"Simply not solvent!

Verbatim

Good result seaxwxyn!

How's the tax situation?

Seaxwyn

aaaargh the tax situation is dire. Thanks for asking though.

I haven't saved any more so the shortfall is still as in my signature. I am banking on OH and I both having good earnings in November, December and January and saving some of that. Then I am resigned to borrowing more in January. It has really rubbed in how "not solvent" we are. Two years since I started this diary, we are still only just getting by, and only by not saving for tax! It really is worrying.

On the bright side, I continue to be offered loads of work. So, like I have said before 100 times, I just need to get through more of it, faster.

Last year I made about £30k, which works out as roughly 171 days work. Surely there is capacity to do half that again. So I do need to get smarter about working harder and billing for more of my time.

Karmacat

Seaxwyn wrote: »

I need to get smarter about working harder and billing for more of my time.

I am so with you on this one! Not about my main work (when you're sitting in a room with one other person, thats it, really!) but about the trading, and even about the matched betting....

bandraoi

Seaxwyn wrote: »

aaaargh the tax situation is dire. Thanks for asking though.

I haven't saved any more so the shortfall is still as in my signature. I am banking on OH and I both having good earnings in November, December and January and saving some of that. Then I am resigned to borrowing more in January. It has really rubbed in how "not solvent" we are. Two years since I started this diary, we are still only just getting by, and only by not saving for tax! It really is worrying.

On the bright side, I continue to be offered loads of work. So, like I have said before 100 times, I just need to get through more of it, faster.

Last year I made about £30k, which works out as roughly 171 days work. Surely there is capacity to do half that again. So I do need to get smarter about working harder and billing for more of my time.

Stop setting yourself impossible goals.

It sounds like you're not charging enough. In fact you're definitely not charging enough.

In a year you would expect to work say 37.5 hours a week for 48 weeks a year or 1800. Of that only a proportion will be productive. As a contractor you'd expect to spend probably a third of your time on marketing/invoicing/admin, which would be 600 hours leaving you 1200 hours productive work. I think your friend worked even less than that before. Wasn't his time split equally marketing/admin/work or something? Anyway in total you should therefore expect to work 1200 hours which is 160 days. You're exceeding that, so you are working at capacity.

In that 1200hours productive work, you should be billing a multiple of your projected salary. In a large company that would be about three times your take home pay, in a contractor I'd expect it to be about twice your take home pay.

Whatever you would expect to earn if you were working full time for someone else, I'd add at least half and divide by 1200 to get an hourly rate.

That said, that's just my back of envelope calculation. Get a decent accountant or a book that tells you had to work it out correctly.

Seaxwyn

Thanks bandraoi. Like I said, I need to get smarter and you have given me a big nudge in the right direction. I am going to find an accountant. I know there are things I could do to pay less tax as well - for example get OH to bill me for some of the services he provides (computer maintenance etc).

Charging more isn't so easy though, as most of my clients have a rate they will pay and it's not negotiable. I have negotiated raises with some of them, but for many, £175/day seems to be the ceiling and there are plenty of people willing to work for less. So to charge more I'd have to change sector, and that I have a deep reluctance to do.

tyllwyd

Seaxwyn wrote: »

So to charge more I'd have to change sector, and that I have a deep reluctance to do.

I'd agree with that, unfortunately - I don't do exactly the same kind of work, but £25 per hour is a pretty good rate for an editor, and I wouldn't be able to charge that much to my clients. The NUJ fees guide has £24 down as the rate for book editing (http://www.londonfreelance.org/feesguide/predirat.html) and I know that when I worked in-house the idea that we would pay NUJ rates to freelancers was laughable.

buddiebabe

Hey

Just been having a quick catch up on your thread. Re the savings for tax i remember when i first started posting on DFW i never saved for anything and i always paid everything once it had came in which would increase my debts at the time as i couldn't use cash i always had to use my credit cards but at the time it looked like i was paying off loads every month then when the major bills were due my debt would increase as i had no savings for them. I now save for them each month and it has reduced the amount i can pay off my debts but it does mean that when big bills come in i have the money (or majority of money available to pay them) except major roof repairs :mad: :rotfl: :rotfl: :rotfl: if i didn't laugh id cry again!

At least you have started saving for the tax even if you can only managed to save £1 a week its always something.

I know its not easy but i do know that you will get there. YOU CAN DO IT!!!!

Buddiebabe x

Karmacat

Seaxwyn, you *have* to get an accountant. When times got tough for me financially, I started to really resent having an accountant, but I'd look at the form, with all these claims for depreciation, and think... maybe next year I'll do it myself. But I went on a mystery shop earlier this year that included a financial assessment, so I had to bring along 3 years accounts, and when the guy saw what I earned, and what I paid in tax, he said "your accountant must be very good".... I was quite chuffed.

Its just like what Martin says, but for self employed people - first of all, you make the painless cuts - and if paying £500 for an accountant is going to save you £3000 tax, then its worth doing.

Possibly my tax is low also because my expenditure has been quite high, comparatively - we used to spend 10% on advertising (didn't need to once the website got rolling) and therapy rooms in London are expensive, and nowadays you have to pay whether you're getting clients in them or not, but even so.... legitimate tax avoidance (as opposed to illegal tax evasion) is crucial!

Here endeth the sermon sorry.

Seaxwyn

I know - but I have used 2 different accountants in the past and neither saved me a penny! They just took my figures and filled in the form - well I can do that.

But I know there are some more complicated things I could do, set myself up as a business for one. I have several friends who are also freelance writers and I'm going to ask them all how they manage their finances and if they would recommend their accountant.

Karmacat and Tyllwyd and anyone else self-employed who reads this - if you have an accountant you would recommend, please tell me.

Seaxwyn

And as an aside - Bandraoi and Tyllwyd - how do you pronounce your names? It always bugs me that I don't know how to read them.