tell me about free-lance/consultancy/being self-employed

[hatwoman]

tell me anything and everything.

do you have to set up a company? are tax returns etc a pita? how did you go about testing the water without effectively announcing your intentions to everyone in your (medium-sized and incestuous) industry before you'd made a firm decision? how does your freelance pay compare with your salary?

I don't earn anywhere near the VAT threshhold but my accountant advised me to register for it. I charge it at 17.5 and repay at 11 per cent (10 the first year) so it seems worth doing.
I couldn't face doing my own accounts: VAT is straightforward, but the annual thing I farm out to pimply youth.
My pay is down on my staff job, but I work less and enjoy it infinitely more.
Being freelance has its scary moments, but in general I thrive on all the self-determination. I love refusing work that I would have felt obliged to do (whilst being bored to death by) when I was on staff.

show off

stupid question cappuccino - if you have a seperate account what do you do about piddly expenses? (I'm unlikely to have others) - travel cards and paper - stuff that you'd pay for in cash normally - or do you just spend enough in a go such that you can always use a card?

Would advise setting up separate business account, makes doing all your books etc much more straightforward. I think it's more or less obligatory if you are a ltd company, not so if you are self employed.
I am self employed and also vat registered (I find the small amount of time I put in each quarter doing my vat definitely worth it for the VAT I can claim back). Do my own vat, but pay an accountant to do my tax return each year. Holidays and maternity leave do slightly bankrupt me, but there we go...

yep. but I seriously deserve a bit of indulgence. have been thoroughly screwed over recently. eg in the loos at work yesterday crying. grinning all over my face today. amazing how far a bit of flattery goes

Cappuccino, what bank is your business account with, and are you happy with them? How much do you pay in bank charges?

Agree with myeye, love turning down work i don't want to do (flip side of that is taking on work you don't really want but need because of cash flow etc...)

Other bugbear is clients that DON'T PAY.... do you use debty collectors? take them to small claims? or if you are like me, do you just walk away from it because you can't face the confrontation?

so...idiot's guide to VAT. when I buy things I pay VAT on them. when I invoice someone I can charge them VAT. what's the claiming it back business? [thick emoticon]

I think technically a personal bank account isn't supposed to be used for business, though I don't know how many banks enforce this.

All you people who are VAT registered, is that because the people you sell to can claim the VAT back?

if you are vat registered, you can claim back the vat on any goods or services that you buy/acquire that is to do with your business. In other words, you can claim back the VAT on stationary, accountants fees, any other professional fees, telephone bills, etc.

being vat registered has its advantages and disadvantages IMO.... on the one hand, it can make you appear more professional (not saying you are not, but it puts you in the league of professionals who are perhaps turning over more than £60k...), but on the other hand, some people may get put off having to pay vat (yours) if they themselves are not vat registered. I have found it to be a useful way of sorting the serious clients from the ones more likely to take the piss (ie NOT PAY!)

Do shop around for the business bank account btw... I originally set one up w my lloyds tsb as i had had a personal bank account w them for ages. They offered me a years free banking, but then the charges kicked in and it was a bit mad. Now am with Abbey, all business banking is free, much better.

hatwoman it doesn't matter where you pay expenses from, you just need to keep a record

honestly the form is so simple - your turnover (say £10,000 for simplicity), your expenses (say £675) = your profit (if you can't work that out then you do need an accountant )

three numbers

doesn't matter which account you paid that from - for example I tot up my petrol miles and just keep a record of them on a spreadsheet. It would be silly otherwise - you'd be buying £2 of petrol to travel to a client and then stopping and buying another litre to get dd1 from Brownies

really I set my business account up primarily in order that I could pay my invoices into it and then take a monthly 'wage cheque' out just to make my family finances more simple - some months I earn more than others and I try to average it out over the year, and having it in a business account makes that easier

also another reason I set it up is that one of my clients is my dh's company, and it just seemed to be more professional and above board to have a business account with a separate business name, rather than him signing cheques out to his wife - it makes no difference I know but it feels better iyswim

redadmiral I am with the Abbey and there are no charges, I'm very happy. But my business is v small and the limits on numbers of withdrawals/ cheque pay-ins are massive compared to my piddly little numbers

Thanks. I think Abbey is best value, though I was a bit put off by a thread on here a while back where they had been absolutely crap about a client whose account has been affected by fraud.

If I was taking a low volume of sales, but for higher amounts, would that help with charges, or would I be hit by charges for small frequent outgoings?

X posted. Are the charges for each cheque you put in or withdraw? That might not be too bad for me if they are not lots for small amounts.

there are no chargers for the 1st x number of payments/withdrawals each month (can't remember the exact number, I just know I have never ever hit that number!)

(charges)

that's exactly the scenarios I was thinking about C - obviously it all works out in the end but there's a bit of me that wants it all seperate in reality - not just accounted for seperately iyswim. I'm a virgo and there's something distinctly un-virgo about paying for a travel card out of a tenner in your purse that came out of your personal account. even it gets accounted for properly. I know realistically you can;t do it any other way.

Isn't that petty cash, HW? I think you can account for that and keep it separate.

Sorry orangina, I meant charges at Lloyds or similar - still a bit reluctant ro go for Abbey at the mo.

Oh, I see (redadmiral). God, I can't remember. There was a montly charge for the sheer joy of having an account, plus charges for each and every transaction, including PAYING IN CASH.

Have been w Abbey for about 5 years now, have no complaints.

hatwoman, you could always run a petty cash box, to keep the virgo side of you happy!

(monthly)

I'm not a virgo and I know exactly what you mean

you just have to take joy and comfort from meticulous spreadsheet activity

oh and I didn't wish to make it sound like people who had accountants were thick

my business is very small scale and not v complex in terms of expenses

Hassled, why is it that your accounts are audited ?
Your turnover is over the 5.6 million audit threshold ? -