Ah, the dreaded tax return... thankfully, the problem I mentioned with my password was not a permanent one and I got my taxes in on time. I managed to do it in the early hours of last Friday morning; it turns out that if you wait until after midnight then the Inland Revenue website works just fine. Apparently my password wasn't a problem at all, the website had simply fallen down from exhaustion earlier that day. And really, who can blame it? I know from past experience that I am certainly not the only person who does my taxes right at the last minute.
According to the Inland Revenue's own figures, they hit peak numbers on Friday 30th January with 390,000 of us filing our taxes only a day before the deadline. It's a bad habit and I plan to be more organised about it next time around... but then I always say that and I bet those other 389,999 people do as well!
Seriously though, my current accounts are a bit of a shambles and I need to get my art assistant, The Wonderful Zoë, to sort me out. She's been self-employed for years and rolls her eyes at the organised chaos of my accounting 'system'.
I do keep all my receipts (ordered by month in small plastic folders) and all my bank statements (ordered by tax year) but I don't do two things that I should - I don't have a separate bank account for my art business (which makes doing my incomings an absolute nightmare) and I don't keep an accounts book. Both those things have always seemed like just too much of a bother when I rarely make any money at my art but I have decided that this year, it's time to tackle them for three reasons. Firstly, if I start making money in the future then it will be vital to have solid accounting practices already in place. Secondly, if I'm ever investigated by the Inland Revenue, my current practices might look suspicious when really it's just incompetence! And thirdly, it will make doing my taxes a whole lot easier and anything that stops me having a nervous breakdown at tax time is obviously A Very Good Thing: I know that my long-suffering family would certainly be grateful!
The current plan is that Zoë is going to bring one of her account books over for me to have a look at and then talk me through it and then I'm going to open a new bank account, move everything to where it should be and buy and start using an accounts book. Simple, no? My deadline for this is April, so that I can start the next tax year properly with all my new systems in place.
What sort of state are your accounts in? Do you do everything you 'should'? Finances can be a difficult and emotionally tense area for a lot of people and although I believe that artists are generally far more practical and grounded than most people give us credit for, we're certainly not immune to Head-In-The-Sand Syndrome when it comes to our accounts.
Tina Mammoser
First of all, congrats on getting it done. :)
I just kept my accounts in a written ledger for years. Just single-entry credits and debits. Eventually I moved over to a super duper simply accounting programme called TinyBooks (for the Mac, http://www.winograd.com). A few years ago I hit that dreaded turnover where I had to actually categorise my expenses. Yikes! Since then they've raised that limit so I don't have to anymore, but it was actually a really good thing to do for my own accounts. I recommend using the IR's guideline list from the self-employment help pages. As artists some of our stuff doesn't quite fit the categories but I did what seems logical.
Best part about those categories? It means at year-end I can really see where I spent what money (great for seeing where I can cut costs) and what brought in money (offline sales? online sales? direct or gallery? freelance work?) It's useful for making my biz plan for the following year.
Oh, and I opened a biz account with Lloyds in autumn. Makes me feel like a grown-up! haha! They were very nice and the guy was happy to hear about my odd (artist) business and help me work out what was best for me. But be careful of fees. Lloyds has various different biz accounts and during the free period (6 months) they still show you all the fees then zero them out, so you can get a good idea of what kind of account to choose at the end. I've decided it's well worth it to separate out my personal and business spending. The hardest part is remembering to allow 4-5 days to "pay" myself if I need to transfer money over! ;)
Tina Mammoser
First of all, congrats on getting it done. :)
I just kept my accounts in a written ledger for years. Just single-entry credits and debits. Eventually I moved over to a super duper simply accounting programme called TinyBooks (for the Mac, http://www.winograd.com). A few years ago I hit that dreaded turnover where I had to actually categorise my expenses. Yikes! Since then they've raised that limit so I don't have to anymore, but it was actually a really good thing to do for my own accounts. I recommend using the IR's guideline list from the self-employment help pages. As artists some of our stuff doesn't quite fit the categories but I did what seems logical.
Best part about those categories? It means at year-end I can really see where I spent what money (great for seeing where I can cut costs) and what brought in money (offline sales? online sales? direct or gallery? freelance work?) It's useful for making my biz plan for the following year.
Oh, and I opened a biz account with Lloyds in autumn. Makes me feel like a grown-up! haha! They were very nice and the guy was happy to hear about my odd (artist) business and help me work out what was best for me. But be careful of fees. Lloyds has various different biz accounts and during the free period (6 months) they still show you all the fees then zero them out, so you can get a good idea of what kind of account to choose at the end. I've decided it's well worth it to separate out my personal and business spending. The hardest part is remembering to allow 4-5 days to "pay" myself if I need to transfer money over! ;)
Barbara J Carter
Hi Kirsty,
Sounds like you're in good shape with your accounting!
I'm in the U.S., but it all sounds pretty similar. I do have a separate business checking account, in addition to my personal account. I mostly have the biz account for my merchant account (so I can accept payment by credit cards). It sure feels good to be able to "pay" myself by transferring money from the biz account to the personal account!
I keep track of income and expenses in Excel spreadsheets that I set up myself. So far, I'm happy with my system. I did try to use IRS categories, but customized them for the idiosyncratic business that is art. It does let me know where the money's coming from, and where it goes.
deb
like you my art doesn't generate a lot of income, not a lot of buyers for huge paper installations, but I did get a tax number for my studio and finally opened a separate business account, but I am not good with money and teh whole thing makes me nervous!
deb
like you my art doesn't generate a lot of income, not a lot of buyers for huge paper installations, but I did get a tax number for my studio and finally opened a separate business account, but I am not good with money and teh whole thing makes me nervous!
Barbara J Carter
Hi Kirsty,
Sounds like you're in good shape with your accounting!
I'm in the U.S., but it all sounds pretty similar. I do have a separate business checking account, in addition to my personal account. I mostly have the biz account for my merchant account (so I can accept payment by credit cards). It sure feels good to be able to "pay" myself by transferring money from the biz account to the personal account!
I keep track of income and expenses in Excel spreadsheets that I set up myself. So far, I'm happy with my system. I did try to use IRS categories, but customized them for the idiosyncratic business that is art. It does let me know where the money's coming from, and where it goes.