Running your business
If you’re like most creatives you probably suck at numbers. I know I do. The thing with running your own business is you have to do some maths. Below are the basics of running your freelance business.
You’ll have to do your own invoicing. Most often you will be sending your invoice directly to a recruiter who pays you. Sometimes you will be required to bill the agency you’re working for. You will be charging the total amount plus VAT. I recommend billing on a weekly basis. Your invoicing will typically be done by emailing a PDF document.
You can expect to wait between one week to four weeks for your invoice to be paid.
Paying yourself a monthly salary
When running a limited company, the way the tax system works in the UK it’s best to pay yourself what’s called a monthly salary. This amount is determined by your accountant or online platform. It’s an amount you pay yourself once a month out of your current business bank account.
Paying yourself a monthly dividend
On top of your monthly salary, you pay yourself what’s called a divided. The dividend amount is calculated by much your limited company has been earning. If you’ve been raking it in, you’ll be up for a big dividend each month. If you’ve had a lean month your dividend will be small. This amount can be calculated by your accountant or your online system. Again the cash will come out of your business bank account.
For the love of Pete don’t spend your tax money. You’re going to need this later. It’s easy to see those big round numbers on your invoice and get all carried away at the pub. As part of running your own business you have to set aside money from every invoice for VAT and once a year corporation tax. The latter is the scary one. The cash has to remain in your business bank account to cover these tax bills. Repeat. Do not spend it.
Expenses are your friend. This is one of the huge benefits of being a freelancer with your own limited company. On any given day, below are a few of many things you can expense to your limited company:
- Coffee breaks
- Lunch and dinner
- Bus and train tickets
- Taxi fares
- Computers & hardware
- Subscriptions and memberships
For a full list of things you can expense click here.
Expenses tip: Remember to always use your company debit card to pay for these expenses. It makes it simpler when doing you are doing your accounting.
Thanks for reading my guide! I hope it helped you out.
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