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| Don't look down |
1) Keep your accounts up together as best you
can. If, like me, just thinking about money can make you feel a bit sick, this
isn’t a natural piece of behavior. I’ve thought about getting one of those apps
they’re advertising on TV, where you photograph your receipts and they go
magically into a spreadsheet. Is anyone using such a thing? I actually get my
partner to do my books, and my Mum once used to do them – basically because I’m
so panicky about doing them myself. One way or another they do get ordered,
anyway.This applies to part-time writers, too, of course.
2) Keep writing earnings and expenses very
plainly separate from your household accounts. This is in case you have to show
the Inland Revenue. I’ve written before about tax investigations and I won’t
bang on about them again, but assume it could happen to you and be prepared. If
you can’t clearly show where money came from and where it went, you could be in
for a bill.
3) Get tax investigation insurance because if you are chosen it’ll cost you in accountancy fees (unless you are very up-together on tax you
will need them to come with you for interviews). Members can get it through the
Society of Authors (and they also have a free tax helpline for members) or I
get it through my accountant. I have been investigated twice, both times when
my earnings went down due to childbirth. I think that the big swings in yearly earnings
aroused their suspicions. They probably thought I was hiding money but I
wasn’t. In the end they charged me for some opal fruits on a petrol bill and a
£4.50 toy on a receipt but it cost me £1,000 in accountancy fees to prove I was
clean (apart from the opal fruits).
4) Pay tax monthly or at least save it
somewhere. The Inland Revenue now has a scheme enabling you to pay an amount of
your choice by monthly direct debit – and you can stop and restart at any time or
get the money back out (it's easy to set up online). By the time my tax bills come (January and July) I’ve just
about cleared them. It’s a total godsend to me as I could never save in my own
private account (I always found I needed it somehow), and I often used to have
to borrow the money when the tax bill arrived. The way I do it now is a huge
weight off my mind.
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| What I used to do with my tax 'savings' |
5) On fee-paying writing jobs don’t allow
publishers to delay paying your invoices past the end of the month after the
month invoiced (ie: 30 days, effectively). If they haven’t coughed up, ring
their accounts office (or get a confident friend to ring and say they are your
financial advisor working on your accounts – Mum used to do that,
too). On work that is invoiced through an agent it will be up to them to chase
payment, but I’m sure it would be worth reminding them if what you were
expecting doesn’t turn up.
6) When working direct with publishers don’t accept payment excuses such as ‘we
can’t find your invoice’. Scan it, email it and ask when payment will occur
asap, as this is not your mistake.
7) Always check stage payments carefully in
a contract. Are they weighted the way you want? You’ll need a fair amount up
front and less at the far end because you need to eat. If accepting a
fee-paying contract I would never agree to delaying any payment to publication
date, as you will have no control over it. On royalty contracts I do accept
that because I have a more ongoing interest.
8) Don’t start comparing your earnings to
other people in different professions. That way lies madness. If you make the
choice to be a full-time writer, own it.
9) Remember that you are not alone. There
are lots of us out there on that cliff path, ready to listen. I know that the
Society of Authors has a hardship fund, and though I’ve never used it, I have in
the past been in a position perilously close to needing that helping hand. That’s
why I have such a difficult relationship with this subject. I would personally
prefer never to think of money again, and instead think only of words, but I know
I have to face it every year, and so do you. Let’s do the best we can.
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| It's not easy dealing with this, but we're not alone. |
Moira
Butterfield
Twitter
@moiraworld
Instagram
@moirabutterfieldauthor
For
tax advice and insurance be a member of:
https://www.societyofauthors.org
4 comments:
'Spect that's why the makers changed the name of Opal Fruits to Starburst. Too many associations with nefarious accounting practices !
Actually, yours sounds really complicated. When I freelanced in my own line of work,
the first thing I did was buy an off the shelf limited liability company. Installed myself as director,and my brother as a silent director. Retained every receipt that could be associated with the company..., car, fuel, travel mainly.and threw them in a box.
After a year of freelancing, it was time for the company annual accounts. After having encountered several freelancers who had played it all fast and loose, never bothered with paying VAT, or keeping accounts..., been caught, and who now drove around in ancient Ford Escorts held together by filler...., I decided that I could do without 7am knocks on my door from HM Customs and Excise.
I went for solid, respectable sounding accountants... Fawcett, Brown and Pinniger.., of Salisbury, Wiltshire. I met with whichever of them was called Brian. Brian explained to me that thay had a very, very good working relationship with their local tax office, and that the accounts audited by the firm were very seldom challenged. There were several more phrases that basically said "No, we don't get involved in dodgy stuff..".
And so, once a year, over a couple of weekends, I'd empty out the contents of the receipts box, separate them into each of the 12 months. Write up descriptions of each spend,then put each month's receipts into it's own envelope. Pull my bank statements together. No business account, just my personal account. Cheque book stubs. Then send the lot off to the accountant. Over several weeks they'd do their work. And eventually come up with a figure for what I'd paid myself, what was a dividend, and how much corporation tax to pay.
Simples.
Over 12 years, never any problems with the authorities. Not remotely.
Quite astonished to read that there is actually something called 'tax investigation insurance'. I guess that's the free market economy for you.
My accounts are very simple, but once picked for a tax investigation, HMRC will go every part of your financial life, not just your business. I was picked, I believe, because I had babies (twice) and the following year my earnings dipped. I think it's discrimination against women, but it can never be proved.
Thank you Moira. My relationship with money is very similar to yours - I find the whole idea fills me with panic. My husband helps me and then I also pay for an accountant and it is worth every penny. I even paid my accountant for a couple of years when it turned out I hadn't earned enough to pay tax - but it was such a relief. I still HATE it so it is a great relief to read your post, although I also have panic now about being investigated and so far I have earned less this year than last so I'd better make sure all is in order! I must find out about paying monthly. I do pay something to HMRC every month but I still seem to get a tax bill at the end of the year so I had better make sure that I am not paying twice! Thank you for prompting me to take my head out of the sand and investigate this!
You sound just like me, Anne, in the way you feel about money. We freelancers probably don't talk about those feelings enough.
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