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Documentation & Tax

Discussion in 'General Business Forum:' started by JakeS, Jan 7, 2016.

  1. JakeS

    JakeS New Member

    Hi all,

    21 yr old designer here who hasn't got a clue when if boils down to documentation I'd need and if and when to consider tax. I'm fortunately not in a dangerous position as I'm full time employed as a designer and have 3 years agency experience.

    The dream like many others, is to go solo.

    Now the freelance work I've done on the side has been a nightmare (bar the actual process of designing itself). Clients not paying on time (if at all), getting smashed with 20,000,000 amends etc etc.

    I know I need to draw up a contract to protect myself from this happening again and again but I have no idea where to start/how to draw one up/what I need to include and I don't know if and when I need to consider Mr. Tax-man.

    Any help would be greatly appreciated :)
  2. Levi

    Levi Moderator Staff Member

    Get a 'signed' contract/agreement on EVERY job that's out of the way

    Been a while and working from memory but iirc this is what I needed to do
    If you go freelance you will need to notify hrmc etc for tax/ni etc as this will, same goes if you continue working for someone too. Pretty sure this is straight away but also have this idea in my head you can delay it for a short period, check on hrmc site it's pretty good once you find the right bit.
    Get a standard T&C's set up to cover your behind if anything goes wrong and to make it clear you don't supply 'development' work unless it's part of the contract (you don't give your 'work' to them unless they pay you extra).
    Consider insurance policies to protect in case of being sued etc
    Check your insurance policies to ensure they allow you to use your car/house for work as some don't.
    Get a business account to separate work from personal, I'd also add another account to 'store' tax/NI so you don't spend it.

    You'll need to keep track of pretty much everything you pay out because some it can be claimed back like a percentage of house costs etc.

    When quoting/invoicing make sure EVERYTHING is defined in it, this includes number of amendments and the likes. Get it signed off or agreed in an email because even though a verbal agreement is enough paper is easier to prove.

    Late payments can incur a penalty fee and interest, if you stick with the hmrc terms this does vary depending on job value.

    There's likely some more that I've missed so it would likely be easier to just ask questions and we'll fill you in as much as possible
    Stationery Direct and JakeS like this.
  3. Paul Murray

    Paul Murray Moderator Staff Member

    As soon as you start charging for work you should be filing tax returns, which means you need to be registered for self assessment. It's easy enough to do, and filing a return is pretty straight forward to. The good news is, if you're 100% self employed you only get charged tax on your profits when you're earning (I think) about £10,000 profit (not turnover). The bad news is you're threshold will be lower if you're also PAYE.

    Surprisingly the site is actually pretty good for information –
    JakeS likes this.
  4. Levi

    Levi Moderator Staff Member

    oh forgot this... as a side note allow at least 1 month for any 'passwords' etc to arrive from hrmc so don't leave any sign ups until the last minute.
  5. JakeS

    JakeS New Member

    Thank you very much for the info guys,

    I already have a business account set up and a poorly written up invoice which I had used at the time.

    So what I'll need to do is:

    Draw up a signed contract
    Draw up a better written invoice
    Register with HMRC

    Is there anything else I might need to do?
    I'm pretty damn confident as a designer but contact with clients and all the legal side of things is newly discovered territory.

    Thanks again
  6. Levi

    Levi Moderator Staff Member

    And another forgotten bit....make sure your invoice includes all the required info, there are a set of 'legal' requirements for these.
    I'd sort out your T&C's too :)

    Maybe set up some templates to aid in 'presenting' quotes (got a mental block this morning, can't remember the proper term lol) or finished projects

    edit: I want to say it's client/project proposal but still not 100%
  7. JakeS

    JakeS New Member

    Would the T&C's come as part of the contract, or would that need to be a separate document to be presented along side of the work contract?
  8. Levi

    Levi Moderator Staff Member

    I have my standard t&c's (currently doing some tweaking due to win10 etc) separate (on request but will be on new site when it's eventually finished) but it also includes a note saying that individual contracts may contact terms which will supersede the contract in case the client wants something specific. Rarely if ever done this though.

    I'll also have individual non disclosure and privacy policies when finished with tweaking but that's just me being me because I work with nda's a lot so just do that as a standard feature these days as saves hassle :)
  9. JakeS

    JakeS New Member

    Thanks a lot Levi,

    I've got quite a bit of work to do before I can officially get the ball rolling; I'm forever procrastinating saying to myself "Oh, I'll get more agency experiance and I'll come back to it a little later" But I suppose if I keep saying that I'll never do it.. I've got my own site to create as I've had my domain for like 6 month and done nothing with it haha
    But I'll do my research as well as lurk on here and absorb all I can.

    Massive help guys :)
  10. Paul Murray

    Paul Murray Moderator Staff Member

    I've been self employed since before I even left my degree. The only agency experience I have is in a temporary freelance capacity and I'm doing just fine (and I wouldn't consider myself an exemplary designer).

    If you're confident as a designer you'll be able to handle the clients. The only problem I've ever really had with clients was working for ones I probably shouldn't have. If you can spot the troublesome ones (and given enough experience, you WILL get a sixth sense about them) you can avoid 99% of the frustrations.
  11. Dave L

    Dave L Well-Known Member

    Get an accountant. This is the best advice you'll ever receive and will save you more than it costs, even on modest returns.
  12. Levi

    Levi Moderator Staff Member

    Honestly never seen the need to get an accountant... it's not exactly hard when all your billing is literally income from each job minus expenses. Yes you need to read up a little on what you can and can't claim on but it's really not that hard.
    Now if you're buying stuff in to sell like a shop or you have varying levels of vat like printers have then it might get more complicated but those of us just selling a service it really isn't that hard.
  13. AR1

    AR1 New Member

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