6A2, 6C2 , 6D2 - OUGD602 - Start Up Wednesdays - Self Employment Workshop

Start Up Wednesday - Self Employment Session 

- Run by Russell Smith from RS Accountancy
- you can become and expert by saying you are an expert, acts as a self fulfilling prophecy, you can get more work if you are confident about what you do
- when you are self employed you run a business no matter what size
- their are four aspects to a business with people in the centre , sales and marketing in a bubble, delivery and operations as another aspect and finance as the last
- you need to have knowledge of all three of these aspects to run a business however you may be better in some areas than others
- people mostly go out of business because they don't keep track of their finances or have enough money in the bank to pay their tax bill
- if you are getting money from selling or providing a service in any form technically you are self employed
- anything under £11,500 you don't have to pay tax on
- you can become self employed at any time
- you can be both self employed and employed
- its ok to start a small business and build it up over time, it doesn't have to be an all or nothing approach and done all at once
- you can have multiple sources of income to allow you to start up your business
- How can you make money? You have different skills you can make money from

Registering

- Google HMRC registering for self employment
- Get given a Unique Tax Reference Number which is a 10 digit number
- The software online calculates your tax for you
- Having a unique business name isn't that important as anyone can use your name
- Can use Companies House website to search for limited company names
- If you are self employed their is nothing stopping you using the same name as someone else

Tax Return

- Profit = income - expenses
- These are the only numbers that go onto your tax return
- Profit is your wage!
- It is always better to have more profit! Don't worry about the tax brackets as this will not mean you will gain more money by being in a lower tax bracket
- You are only taxed on any money over £11,500 not the whole lot
- You can have a high income but low profit because of expenses
- It is not always about working hard but having good management / structure within the company particularly if you have people working for you
- Use freelancers for projects can be a way of getting help on projects rather than having to employ them 

Tax brackets : £0 - £11,500 = 0%
£11,500 - £46,500 = 20% + 9% for National Insurance
£46,500 + = 42%

- Round up tax return numbers
- On your tax return you have to disclose all your income

You could make money from:
- selling work
- grants
- freelance income
- teaching / workshops
- services

Expenses include:
- Travel
- Materials
- Studio
- employees
- freelancers
- software
- equipment
- laptop - whole value considered expense
- utilities for studio
- website
- phone - estimate on how much personal and how much business
- advertising
- insurance
- event / hiring out venues
- product maintenance
- hotels
- car - add up miles for self employment and times by 45p
- working form home - percentage submitted to cover utilities etc
- delivery , postage, packing
- stationary

- Public Liability Insurance - if you accidentally do damage to something
- Professional Indemnity Insurance - if you are sued for something e.g. a website that you made doesn't work

- there are start up costs for setting up a small business however these vary
- you are taxed on profit not on income
- 9% goes towards National Insurance
- any person that pays you money put roughly 20% away for tax as this will mean you won't run out of money when the tax bill comes, unless you are earning over £46,500 then more needs to be set aside

Keeping Records

- receipts need to be kept or sales from paypal etc
- need a spreadsheet with a list of income and expenses 
- documents need to be kept for 7 years, photographs of the documents can be kept instead of the physical thing as well 
- having a different bank account for the business makes it easier to keep track of your money rather than mixing it all with your personal money 
- you don't have to get a business account it can go into a current account 
- bank account records need to be kept 
- keep all documentation from HMRC
- have a tax bank account as well 
- tick the Student Loan tick box on the tax return

Sales Invoice 

- it is good practice to send a sales invoice to your customers so that they know how much to pay you and have a record of what they have paid to you 
- it should include information such as what you have done for them , how much you have charged and payment terms 
- there are no rules on payment terms e.g. 100% upfront, 50% upfront and 50% after etc 
- payment terms should tell the customer when you want the money and should be included in correspondence with the client / customer 

Pricing 

- people don't buy on logic they buy on emotion 
- it is unlikely you are going to come up with something completely unique and other people do the same things as you however they will come to because of reputation and because they like you 
- people buy from people, you have to instill faith and confidence in them 
- consider who you know and who would help spread word about your business. Taking them out for coffee and telling them about your business will mean they will talk to other people about your business getting you work through word of mouth 
- contact people who have done what you are doing to get tips on how to run your business. Network with people.
- people who do the same thing as you are not your competitors they will also help you get work 

- grants are income and taxable
- prizes are not taxable 

Three tips 

1. Don't read the newspaper / news - the news is not positive about business, profit and self employment in general 
2. People don't always want you to succeed because they are not happy with what they do - work out the people who actually want you to do well 
3. People buy for who you are not what you do - its important to be yourself as this matters more to them than the product 

Things learnt:

- Its really easy to become self employed
- It is important to keep a check on finances within the business, separating money into different accounts, regularly updating spreadsheets / records and keeping all documentation is really important as proof of you earnings
- A businesses income / sales might be really high but that doesn't necessarily mean that they are making lots of profit
- Being in a lower tax bracket doesn't mean you will keep more money than if you were in a higher one, you are only taxed on the money over £11,500
- Being professional in your service and being likable will make people more likely to buy from you 
- Networking and asking people around you to spread the word about what you do is a simple marketing technique
- You can make money from a range of different skills that you might have, you don't necessarily have to be tied to one thing 
- Setting up a business doesn't have to be done all at once, I might find it easier to do it gradually and do work along side this as a source of income as this will put less pressure on it being a success instantly.