Going freelance...

bobins

Hi there,

I work as an artist in the visual effects industry and am currently in full time employment.. Over the next few months I plan to leave my current position and start working on shorter term contracts on a freelance basis for various studios / companies around London and the UK..

From what I gather I will be paid on a daily work rate at the end of each month or the end of the contract and will have to take care of my own taxes and NI contributions etc..

I am slightly clueless when it comes to this sort of thing so have a few questions that are probably going to have really obvious answers

Is it best to open a different bank account for anything to do with freelancing or can I just use my personally current account to be paid into etc?

Should I be putting a chuck of what I get paid away in a separate account every month for covering the tax bill at the end of year? Any interest it earns me is a bonus I guess?

Finally, am I entitled to put a few things through as expenses? Travel costs, Hotels, Mobile Phone bills, Food etc?

Thank you so much!

John_Pierpoint

You need to talk to someone else who works in the same business.
I know someone who does a job very like what you seem to be proposing, though half the time she works from her front room creating proposals for what should be done.

Accountants are business men like any other, they want your business - you sound like you need to get on with your business and not worry about the accounting /tax aspects BUT if you know something of the ropes BEFORE you go shopping for an accountant, you should start on an equal footing.

John_Pierpoint

I think what I am trying to say is:
As you will be working for the government for a third of your time (and by the time you added on indirect taxes you will find that "tax freedom day" is now in June) one hell of a lot of your hard earned ,money is going to end up in the hands of the tax man and his hand maiden the accountant.
So whether you like it or not, it makes sense to have some commercial tax knowledge of your own.
It is a bit like owning a car - do you just go along to the main agent and say "I know next to nothing about owning a car - can I sign a blank cheque and let you tell me what to do I've passed my driving test!
If you are serious about expanding your future business choosing a GOOD accountant and being able to work with them is vital.
Like employing any tradesman, picking out an entry in Yellow Pages is probably not the best way. Going on a taxation workshop organised by Business Link might be a much better way of planning you business future.
The world is full of people who have a talent at what they do, but lack the commercial "savy" to make a financial success of it.
http://www.telegraph.co.uk/finance/yourbusiness/7815195/Business-tax-freedom-day-today.html

bobins

Thanks for all the comments and suggestions, much appreciated!

isplumm

bobins wrote: »

Thanks for all the comments and suggestions, much appreciated!

Hi,

I run my own consultancy & have my own limited company - I work in IT, but your work is similar. Remember that if you do go down this route, you will need things like professional indemity insurance.

Also if you have your own limited company, I would pay yourself a low salary - say £7.5k a year & then everything else in dividends - more tax efficient.

One thing I would say - we are in a recession / new government - how is the contract market - might be better to stick in a permie role for the meantime?

If you do self-employed, get a good accountant, think about the flat rate VAT scheme if VAT registered.

Mark

isplumm

RJDAssociates wrote: »

Actual amount is £110 a week. That will ensure you avoid paying NI, but still receive the benefit of paying it.

Indeed - but remember that you can only pay the amount you earn into a pension.

Mark