Accountant. You will need one.  I would ask around. If you go self employed you will need much less from the accountant than if Ltd Co. There are lots of very well qualified accountants who work from home and charge a lot less than a company with big offices to pay for. I have one of those and he is available to answer questions at all times and doesn't charge very much at all. I used to have an accountant who charged me £100 a year, then he joined a pucka company and my account got passed to a junior and they charged me £250 pa. I now have another who works from home (on the recommendation of another self employed local) and he only charges £60 to file both my and my wifes Returns plus oversee my accounts and calculate my Class 4 and Tax payables, though to be fair I do do our own returns. Still very good value, indeed exceptional.

Marketing. You need logos, letterheads, compliment slipts, business cards, even possibly leaflets (depends on your target market). If you can, do it yourself do, if not pay someone. Learn what looks nice, what looks professional, what looks cool, etc. you can do this just by being observant and studying other peoples work. Advertising will depend on your target market. The very best advertising is word of mouth and is generally free, but you do have to earn it!!

Website. You will need one. If you pay someone to do it you will keep paying them, thats how they make their money. Learn HTML and CSS, build your own site and manage it yourself. There are lots of very professional plugins for the likes of Dreamweaver taht will work wonders for a site (Project 7 for example). When you start to get busy get a blog/FB, but only when you have interesting stuff to add, there's nothing worse than a blog with nothing on it.

Shared expenses. If you are working from home as a one man operations there will be lots of things that you will use for the business and for personal use. Your accountant will advise you how to apportion value/cost. Your car for example. When you start working you will have to record every journey and attribute it to work or personal. This will form the basis for how all costs relative to the car will be apportioned when you do your accounts, but before this you must log every receipt relating to the car as a business expense, to be later reduced when you fill in a TAx Return, the personal use portion will be re-categorised as Drawings. Same for Heating, Lighting etc. Dont be too keen to claim rates as an expense as it is possible you might create problems relating to operating a business from home (planning approval, business rates etc), seek advice before doing so.

Fretwired

Download this guide to freelancing .. I wrote the original .. ;-)

https://www.ipse.co.uk/sites/default/files/documents/guides/Guide-to-Freelancing-v1.pdf

ThePrettyDamned

I need an accountant... 

seriously, thanks guys - tons of info. 

RaymondLin

Also think about setting up a business account, will help to keep things tidy on the financial side...I don't and it can get confusing at times and make end of year accounting more laborious.

jaytmon

Something else that I had considered until recently - the default thinking can be to keep profits as low as possible and write off as much as can be legitimately done as expenses etc. All well and good unless you decide to apply for a mortgage and realise your meagre earnings that, whilst keeping tax to a minimum, basically means you can only afford a secondhand caravan at best! (Extreme but hopefully you get the picture). 

hywelg

Yes, absolutely separate your finances or you will end up in the mire. Always consider what an HRMC investigation would require of you, keep accurate records of all your ins and outs. Treat incoming cash as if it were a cheque, pay it in to a bank and theres a trail so you can attribute it to a source. If you just put it into a cash tin chances are you will forget to document it and if HMRC find it they will assume youve done the same thing 100 times. Guilty until proven innocent is the HMRC motto.

Fretwired

If you get an accountant make sure they offer tax investigation insurance. Not all accountants are tax experts or have a tax expert in their firm. You need an accountant who is a CTA. Tax investigation insurance costs about £30 a year and will cover you for the costs of defending an investigation. A basic investigation could cost £3K. HMRC are staffed by idiots. My accountant has fought quite a few claims from HMRC and hasn't lost one yet.

Look at joining IPSE - membership gives you loads of benefits.

RaymondLin

jaytmon said:

Something else that I had considered until recently - the default thinking can be to keep profits as low as possible and write off as much as can be legitimately done as expenses etc. All well and good unless you decide to apply for a mortgage and realise your meagre earnings that, whilst keeping tax to a minimum, basically means you can only afford a secondhand caravan at best! (Extreme but hopefully you get the picture). 

I take 99% of payments by BACS and rarely by cheque and only once have I ever had cash.  BACS is easier and if a customer asks if they get a discount with cash, I just politely decline.

hywelg

RaymondLin said:

I take 99% of payments by BACS and rarely by cheque and only once have I ever had cash.  BACS is easier and if a customer asks if they get a discount with cash, I just politely decline.

Me too, its a very sticky road to go down, don't do it, you have to extremely clever and absolutely on the ball with your accounts to be able to get away with it. HMRC, if they investigate, will find any backhand transactions very easily, the time you spend covering your back would be better spent earning more!!! Mind you there are quite a few people who are a thick as pigshit and still get away with it, but only by luck. So if you like a little risk in your life ........

BACS not only routes things properly, if you run accounting software it will also do your accounts for you, by downloading your bank transactions, you then import them into the accounts software.

RaymondLin

hywelg said:

RaymondLin said:

I take 99% of payments by BACS and rarely by cheque and only once have I ever had cash.  BACS is easier and if a customer asks if they get a discount with cash, I just politely decline.

Me too, its a very sticky road to go down, don't do it, you have to extremely clever and absolutely on the ball with your accounts to be able to get away with it. HMRC, if they investigate, will find any backhand transactions very easily, the time you spend covering your back would be better spent earning more!!! Mind you there are quite a few people who are a thick as pigshit and still get away with it, but only by luck. So if you like a little risk in your life ........

BACS not only routes things properly, if you run accounting software it will also do your accounts for you, by downloading your bank transactions, you then import them into the accounts software.

What accounting software do you recommend?

At the moment I do a manual spreadsheet that I pull all Palpal, credit cards, BACs into which takes me a couple of days.

Fretwired

Zero is the current hot shot accounting package. Excellent support and used by accountants.