Starting your Illustration Business
Starting your Illustration Business- Registering as Self-Employed
Becoming a 'Freelance illustrator' means starting your own business.
This means that you have to register and fill an annual self-employment tax return form available at the government's website.
First thing first - let the government know you have a business.
Then each year pay the income tax. If you don't pay the tax it can be considered as tax evasion. This could lead to a jail sentence.
Good news is that you can be employed (part-time job) and self-employed at the same time.
The employer wage pays your tax and NI (national insurance-state pension) contributions automatically.
When you become self-employed you have to do it yourself.
You should register within 3 months of your first commission.
The forms are available at the HMRC website - clearly and fully fill in the information and details.
Income tax - is payable after you start earning 11,000 pounds in earnings.
NIC - National insurance state pension - you should avoid leaving any gaps in paying your NI, as this could provide problems in receiving care etc. You need a total of 30 qualifying years of national insurance contributions or credits to get a full basic state pension.
When u don't work - pay NI - you can also get a jobs seekers allowance.
class 2- profits of 5,965 a year or more
class 4- 8,060 or more a year
Tax year lasts from 6th April one year to the 5th April the next year.
An example - 6th April 2017 - 5th April 2018
When you register allow for the business start on 6th April. It just makes life easier.
Keep records - book-keeping- all receipts, receipts everywhere!
Include invoices to clients and receipts for business expenses.
Calculating your tax is easy.
Just take your income total - business expenses = profit
Let's say your income is 16,000 pounds and your business expenses were 2,000 pounds.
16,000 - 2,000 = 14,000 profit. You only get taxed on your profit!
With the tax-free allowance of 11,000 - 3,000 is taxable income, of which only 20% is taken, making it 600 pounds of tax and NI is 10%, so it is 300 pounds = 900 pounds of tax.
Keep it clean and serious.
Remember that you also have to pay off your student loan, make sure you keep your tax return money in a separate account along with your student loan repayments, this way you will be less likely to spend it.
What are business expenses?
It is any equipment, art equipment, and other costs spent.
Computer, laptop, pens, inks, related books, travel costs, workshop costs, phone bills (just a proportion), tablet, scanner, website fees (domain).
WHAT ISN'T EXPENSES?
Clothing, food, holidays etc.
Keep your receipts!!! - tax year .........., print them and keep them safe. - You are obliged to keep the records for 7 years!
How to do it?
Keep them organized and clearly labeled
Section 1 - Invoices (12 sleeves - 1 sleeve per month)
Section 2 - Receipts (12 sleeves - 1 sleeve per month)
Stick receipts on a A4 sheet - write what it was for - remember that receipt ink fades with time, scan them in, keep them in a separate folder on your hard disk.
Create a simple Excel spreadsheet - one for invoice and one for expenses.
Make sure that you put at least 30% of each invoice earning into a separate account for your tax - it has to be paid all at once.
Fill your self-assessment tax return after April 6th and pay by 31st January next year.
Becoming a 'Freelance illustrator' means starting your own business.
This means that you have to register and fill an annual self-employment tax return form available at the government's website.
First thing first - let the government know you have a business.
Then each year pay the income tax. If you don't pay the tax it can be considered as tax evasion. This could lead to a jail sentence.
Good news is that you can be employed (part-time job) and self-employed at the same time.
The employer wage pays your tax and NI (national insurance-state pension) contributions automatically.
When you become self-employed you have to do it yourself.
You should register within 3 months of your first commission.
The forms are available at the HMRC website - clearly and fully fill in the information and details.
Income tax - is payable after you start earning 11,000 pounds in earnings.
NIC - National insurance state pension - you should avoid leaving any gaps in paying your NI, as this could provide problems in receiving care etc. You need a total of 30 qualifying years of national insurance contributions or credits to get a full basic state pension.
When u don't work - pay NI - you can also get a jobs seekers allowance.
class 2- profits of 5,965 a year or more
class 4- 8,060 or more a year
Tax year lasts from 6th April one year to the 5th April the next year.
An example - 6th April 2017 - 5th April 2018
When you register allow for the business start on 6th April. It just makes life easier.
Keep records - book-keeping- all receipts, receipts everywhere!
Include invoices to clients and receipts for business expenses.
Calculating your tax is easy.
Just take your income total - business expenses = profit
Let's say your income is 16,000 pounds and your business expenses were 2,000 pounds.
16,000 - 2,000 = 14,000 profit. You only get taxed on your profit!
With the tax-free allowance of 11,000 - 3,000 is taxable income, of which only 20% is taken, making it 600 pounds of tax and NI is 10%, so it is 300 pounds = 900 pounds of tax.
Keep it clean and serious.
Remember that you also have to pay off your student loan, make sure you keep your tax return money in a separate account along with your student loan repayments, this way you will be less likely to spend it.
What are business expenses?
It is any equipment, art equipment, and other costs spent.
Computer, laptop, pens, inks, related books, travel costs, workshop costs, phone bills (just a proportion), tablet, scanner, website fees (domain).
WHAT ISN'T EXPENSES?
Clothing, food, holidays etc.
Keep your receipts!!! - tax year .........., print them and keep them safe. - You are obliged to keep the records for 7 years!
How to do it?
Keep them organized and clearly labeled
Section 1 - Invoices (12 sleeves - 1 sleeve per month)
Section 2 - Receipts (12 sleeves - 1 sleeve per month)
Stick receipts on a A4 sheet - write what it was for - remember that receipt ink fades with time, scan them in, keep them in a separate folder on your hard disk.
Create a simple Excel spreadsheet - one for invoice and one for expenses.
Make sure that you put at least 30% of each invoice earning into a separate account for your tax - it has to be paid all at once.
Fill your self-assessment tax return after April 6th and pay by 31st January next year.
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