Working as a self-employed photographer can be life changing and incredibly rewarding. Being your own boss while doing what you love is an offer that most cannot refuse. However, what separate the dreamers from those who make the leap is having the correct guidance to set your business up legitimately.
STEP 1- REGISTER WITH HMRC
As soon as you start working for yourself you are classed as a sole trader. At this point you should register with HMRC as self-employed so you can complete your tax return as a photographer.
It takes 10 days for HMRC to complete your registration. Once the registration is complete HMRC will send you your Unique Tax Reference (UTR) number, which is how HMRC will identify you. Your UTR must be included on all documents you send back to HMRC each year.
If you are self-employed and have not yet registered as self-employed, you can follow the link below:
STEP 2- RECORD YOUR INCOME AND EXPENSES
One of the most essential tasks for any business is bookkeeping. Without proper bookkeeping your career as a self-employed photographer could quickly face many unnecessary hurdles. Good tax records can save you a lot of time, stress and money in the long run.
Bookkeeping is the process in which any income and expenses that you have in your photography business are recorded. This information includes any purchases, receipts, invoices and statements that can account for the money that flows in and out of your business.
A lot of people think that bookkeeping only plays an important role in avoiding a HMRC audit. Although it is true - properly kept records can keep HMRC at bay - bookkeeping can also allow you to accurately portion your expenses as claimable expenses.
The law states that expenses are only claimable when ‘wholly and exclusively incurred in the performance of business.’ Therefore as a photographer, money you spend on equipment such as camera lenses, work-related travel, office costs and much more can be claimed back on in your tax return – to help reduce any tax you need to pay.
STEP 3 - KNOW YOUR TAX DEADLINES – PHOTOGRAPHERS TAX RETURNS
Missing tax deadlines can cause unneeded expense and stress. We’ve listed below all the important HMRC tax return deadlines:
31ST OCTOBER: PAPER RETURNS
All paper tax returns must reach HMRC by midnight on 31st October. So for the 2015-16 tax year (ending on 5th April 2016) the deadline is midnight on 31st October 16.
31ST JANUARY: ONLINE RETURNS
Any online tax returns must reach HMRC by midnight on 31st January. So for the 2015-16 tax year (ending on 5th April 2016), you must file your online return by 31st January 2017.
31ST JANUARY: TAX PAYMENTS
You must pay any tax you owe by 31st January following the end of the tax year. Payments on account are part payments towards your next tax bill. You may not have to pay these - it’s dependant on the amount of tax due and the kind of income you receive.
HMRC will usually send you a ‘Self Assessment Statement’ that shows how much you owe or you can check your tax bill online.
31ST JULY: SECOND PAYMENT ON ACCOUNT
This is your deadline for making any future payments on account. For example, on 31st July 2017, you’d make your second payment on account for the 2015-16 tax year.
Step 4 – Minimise your tax - Photographers
Once you are up and running, there a few simple ways to minimise your tax:
· Make sure you keep all your receipts, so you can claim these at the end of the year
· If you are going to buy any camera and other photography equipment, try and do that before the end of the tax year (5th April)
· When you first start out, you may have more expenses than income. In this case you can use those expenses to reclaim any tax you’ve paid over the last 3 years which should help with your cashflow
If you have any queries, feel free to contact us and we can discuss your situation and tell you the next steps to get your photography business up and running.
Bambridge Accountants is a team of award winning, chartered accountants based in the heart of Covent Garden. We specialise in providing tax and accountancy advice to the creative industries, including many photographers, and US expat tax services.