Sole trader photographer

[faustvasea]

Hello.

I'm a freelance photographer based in London, and I do work as a photographer only part time. I'm very confused about paying tax, as I'm not earning as much from photography. I do have UTR number which makes me to be sole trader. The question is do I need to open a limited company if I want to invoice a client, or I can use my UTR number on invoice. Also, do I need to open a business account for that or not really?

I was researching for a while, and couldn't found right answers to my questions.

 

[MyAccountantOnline]

.... The question is do I need to open a limited company if I want to invoice a client, ....

No you don't.

You are a soletrader so just issue an invoice in your own name. (don't add the UTR)

 

[faustvasea]

No you don't.

You are a soletrader so just issue an invoice in your own name. (don't add the UTR)

Thanks a lot for your reply.
Also is that better all income from photography to have on separate personal bank account or I should open a business account?

Sorry for so many questions, I'm not really sure about how sole trader works.

 

[MyAccountantOnline]

Thanks a lot for your reply.
Also is that better all income from photography to have on separate personal bank account or I should open a business account?

Sorry for so many questions, I'm not really sure about how sole trader works.

I'd advise using a separate bank account for your business income and expenses, it'll make your bookkeeping keeping quicker and easier.

 

[MyAccountantOnline]

If you are going to look after your own accounting and tax rather than use an accountant you may find it helpful to read the information here.

 

[Paul Murray]

Get a separate bank account. Most banks will want you to have a business account now so they can charge you.

When you invoice you simply include the details of your business bank account on their and the client will likely pay straight into it. Every year you file a tax return telling HMRC what you earn and what you spend. If you're operating as a sole trader and as en employee, then there's a section to also declare PAYE income.

You pay tax on your profit, basically what is left once you've paid all your expenses. If your income is low as a sole trader and you don't really have any profit to tax then you won't have to pay it, but you'll still still be taxed on your PAYE earnings. And HMRC will still expect you to pay National Insurance contributions though, even if you're not making a profit.

 

[Gecko001]

Thanks a lot for your reply.
Also is that better all income from photography to have on separate personal bank account or I should open a business account?

Sorry for so many questions, I'm not really sure about how sole trader works.

It depends on your bank and whether they will allow you to use your personal account for business transactions. If you do not have many business transactions many banks will allow you to use your personal account. I have been using my personal account for over 20 years for my business with full agreement with my bank.

If you do decide to get a separate business account, your personal accounts (current, savings, credit cards Paypal etc.) will still be relevant as far as income tax is concerned. As a sole trader the business is not taxed. It is YOU that is taxed. So if you have interest from savings, or get other income which goes into a personal account, you will have to include that in tax returns.

 

[faustvasea]

Thanks a lot for help. I will use my personal bank account for business transactions. I just wasn't sure how should I do when I issue an invoice.

Get a separate bank account. Most banks will want you to have a business account now so they can charge you.

When you invoice you simply include the details of your business bank account on their and the client will likely pay straight into it. Every year you file a tax return telling HMRC what you earn and what you spend. If you're operating as a sole trader and as en employee, then there's a section to also declare PAYE income.

You pay tax on your profit, basically what is left once you've paid all your expenses. If your income is low as a sole trader and you don't really have any profit to tax then you won't have to pay it, but you'll still still be taxed on your PAYE earnings. And HMRC will still expect you to pay National Insurance contributions though, even if you're not making a profit.

Yes I have an other job where I'm getting paid PAYE, so taxes and insurance are deducted from salary.

 

[Gecko001]

Thanks a lot for help. I will use my personal bank account for business transactions. I just wasn't sure how should I do when I issue an invoice.
.

As has been said you must put your name and address on your invoice if you are a sole trader. You can have a trading name as a sole trader just as long as you include you own name on the invoice as well.

Here is a link which might be useful.

https://www.kent.gov.uk/__data/assets/pdf_file/0005/77900/Get-it-right-protect-your-business.pdf

 

[Carly Swinson]

Part time job means you work at your convenience. I usually do the invoicing through my email and just add my name on the rare occasions when i have to handout a paper invoice.

 

[Jeremiah@RHJ Accountants]

You may want to be aware of the following tax rates:

Basic Facts For 2018/19

The tax free allowance is £11,850 – so tax is not payable on the first £11,850 of income.

If your taxable income exceeds £100,000 this allowance is gradually withdrawn.

The next £34,500 of income is taxed at 20% - any income above this (i.e. £46,350) is taxed at 40% up to £150,000 with income over £150,000 taxed at 45%.

As a self employed person Class 2 NIC is payable at the flat rate of £2.95 per week this is usually paid by monthly direct debit although now when you file the tax return.

If your self-employment income is below £6,205, Class 2 NIC is not payable.

Class 4 NIC is also payable at the rate of 9% on self employed profits between £8,424 and £46,350 and at 2% on profits in excess of £46,350.

If you have any employees, they will pay NIC at 12% on salaries between £8,424 and £46,384 and at 2% on the amount in excess of £46,384 – as an employer you would pay NIC at the rate of 13.8% on any salary above £8,424.

 

[EnhanceAccountancy]

Something that hasn't been mentioned yet is that, if you do make a loss in the first year and you are employed elsewhere (under PAYE as a 'normal' employee) where you have had income tax taken off your pay (see payslip for 'tax to date' figure or P60/P45) - then you can offset your losses from self-employment against your salary and you can get a refund of income tax from HMRC that was overpaid through PAYE (in retrospect).

This also applies to self-employment losses you make in any future years. I.e. you can offset them against employment income in the same year that you make the loss (assuming the tax laws don't change).

You have to elect to do this though on your self-assessment tax return. It isn't automatic!
If you don't make the election, the losses will roll forward to reduce your future taxable profits from self-employment.

 

[faustvasea]

I forgot to ask one more thing, do I have to mention all my investments, as tripods, lenses cameras? If so, how could I do that?

By the way, I'm not earning even £5000 a year for now.

Thanks everyone for help.

 

[Scalloway]

You can take your existing equipment into the business at a reasonable valuation as Capital Introduced. Then you can set the Writing Down Allowance (WDA) against your taxable profits each year.

https://www.gov.uk/work-out-capital-allowances

 

[faustvasea]

Can write it even if I don't have a proper company, I mean I'm acting like self employed.

 

[Scalloway]

If you are registered with HMRC as self employed then you are entitled to capital allowances.

https://www.enterprisetax.co.uk/hmrc-self-employed-capital-allowances/

 

[faustvasea]

Thanks. One more thing, do I have to declare those money which are paid cash sometimes? Thanks.

 

[Scalloway]

do I have to declare those money which are paid cash sometimes?

Yes. Why wouldn't you?

 

[Gecko001]

Thanks. One more thing, do I have to declare those money which are paid cash sometimes? Thanks.

It is income tax evasion if you don't. That is a criminal offence.

 

[faustvasea]

Thanks once again for help