Monthly Archives: June 2017

0 Struggling with bookkeeping?

The previous post was all about what your bookkeeping records are (you can view it >>> here <<<  ). But what if you are struggling with it? What do you need to do? Here are a few hints & tips.  Watch out for the blooper part way through.

If you are a UK based performer, why not join our facebook group for your tax & accounts questions answered, or to find more useful hints & tips. You can join in >>> HERE <<<

Transcription: Well, what should have been the script, but you know what Actors are like – we do ad-lib sometimes.

You didn’t become a musician or an actor or a freelance performer to be able to sit there and do paperwork, but unfortunately, as with all self-employed businesses, paperwork is a key aspect. Accounts, tax, more tax, and even more tax tends to run your lives at certain times of the year, and a lot of people struggle with the amount of paperwork you end up having to do.

What do you do if you are struggling? Well, there is the option of shove it in a box and deal with it later, but quite often that later doesn’t come, and then you start incurring fines, or you’ll just do your tax return in such a hurry that you don’t actually consider what you’re doing. Here’s my suggestion. All you need is potentially an hour or half an hour a week say on a Sunday to, I don’t know, empty your music bag, empty your pockets, your jacket, your handbag, and find all the receipts that relate to whatever business you have done that week. Note it down in a spreadsheet. Shove the data into an Excel spreadsheet, and then just mark on top of that receipt that it’s done and you don’t have to worry about it. We provide templates for our clients that are fairly easy to use if you use Excel.

What do you do with those receipts? Well, you could get something very simple like an expanding January to December file, and just put them in a plastic wallet inside those expanding files, label it up for that tax year, and there are your accounting records.

Obviously, you have to deal with income. Now, have you been billing your students? Do you get remittance advice from your agent so you don’t actually raise invoices? Is money just being dumped into your account, bank account? What you have to do is put all that together in a different spreadsheet that’s labelled up as income. If you raise invoices, a big tick from me, then what you need to do is also note opposite that invoice, when it’s been paid. That way you can chase up in order to collect payment.

There are also things like mileage. If you use your car for business, you can claim a mileage allowance. As soon as I sit in my car, I write down, in an exercise book, the date, where I’m going, the start mileage and the end mileage, and work out what my business miles were.  At the end of the week, I transfer that onto an Excel file, and then I know I’m charging my business 45p a mile or 25p a mile, depending on how many miles I’ve done that year. It doesn’t take much each week, if you are disciplined to do it. What would you rather do? Sit there and struggle for days on end at the end of the tax year knowing the 31st of January deadline is coming up, or just do something simple like this?

Now, obviously, there are accounting & other tools out there on the internet. We do provide some of these tools ourselves. Yes, they do cost money, but, again, what you can do with some of them is take a photo of your receipt, it wings its way off into a system on the internet, and then it comes back, and you can either download it all as a spreadsheet, or you can get it downloaded into an accounting system. The joy of an accounting system is that if it’s learned it once, you very rarely have to keep typing things in. With making tax digital coming on the horizon, then you will need to be getting some kind of accounting system anyway like this. What I advise clients is bite the bullet & start to do it early. Then you’re getting in the swing of it, so you know you will be completely compliant.

Really, all you need for your accounting records, and if you’re struggling with paperwork, are plastic wallets, one per month for purchases, one per month for sales invoices, one for your bank statements, and make sure you have a separate bank account for your self-employed business, and just an expanding folder, January to December. Yes, I know the tax year starts in April, so you’ll start in April, go to December, and then you’ll fill up January, February, March at the beginning of the folder. It might look a bit odd, but it’s safe and secure to hold paperwork. Load it into Excel or other spreadsheets on an accounting system, and that’s it’s done.

An hour a week is not a lot, a couple of hours a month, depending on how much you do. It saves a lot of time and a lot of grief, or, of course, you can give it all to your accountant or your bookkeeper, and they can charge you for it. It’s up to you.

0 Bookkeeping records

Accountants always ask for clients bookkeeping records, but what exactly are these bookkeeping records we ask for.

Hopefully this will put you in the picture (well , in the know as I am in the picture!).

Transcript below:

Whenever I take on a new client I always ask about their bookkeeping. Are they doing the bookkeeping or do they want us to do the bookkeeping? But sometimes there’s a misunderstanding about what bookkeeping actually is.

In its simplest form it is a list of your self-employed income be it remittances from your agent for any work, student money if you’re a teacher and people pay you, and also your expenditure. Technically you should be raising invoices but I know a lot of people don’t, so it will be a log of cash received or checks received for your students, and any other type of performance income you might have had be it from a profit share, etc., so all those should have some backing paperwork to equal what you have hopefully paid into a separate bank account for your self-employed business.

The actual record is a simple case of keeping a list ideally in Excel of all those income types and the amount and the date, and for the tax year which will be the 6th of April to the 5th of April that is the listing we need for income. You can actually do your accounts to the 31st of March, it doesn’t make any difference.

With expenses or costs you have incurred it is exactly the same thing. You’ll have receipts or purchases you have made, hopefully made out to you, hopefully with values on it and not just a credit card receipt. You need to list those down, again ideally in Excel, categorise what the spend is and then you can file the receipt away.

So in the simplest form it’s two spreadsheets effectively. You can also add in a mileage log for if you are doing any miles on a bicycle or on a motorbike or a car, so if you are using that for your self-employed business that is also part of your bookkeeping records.

In theory, your working from home allowance needs to have some back up. You will need to know how many hours you have worked each month from your home if you’re going to be claiming any costs for home allowance. You’ll also need to keep copies of your utility bills, your rent, your mortgage interest, if you want to claim an actual cost of working from home. The working from home allowance is only available to freelancers on a self-employed basis and not for directors of your own limited company so just be aware of that difference if you do operate through a limited company.

Really they are your bookkeeping records. You should have a record of any capital items you’ve purchased so it could be a new piano, a new instrument. I know a piano is an instrument. It could be ball gowns or clothing for performances that might cost quite a bit of money and you used them over a number of years. You’ll have capital costs listing that you can claim a capital allowance on. That’s subject to a different blog post.

The simplest method of bookkeeping is and excel file showing  a list of all your expenses categorised into what it is, a list of all your income, a mileage log and ideally some kind of form of recording of the amount of time you spend in your home on your self-employed business.

A different blog post talks about how you keep these records and we do actually provide a Excel template for people to use when they come on board as clients and if they’re not sure of what they’re keeping.

I do stress having things electronically in Excel. You can keep it in a physical cash book. They still exist.  It does increase the cost of your bill from us because we end up having to manually key all that information into Excel in order to be able to work with it.

0 Mileage for a bike

We know about car mileage rules for the self employed, but did you know you can get mileage for bicycle usage? Listen up.

There is mileage for a motorbike – just so you know they are not left out.

Of course, neither of these are good methods of transporting a piano or a harp.

Feel free to give us a call to find out more.

0 Employed v Self Employed

What is the difference between employed and self employed?

An employed job tends to be the way most people earn money; they head out each day to a place of work to carry out specific roles, often under supervision, and, at the end of the week, or month, get paid for the work they do.  Their employer is responsible for deducting income tax, National Insurance, deductions such as child support, and now auto enrolment pension if the employee is in the scheme.  It is up to your employer to find you work to do.  At the end of employment you receive a P45 and at end of tax year a P60.

For those who are Self-Employed, you are working for yourself.  It is up to you to find work, obtain new contracts or clients, perform the work when you need to, decide how it’s done and you usually use your own equipment to carry out the work.

Now often in the arts, entertainment and media industry, this gets a bit muddled.  A clarinettist can be playing in an orchestra as an employed person, but sitting next to somebody on a 50% contract, employed on a freelance basis.  To all intents and purposes, they are doing the same job but one has an element of job security and the other not.

A freelancer would normally raise invoices for their work, but it can be based just on a contract and money deposited in their bank and a pay slip issued.  Pay slips tend to say ‘employed’ but the giveaway is that there is often an ‘NT’ tax code, no National Insurance deducted or holiday pay given as it is inclusive in the hourly / daily rate and finally no pension deductions given.  There is no P60 at the end of the tax year, no P45 when you leave and probably no party either!

During the tax year, you can be employed and self employed so it is vital you keep documents for them both separately.  As an employed person, you cannot claim any employment costs such as travel to work as it is assumed to be covered by your salary.  However, as a freelancer, you may be able to claim these costs subject to temporary verses permanent work place rules.  I won’t go into that now.

Try to keep 2 different bank accounts; one for everyday life including PAYE work and one for self employed work.  The only transactions that go through the self employed account are income and expenses related to freelancing and the freelance business.  It will make life so much easier if you do this.

What you must ensure you do is declared your employed income and self employed profit on your tax return.  You only get one personal allowance per tax year spread over all income.  Your tax return shows gross salary, profit from self employment as well as other income such as rental profit.  Add all that up, deduct the personal allowance and that is the amount you get taxed on.  Multiply out by the income tax rates (ignoring National Insurance for the self employed) and that gives you your tax liability.  If you have had employed income, then any PAYE taken is deducted from the total liability, so you are not being taxed twice.

Hope that helps.