Week 7: Business structures and other practicalities
Introduction
Last week you focused on the potential costs of setting up your creative freelance idea and the financial investment or fundraising opportunities that might be available to support you. This week you’ll look at some of the practical issues involved in setting up and running a business, including the steps you need to take to register either as a sole trader or limited company, some of the other options you could consider, and practicalities such as pricing and invoicing.
First, watch this video of our freelance creatives sharing their views on what type of company to set up.
Download this video clip.Video player: Video 1
Transcript: Video 1
TERRI BROWN:
When I was signing up to start my company, I went through the job center, and they went through everything with me. I signed up through the .gov portal. It was so easy. Really easy. It's all really straightforward. All you have to do is really, really remember to put your tax returns in on time. Otherwise, they will charge you even if you've not earned anything. Lesson learned.
JESSICA ROWE:
It's really useful, I think, to find. Just ask somebody that you already know is self-employed, and they will help you with the process. I find that really easy.
CRAIG SPIVEY:
So I'm a sole trader, and that was the advice that I was given by my accountant because the business was just going to be me doing what I do. So that made it very easy.
JOHN SIMPSON:
But on a more business footing, I think probably being a limited company is a better idea. You're covering your overheads, you're covering anything that might happen financially. It's more of a risk to go self-employed. But I just found it easy way at the time. And I wanted to create, so money was a bit of a side issue.
CRAIG SPIVEY:
Well as my freelance career has progressed, I'm more and more of doing projects where I'm leading them, so I'm paying other freelancers. And it's all coming through me. And that is starting to have an effect on my cash flow and tipping me into a different kind of sphere. So that's a conversation I need to have with my accountant in the next couple of months.
MATT KATZ:
So the scale of some of the projects that we're delivering, it makes sense to limit liability. And also it's just financially expedient to be a limited company because it's more efficient from a tax point of view. And it's fairly straightforward to set up. You just have to pay slightly more to your accountant.
ZAKIA RASHID:
I have a family, I have a home, and I think we're in a more litigious society. And so being a limited company was important for me this time around, and it's working fine. Both ways worked, but I would have to say I think being a limited company is probably a lot more comfortable is what I've learned over the years.
MATT KATZ:
In terms of the bookkeeping and accounting, it's incumbent on you to keep slightly more detailed records and provide more information as a limited company. But it's very similar to just being a sole trader in that you still have to account for what you have spent, what you have earned, and keep that information and submit it at year end.
GARIMA KHAWAN:
My husband is very much Mr logic. His Excel sheets are coloured, sub-coloured, he meets deadlines, he makes it before deadlines, he leads a team, and he's very, very, very efficient in doing what he does. And there's a learning there. Even though I would just be happy to just spend my whole day painting and drawing and dreaming, it is a business. It is the business of art.
Video 1
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By the end of this week you should be able to:
- understand the range of formal structures available to you in setting up your business
- identify appropriate insurances and protections for your business or project idea
- approach practical issues, such as invoicing, with greater awareness.
You’ll start by looking at a broad overview of the structural options.