Freelancing &
Self-Employment
in the Creative
Industries
3
Practicalities Of Freelancing And Self-Employment
As soon as you start earning money as a freelancer you should declare yourself
self-employed for tax purposes. HM Revenue & Customs (HMRC) will assess
each year any tax due from your earnings and you will also have to pay your
own national insurance contributions. Consequently, it is important that you
read the relevant information on the HMRC website to ensure you understand
your responsibilities as a freelancer. Do not avoid these tasks as failure to do so
may result in incurring a fine.
Tax and National Insurance
Resources for finance and tax:
•• Check your employment status - If you are unsure of your employment status (which may affect your rights to benefits, tax requirements and more).
•• Citizens Advice Bureau – Information for starting a business in Scotland including a checklist regarding practical issues such as account keeping, tax and national insurance.
•• HMRC Check your employment status
•• HRMC - Introduction to VAT
•• HMRC Working for Yourself – a useful overview of the essential considerations
•• HMRC National Insurance Rates for Self-Employed
••
Independent Contractor Services – Company specialised in providing accountancy and administration services for contractors across the UK. May be useful for those who want an umbrella company to take care of the financial matters related to their freelance business.
•• HMRC Self Assessment Tax Returns – a useful overview of whether you need to complete a tax return, deadlines for doing this and more
•• HMRC Simplified Expenses Claim
•• HMRC e-learning course
Record Keeping
•• It is a requirement to keep records (paper or digital based) of all income and payments when self-employed.
•• These records, which may include invoices, receipts of business or over
head costs and/or bank statements, must be kept for 6 years.
There are various methods you can use to file and store the information including using basic Microsoft Excel, accounting software or outsourcing the work to
a specialist firm for a small fee.
Record keeping is not only required for legal reasons, it is also a useful way to
track your performance and will make the process of providing tax information
at the end of the year much easier.
The HMRC website contains a wealth of information on the topic of record
keeping, and they also run short courses across the country covering a range of
finance-related topics:
•• Government advice on what records to keep if you are self-employed
•• How to claim expenses if you are self-employed
•• HMRC e-learning course
Contacts
It may be that prior to the contract you are asked to provide a quote for the
work. In this case you will provide upfront details of the costs and you may also
choose to send your terms of service that will include information similar to
that included in the contract (payment terms, the process for rebilling any extra
costs and ownership of the work). A quote gives the client a chance to see the
conditions of work clearly set out. They can then make a decision on whether
or not to go ahead with the work which would be confirmed this within the
signed contract.
It is always a good idea to create a contract (a written agreement signed by
you and the client) for each project or piece of work you undertake. This helps
to ensure both parties have agreed expectations on the work to be completed
and associated outcomes. The contract does not have to be long but needs to
include information such as project details, deadlines for completion, payment
rate, confidentiality and copyright agreements. It is important as this may
determine whether or not you own the completed work and can show it within
your portfolio.
Invoicing
You will need to have an invoicing template in place to send to any customers
once your work is completed. In general, you should include the following
details as a minimum:
•• Business information such as the company name and address, VAT number if applicable and invoice number.
•• The total amount that needs to be paid. This may also be broken down to itemise and detail any individual costs.
•• Payment terms including how to pay and by when. Ensure you include all details required to make payment for example your bank account or Paypal details.
Banking & Insurance
It is always advisable to conduct any banking relating to your freelance work
separate to your personal banking. Research and compare the offers available
to ensure you set up a business account with a bank that offers what you need
whether its low fees, specific advice or other incentives.
It is essential to have adequate insurance cover in place. This may include
public or product liability and/or professional indemnity cover if you are
providing advice as part of your service. Additionally, you will need insurance to
cover any essential equipment you need to carry out your work and it is worth
checking your home insurance policy for any restrictions that may apply to
conducting business activity. If you are working for an agency or organisation
you may be covered under their insurance. If not, look to get cover from a
broker or company that specialises in insurance for freelancers within the
creative industries.
Protecting your work
When working as a freelancer in the creative industries it is really important
to protect your work, for example your brand, logo, websites, photographs,
designs, compositions, recordings and films. These are referred to as
‘intellectual property’ and can be protected in law by patents, copyright and
trademarks. It can be a tricky topic to get your head around, for example
establishing when and if the work you carry out for a client becomes their
property so it is a good idea to check out the Resources section of this leaflet to
learn more about this area.
Resources for protecting your work:
You need to make sure you know your rights when it comes to owning your
work. Have a look at the links below to make sure you know everything that is
necessary:
•• Intellectual Property Advice for the Creative Sector
•• Copyright User – this is a new website which gives straightforward explanations to commonly asked copyright questions.
•• Intellectual Property Office
•• Design and Artists Copyright Society
•• Public Art Online – Practical advice on copyright, commissioning work and insurance for artists.
•• Copyright Licensing Agency Guide – An introduction to copyright in the creative industries and reference guide to related organisations.