When you run a creative business, you may not feel that numbers are your strong point. But if you want your business to thrive, you have to make sure that the figures add up.
Should you work as a self-employed individual or set up a limited company? Register for VAT or not? And can you claim a walking tour in the Lake District as a business expense?
Earlier this month, accountant Christine Styrnau flew into the Free Word Centre in Farringdon on a mission to share her financial savvy with 26ers.
Christine has over 30 years’ experience of working with artists, academics and creative individuals, so she understands the kind of accounting issues that writers frequently face.
During a relaxed afternoon session, Christine talked us through the essential elements to consider, including how the tax system works, and how and when to file your taxes.
The dividend tax regime is changing in April this year, so Christine would only recommend setting up as a limited company if there’s a good reason. She comments: “A limited company gives you a separation between you personally and the company, and it might give clients a better impression. But generally it won’t help you save tax the way it used to.”
As for VAT, Christine told us: “Don’t do it unless you have to.” VAT requires quarterly returns and a lot of admin, and is only compulsory when your turnover is over £82,000 a year.
We were fascinated to see one (anonymous) writer’s statement of earnings and expenses, where the writer had claimed for ‘wardrobe and hairdressing’. Christine explained that these expenses were allowable on this occasion because the writer had attended an awards ceremony. “If you’re nominated for the Booker, it would be fair enough to claim for a new outfit,” she reasoned.
On the subject of fluctuating incomes, Christine added, “Remember that authors and artists can average their earnings over two years, if they’ve had two consecutive years with wildly differing incomes.”
During the session, people shared their tips for accounting software:
VT – inexpensive accounts and bookkeeping software.
And how about that walking tour in the Lake District? Christine says: “You could argue it’s valid if you’re a poet or photographer getting inspiration from the landscape.” So if that’s you, best dig out those hiking boots.
Thanks to Christine for a wonderfully practical session delivered with warmth and a down-to-earth attitude. And look out for more 26 Trade Secrets courses coming here soon.
In the words of participants:
“I really appreciated the openness of the topics discussed, and how this was adapted to the people at the session.”
“It was great learning about tax and finance issues in plain English! It was clear and simple – much appreciated.”