There are so many questions about the subject of accounting for performers. We’ve compiled a list of your most frequently asked accounting questions and spoken to our friend Alex at Theataccounts – who are a friendly, helpful accountancy service specifically for performers. They understand the performance industry entirely and not all accountants do.
I’ve just graduated from Drama School – how soon do I need to register as self-employed?
Alex Says: If you are looking for work, you should register straight away. It’s simple to do or an accountant should usually do it for you.
I’ve just graduated from Drama School – do I need to worry about VAT yet?
Alex Says: Not normally, unless you expect your turnover to go over the VAT threshold. This is currently £77,000.
However, you should always check this out though as it can sometimes be beneficial to register for VAT even if your income is not over the threshold.
What should Performers do with their receipts?
Alex Says: Keep them, all of them! Obviously only for business costs though.
Will their accountant require all of their receipts, or will bank statements be enough?
Alex Says: This depends upon each individual person and if any records are maintained (spreadsheet/ book etc).
If records are maintained listing all income and all expenditure it is not normally necessary for the accountant to see all of the receipts. However, it does help if they are provided to the accountant and they still must always be kept.
Your accountant will need copies of income invoices and payslips etc.
How should I log my income and expenditures?
Alex Says: Spreadsheets or a simple book generally work very well. You should keep your income and expenditure listed separately and try to categorise your expenditure.
eg. Travel/Telephone/Membership fees/Cosmetics etc
Should I have a separate bank account to save for tax?
Alex Says: This is often a good idea and saves people dipping into the money they need to save for their tax bill.
My part time job is paid by PAYE, but I’m a self-employed performer…how does this work?
Alex Says: This is fine and very very common!
PAYE and self-employment are included separately on a tax return. The tax liability is calculated by adding together the PAYE income and the profit/loss from self-employment. Any PAYE tax that has already been paid is taken into account.
Is it important for performers to have an accountant? Why?
Alex Says: Not necessarily, but…
Opinions will always vary as a lot of people think that as they are capable of managing to muddle through and complete their own tax return that they do not need an accountant, and that this is a cost that can be avoided.
However, just because people are able to complete a tax return doesn’t mean that it is being completed correctly – they may be paying too much tax.
We can sing, but not very good!
A common mistake we see is in respect of Class 1 and Class 4 National Insurance. Most freelancers do not fully understand the difference between the two and end up paying too much.
An accountant should seek to optimise your tax position as much as possible by giving you the best tax advice in an easy to understand manner; “Should you be self-employed or a Limited Company?, if you are VAT registered, should you be on standard accounting or on the Flat Rate VAT scheme?“
If you do choose to appoint an accountant, ALWAYS use one who has recommendations from existing clients who are getting the results they want!
Do I need to meet my accountant face to face?
Alex Says: No, not at all – we find that a lot people nowadays prefer not to.
How much does it cost to have an accountant?
Alex Says: Fees can vary considerably dependent upon several factors. If you earn £5,000, your fee will be less than if you earn £100,000!
Most accountants should provide you with a basic quote over the telephone.
Theataccounts are an extremely knowledgeable and friendly group of people who understand the performance industry. We recommend that you get in touch with them to take care of any accounting needs:
To get in touch with a member of the team at ‘Theataccounts’
Give them a call on: 01905 823177
Drop them an email: email@example.com
or visit their website www.theataccounts.co.uk
You can also tweet them @theataccounts
Don’t forget to tell them you got their information from the Already Labelled Website.