Thinking of self employment? Help!

iPanda

Hello everyone.

I'm not sure if this belongs here, so feel free to move or delete it. I just need some help!

For the past few months I have been on Jobseekers allouance, like a lot of other people trying to find a job. I am twenty years old and have only had one paying job, which was for a charity. I've done some charity work for free.

Seeing the jobs that were avalible, and the fact I couldn't get any of them despite trying, made me depressed.

I have had an idea of what I want to do for a career now, something I always enjoyed - photography. I have signed up for a local photography course - it's not a degree or anything, just training.

I'd really like to be able to learn the craft properly and then be able to support myself by providing portraits, family photoes, wedding photoes, marketing prints, etc. I have done a lot of investigation into how and pros and cons etc.

My question is to do with being self employed.

I have read up on what taxes you pay and how to pay them, but how can you even begin to pay them when you don't know what you'll be earning? I have no idea how many, if any, clients I will be able to have every month and thus how much I will earn. I don't know if I'll be able to get by, I don't even know if there is any help. Plus, It's unlikely to be the same every month.

I'm sure the job center offered tax credits and help when it comes to going it freelance or setting up small buisnesses but I don't know what to ask for or if that's being cut, like everything else...

Please help. Thank you!

DCFC79

For help on pricing look at what local firms charge to get some kind of idea

iPanda

DCFC79 wrote: »

For help on pricing look at what local firms charge to get some kind of idea

Thank you.

But I have looked round to find a fair price for every service I have the skill to offer. I've worked out averages and made up different package ideas for budgets and for people with more money to spend.

But that still doesn't tell me how many clients I'd get in one month compared to another, for example.

How long would I wait before filling out tax forms or registering as self employed to work it out?

I'm basically completely green when it comes to tax. xD I do not get it, and I can NOT afford a soliciter. xD

little_teapots

Have a look at the business link website, it's very clearcut and useful - you can make a task list of all the things you need to do.

If you want to register as self employed you need to do it within 3 months of starting to trade. As for tax you won't be PAYE like you are when you're an employee, you'll do a tax return each year and get a bill to pay. You won't need to register for VAT unless you make over 68k (I think, the business link site will tell you the limit for sure)

Hope that helps a bit!

iPanda

little_teapots wrote: »

Have a look at the business link website, it's very clearcut and useful - you can make a task list of all the things you need to do.

If you want to register as self employed you need to do it within 3 months of starting to trade. As for tax you won't be PAYE like you are when you're an employee, you'll do a tax return each year and get a bill to pay. You won't need to register for VAT unless you make over 68k (I think, the business link site will tell you the limit for sure)

Hope that helps a bit!

Thank you very much!

So, I'm guessing I see how it goes for a month or two then register as self employed if I earn enough to live on. Then, at the end of the first year I complete a taz return? So I'll know exactly how much I've earned?

So I should just save money throughout the year?

Thanks x) I'll check the site!

soupdragon10

I'm sure someone on here suggested putting aside 28% of everything you earn, as in addition to tax you also have to pay your own National Insurance premiums, and things like insurance etc. which normally an employer has paid for. I would second the suggestion to look at Business Link - if you can, sign up for a 'self employment is it for me' course which is free and may well answer some of your questions.

Horace

With regard to photography (I know several photographers) most of them have degrees in photography rather than just attending a training course. You could find out more perhaps from BIPP (British Institute of Professional Photographers).

It takes time to build up a client base and you can do that by networking (again this costs money because you have to pay for breakfast or lunch and/or membership fees if you join a networking group that charges a membership fee on top of what you pay for breakfast, lunch or whatever). Also if you want to photograph weddings bear in mind the amount of competition out there - several photographers can end up attending one wedding fair so competition is fierce. Think too of your camera and the cost of lenses and lights - it isnt cheap. You will also need to have public liability insurance.

Have a chat with the jobcentre because they may run courses to help people into self employment and if you get onto one of those courses they will advise when you need to contact the HMRC to register your self employment.

Photographers fees vary - an untrained one with no real qualifications can charge around £200 but those with degrees can charge upwards of £1600 for a wedding shoot etc.

To be brutally honest you may not get any clients in your first year of business, self employment is tough and you need to work long hours for less than the minimum wage with no holiday or sick pay. People seem to think that they will get clients straight away, I know that I did when I started out in April 2009 (off the dole via a New Deal programme) because I was led to believe that I would get clients immediately. It is only now after a lot of money spent networking that I have paying clients and working 80hr weeks in the meantime.

With regard to the HMRC as I said above, have a chat with the jobcentre about self employment courses, when you do decide after you have done your training to become self employed then you need to register pretty promptly (there is no longer a 3 month grace period) and the HMRC run courses in how to complete a self assessment tax return. Remember you will also need to pay Class 2 National Insurance and you are taxed on any profits you make. I must admit that I employ an accountant to do my tax return because he knows what I can and cannot claim for and despite my knowing exactly how much money I have got at any one time, I know that I am no good with tax returns so would rather outsource that bit of work as it frees up time for me to concentrate on the aspects of my business that I love. An accountant is not that expensive and is definitely worth the fee - remember that accountants fees can be offset against tax, an accountant will save you money.

I am not trying to put you off, I want to make you think about the costs involved to be a photographer and the insurances you will need. I suggest that you see if you can work alongside some photographers to see if that business is really for you.

I can honestly say that I have learnt a lot since I started out and yes I have made some mistakes along the way but I have overcome them and no doubt I may well make some more as time goes on. I talk to people and listen and learn from their mistakes too so that hopefully I don't make the same mistakes.

Think about the photography too - wedding photographers are two a penny but those that do commercial photography seem to fare a bit better as do those that do fitness shoots. Don't copy someone else's package, you need to make yourself stand out from the crowd and offer something different.

Good luck, do more research, think about cost of equipment (cameras can cost upwards of £700 plus the additional paraphernalia), insurances, cost of website and business cards etc. etc.

Another tip - you need to love what you do, if you don't then you are unlikely to succeed.

iPanda

Thanks for the advice.

The training course is just a basic. I don't know where I shall be heading after completing that, all though I do believe that a degree is not essential. I have friends in many fields who have grown to be the best at what they do without a degree. They help at first, I believe, but I'd rather have industry expirience and hands on expirience, get to know people in my area and groups that may want my services.

I have looked up cameras, features, lens, paraphenalia, etc and worked out costs. I'm putting off buying one and talking with my tutor about what'd be best for me, though.

The only thing I didn't think about was the insurance - because I'm a ditz and forgot! So thanks!

I was thinking about offering budget packages or even offering free services so I could build up a portfolio and make a name for myself at first.

A good friend of mine is a proffessional web designer and developer, though, and has kindly offered his services, so luckily that takes a bit of the weight off! I have to think of printing costs and such, nevermind having enough to pay tax!

It's scary! But I'd rather try and fail then work doing something I find mundane or am unenthusiastic about... Or never be able to get a job at all. :S I haven't been this excited about a project in so long and I feel like a different person. Because I love it I know I'll keep at it.

Lou76

iPanda, HMRC run free courses for people who are, or thinking of becoming, self employed.

This link will allow you register: http://search.hmrc.gov.uk/kb5/hmrc/hmrc/results.page?qt=self+employment+course

Good luck.

Horace

Have a look at the Business Link course that someone else mentioned.

I know that you don't necessarily need a degree to be a photographer - I know some that have degrees but one in particular does not and he takes the most amazing photographs and he mainly does fitness shoots and his work is often featured in American fitness mags.

When you have a domain name and website - get yourself onto Facebook and get a page on there to promote your business (keep your page separate from your personal stuff), use twitter and LinkedIn.com (you can have a free basic account on LinkedIn.com) twitter is also free and you can use both of these to promote your business. If you have a wordpress website/blog you will need someone to host it and maybe your chum could help you build the site then you can update this and have a blog on there too which you can update regularly with offers, guest blogs and free tips e.g. how to take a photograph, how to make use of lighting etc. If you have the wordpress site then you can set it to feed to your twitter account and LinkedIn and you can set your twitter account to feed to LinkedIn that way your connections see what you are doing. Join some industry specific groups on LinkedIn too as these will give you some new ideas and you can share your knowledge with others.

Regarding networking groups - look to see if there is a Business Biscotti in your area, these are no membership fee meets which are pretty informal as you can drop in and out as you please, you pay for coffee/tea and more importantly no massive membership fee. Networking will build your contacts and ultimately get you more business.

You will also need business cards and although Vistaprint may seem like a good idea their cards are pretty awful as they look and feel cheap. I had some when I started out but was soon told that they didnt match the image I was trying to convey so I switched to printing.com and only buying when they had a sale on, since my rebrand I use the printing services offered by my graphic designer as he worked out cheaper than printing.com but the cards and stationery are excellent quality.

When you start your business and you register with the HMRC, see if you can get working tax credits because you are on a low income and also ask if you can apply for a Class 2 NI Exemption Certificate as this will cover you for a certain amount of time so you don't need to make contributions.

Self employment is great but it is hard work - I love what I do although I started out with weddings having trained for a diploma then I realised that people didnt want to pay wedding planner fees preferring to pay £4 an hour - I don't get out of bed for that and I realised that I didnt particularly like weddings, I much prefer organising corporate events so that is what I do and I love it. I don't even notice that self employment is work because I am having so much fun.:D

BTW elsewhere on this forum under the Debt Free Diaries there is a Join in if you are self employed thread - we gee each other up and there is also the Small Business forum with lots of helpful advice from folks.

Good luck and I hope to see you on one of the other threads.:D

KiKi

When you earn as a SE person, you have to put aside money to pay your tax bill at the end of the financial year (April 5th). You should put aside 28% to ensure that you're covered - 20% for tax, 8% for Class 4 NICs. However, assuming you have the standard tax code, then you can earn £7475 before you pay any tax anyway. You can earn something in the region of £5300 before you pay Class 4 NICs. So you could keep all your earnings up to that point then put 28% aside. (I personally put aside 28% of all earnings - because then at the end of the tax year after I've paid my bill I have some spare savings to spend on luxuries!)

You also need to pay £2.50 a week for Class 2 NICs - this ensures you keep up your entitlement to certain state benefits should you need them. You have to pay these quarterly.

Regarding registering with HMRC... It's HIGHLY unlikely that you'll know within 3 months if your business will work or not - businesses take a long time to get going unless you already have clients. And you must register as SE as soon as you have your first paying client or you are likely to be penalised.

HTH
KiKi