Whether you are a graphic, fashion or jewellery designer, your focus should be on your creative outlet and not the red tape of self employment.
But there are certain requirements that every freelance designer must take into account. There are specific forms and legislation to adhere to and ways of working to help you boost your income.
We’ve spoken to the clever people at specialist freelance accountancy firm Nixon Williams about the necessary steps to becoming your own boss and how to make sure you maximise your take home pay. It is always best to get some tailored advice for your individual working situation – but let’s go through some of the most likely scenarios now.
Sidelining as a sole trader
If you’ve already got a permanent role with an agency, you may want to test the water with a few little projects on the side to see if freelancing is a viable option before giving up the day job.
Do you have to tell your boss? Not necessarily, as Martin Brennan, Practice Manager from Nixon Williams, explained: “It is not a legal requirement to tell your boss about part time freelance work, but it may be advisable in case of any potential clauses or conflicts in your contract.”
If you decide to just do a little part time freelance work, then the simplest route is often to become a sole trader. All you have to do is register with the HMRC by filling in a CWF1 form within three months of setting up your part time work. Then after the end of the tax year, which is April 5th, you complete a Personal Tax Return to make sure you give the tax man what he’s owed.
If you decide to become a sole trader, it may be best to have a chat with an accountant as there may be tax implications you could be stung by, or allowances that you are not taking advantage of.
Bye bye 9-5
If your sideline becomes your main line and you move into freelancing on a permanent basis, you may find yourself working for a range of different companies and clients.
This is where things get interesting, and potentially a little difficult, as Brennan explained: “Working as a sole trader may not be the best option when you move to a more permanent freelance position and it could be financially beneficial to set up as a limited company, umbrella company or another working arrangement.”
“Either way, you will need a lot of tax and accountancy advice and support in these early days,” Brennan added.
Picking an accountant
Engaging with and picking an accountant can be a daunting thought, but they don’t bite.
One major consideration is hidden costs. Some accountants will charge you every time you pick up the phone for a little advice. Others will be difficult to get hold of and will only be accessible during the 9-5 working day. Also, make sure you pick a firm that specialises in the freelance market.
This is where Nixon Williams steps up to the mark. They offer a flat rate monthly fee and you get a dedicated accountant that you can bug day and night with all those tax and accounting questions at no extra cost.
OK, you can’t ring your accountant in the middle of the night – but Nixon Williams has that covered too with its ‘Vantage’ online portal. Here you can access and edit your personal accounts, get a snapshot of your financial situation and access a heap of information on working as a freelancer. It’s designed for those with little to no knowledge of accounting, and there’s an app for easy access to the system.