Self – Management & Professionalism
Introduction
If
you are self-employed you must be able to self-manage and be professional in
the way you present yourself and the way you handle your money, and in this
blog post certain things about this will be discussed and explained
Self-employed – Being self-employed is working for yourself and getting your own work i.e. handing out flyers and social networking to get your name around, being completely self-dependent so that you can handle all of your money at low cost and correctly
Specific Income - Specific income is a person’s employment income for tax purposes
Tax deductible expenses are things that are for work use and not personal use e.g. a new laptop that is used to record or produce music would be a tax deductible. An example of something that is not tax deductible would be a house with no studio because you cannot say it is work related and therefore it would not be tax deductible
Examples
- Equipment
- Auto Expenses
- Travel Costs
- Equipment Repairs
- Advertising
- Board Meetings (entertaining guests)
Invoice
In the example you can see there is a billing address, company name, my details, the money that is owed and a due date. All of this is essential for an invoice, because without this there could be many problems with payment including not receiving any money as there is no due date.
National Insurance
National Insurance - social insurance program in Britain; based on contributions from employers and employees; provides payments to unemployed and sick and retired people as well as medical services(Definition from http://wordnetweb.princeton.edu/perl/webwn?s=national%20insurance)
You pay National Insurance if your profits are above £5,725 and you’ll pay more when your profits rise above £7,755.
| Annual profits | Class 2 | Class 4 |
|---|---|---|
| Up to £5,725 | £0 but only if you get an exception | £0 |
| £5,725 - £7,755 | £2.70 a week | £0 |
| £7,755 - £41,450 | £2.70 a week | 9% of profits between £7,755 and £41,450 |
| More than £41,450 | £2.70 a week | 9% of profits between £7,755 and £41,450 and 2% over that amount |
Class 2 is paid by direct debit.
Class 4 is paid through your Self Assessment tax return.
E.g.
- If you earn up to £5,725 in annual profits you pay no national insurance
- If you earn £41,550 you pay £2.70 per week and that is taken from your direct debit card so that totals up to £140.4 per year and then the class 4 is paid through your tax return, So the 9% would come out of £33,659 meaning that you would pay £3,056.85 in national insurance and over the £41,450 you would be charged 2% so if u had £100 over you would be charged £2
Class 2 - £2.70 x 52 (working weeks in a year) = £140.4
£41,550 (profit) - £140.4 (class 2 national insurance) = £41,409.6
Class 4 - 9% of £33,659 (profit left from class 2) = £3,056.85
£33,659 - £3,056.85 = £30,602.15
Total taken for national insurance - £3,197.25
Money left after national insurance - £41,450 - £3,197.25 = £38,252.75
Tax
Tax - a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.(Definition from http://dictionary.reference.com/browse/tax)
Rate
|
2012 to 2013 tax year
|
2013 to 2014 tax year
| |
Basic rate 20%
|
£0 to £34,370
|
£0 to £32,010
| |
Higher rate 40%
|
£34,371 to £150,000
|
£32,011 to £150,000
| |
Additional rate 50% (45% from 6 April 2013)
|
Over £150,000
|
Over £150,000
| |
E.g.
- If I was to get a job producing in the future and earned £28,000 anually then I would be taxed £5,600
- and then the next year i earned £100,000 anually I would be charged 20% for the £34,370 and then for the remainding £65,630 I would be charged 40% so in total you will be taxed £33,126
Importance of Professionalism
If you have a professional approach to the freelance world you would be more likely to be hired and more work would come your way as you'd grow a reputation for being professional.As a Music Production student I feel that presentation is very key in receiving job offers and actually making money so being professional with your image and money is a way to be successful self-employed, Because if you aren't responsible with your money you are just basically losing all of your profit and potentially losing money. Also being able to self-manage as well is just as important because you can actually keep track of what you have and how much you owe rather than getting an accountant to check your books for you, you can do that yourself and be able to lower what you are giving in tax.
Also being professional would mean being up to date with social networking sites so that you can market yourself in a professional manner and showcase yourself to a wider audience. Also if you are professional you will know about tax considerations and be able to find ways to reduce your profit therefore you will pay less.
If I was a freelance sound engineer and was hired to master a song and handed the mastered track back late and not up to a high standard i would be risking not being hired in the future by any artists as i did not complete the work with professionalism. But if i mastered the song to the best of my ability and done so on time i would be in a great situation as the artist may hire me again and my reputation as a professional would grow and more work would come my way.
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