If your creativity is your fulltime business or a hobby that enables you to treat yourself – if it is earning money it is a business!
As such you need to start thinking with a little bit of a business head on – this is not a lecture and I’m not going to give any tax advice! However if you are thinking your creative business will be your fulltime business in the future you need to start thinking of it as a business now.
What’s the difference?
Mostly it’s ensuring you know your numbers…
Material costs are relatively easy – you have the receipts, record them in some accounting software or a spreadsheet.
Time is also relatively easy (if we ignore how you calculate your hourly rate – that’s a whole separate blog post!) simply make a note of how long you spent on each project.
But what about other costs?
Here are 5 other costs which could be included in your accounts (if applicable to you) which you need to be mindful of when you price your work.
They will also reduce your tax bill!
Overheads
Gas, electric etc. are an example of costs which are easily forgotten when you’re not used to thinking as a business – especially if you work from home.
In the UK sole traders and partnerships working from home can use the HMRC flat rate to easily work out what to include in your accounts:
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
Mileage
You may not think to include mileage if you don’t deliver a product, I know I didn’t for the first few years and I’m an accountant!
But if you need to collect items for your business, for example collecting a specific material or taking a painting to the framers, an exhibition etc. then these mile are business miles and the cost needs to be in your accounts.
Record the day, place and reason for the trip in either a spreadsheet or a mileage app if you make a lot of trips – you can then use the RAC route planner (or maps etc.) to find the number of miles to the destination, record the number of miles times two as you will be coming back!
You can then use the HMRC (for the UK) flat rate mileage to work out the amount to put into your accounts.
Insurance
Whether that’s product insurance, public liability insurance or other business insurance that is relating to your business it needs to be recorded in your numbers.
Subscriptions
These are memberships to guilds or other organisations relating to your business, for example your local art group, the Fine Art Guild etc. all your annual creative subscriptions (which relate to your creative business!) need to go through the business.
Admin Costs
This is another expense which gets overlooked, if you’re printing loads of reference photos out, or instruction sheets etc. you need to include the cost of your printer ink. There are many other ‘admin’ style expenses including notebooks etc. which need to go into your records!
This is not an exhaustive list and it will be different for each business but hopefully you are starting to think wider than the costs of materials and time.
When you know your numbers you also know how much more than just time and materials you need to include in your pricing for your business to become financially viable which is a major step to becoming a fulltime creative!
This is a long blog – don’t feel overwhelmed, take one step at a time and shout if you have any queries!
Do what you love and be kind to yourself.
Su x
