Can you believe it is almost 2019? I am really excited for this New Year and what it will bring for me, my family and my business. It has been a tough year for me, for a number of reasons, but 2019 already has lots of things to look forward to, including an awards ceremony in March, and some training with the amazing Annie Reynolds, in July.
I have been thinking this week about New Year’s resolutions for the business, and one of the things I am determined to do this year is manage my accounts better. I am notoriously bad at completing my accounts on a monthly basis, and instead I find myself every year, spending hours upon hours sat at my desk surrounded by a years’ worth of invoices, bank statements, receipts and the like. It’s not fun, and it comes at what is already a ridiculously busy time of year for us. 2019 is going to be the year that I break this bad habit. I am going to complete my accounts at the end of each month. Not only will this mean that I don’t have the December stress fest, and will also help me to know on a monthly basis where I stand in terms of profitability.
Here are a few hints and tips about managing your business finances.
Disclaimer – I am NOT an accountant or financial advisor, so please do your own research and take advice before making any financial decision.
Do I need to be registered with HMRC?
YES! Working without paying the appropriate tax is illegal, and can get you into serious bother and hefty fines if you are caught. If you are working on a self-employed basis, then you need to register with HMRC and complete a tax return at the end of each tax year. Each tax year runs from 6th April to 5th April the following year. You then have until the following January to submit your tax return. Also, if you don’t also work on a PAYE basis elsewhere you will need to think about your National Insurance contributions, as failing to keep these up to date can / will have a detrimental impact on your future pension entitlement.
Do I need an accountant?
No. It is totally possible to complete your own tax return, but it can be daunting. There are often local classes / sessions available to get you started so it worth checking with local adult learning centres/ colleges. There is also a lot of information online and it is definitely worth familiarising yourself with the basics. Now that I’m a few years in, I sit somewhere in the middle by doing all of my own accounts, but having them checked and submitted by my accountant. This keeps the cost down, keeps my eye on the ball so to speak, while also ensuring that it is all completed properly and on time.
What information do I need?
You should be keeping a comprehensive note of all income and outgoings associated with your business. This includes income from any job you carry out, any private booking, and any products sold. You will also need to keep a record of any purchase made in relation to your face painting work. This will include the obvious things like products and kit that you buy, but can also include mileage accrued travelling to and from gigs, and, depending on your circumstances, can often include a proportion of some household bills such as phone, internet, electric and heat etc. These costs will vary according to how you operate so please take advice from your accountant on what you can include.
Should I have a business bank account?
If you are a limited company then you must have a business account in the name of your business, but if you are self-employed then it is not compulsory. It can make life at tax return time a lot easier though, as all of your work related transactions are in one place. I find that it is also helpful in terms of being able to more clearly understand your work related income and outgoings. It also looks more professional when clients are issuing direct payments, and means that if for any reason, HMRC decide to audit you, they don’t need to see that you ate Mc Donald’s 3 times in one week and spent your last £20 on gin.
In short, Tax doesn’t need to be scary. It is always better to be registered and above board, and you never know, you might find yourself being owed a nice little rebate meaning you can stock up on those new rainbow cakes you spotted on The Face Painting Shop’s website!
I Hope you all have a wonderful Christmas break, and enjoy the rest!
Some useful links