1. Financial Fundamentals for Creative
Practitioners
• Jane Norton FMAAT is the director of
Norton Accountancy Ltd
• Jane was the former trustee of Spike
Island for 5 years
• We have 3 offices (Bristol, Cardiff and
Newport) 25 staff and over 2000 clients
• Norton Accountancy acts for a large
number of artists, musicians, writers and
designers. We are very well placed to
understand taxation issues for creative
practitioners

2. Financial Fundamentals for Creative
Practitioners - Summary
So you’re thinking of starting your own business?
1) Methods of Trading
2) Business Plan: A necessity
3) Funding Requirements
1)Approaching an accountant, bank or solicitor
5) Do your research
6) Registering your business with the Revenue, Companies House etc
7) Bookkeeping
8) The importance of cash flow
9) Profit and loss
10) Annual accounts, tax liability and national insurance – when are they due?

3. Financial Fundamentals for Creative
Practitioners - Summary
11) Employing staff
12) Making your business succeed
13) Subsidising your self-employment with income from other sources such as part-time
PAYE jobs
14) Registering for VAT
15) National Insurance and how it works
16) Premises
17) Tax Credits
18) Additional information

4. Methods of Trading
• EMPLOYEE
• SOLE TRADER
• PARTNERSHIP
• JOINT VENTURE
• LIMITED COMPANY
• REGISTERED CHARITY

5. Your Business Plan
No business can survive without a Business Plan. Keep it simple and to the point. A
good business plan needs no more than ten pages for a start-up business.
What should you include?
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Front Cover
A Summary of your business proposal (a paragraph will do) and what
funding you will require
About you, almost like a CV with your strengths and why you think you
have what it takes to succeed
About the business in more detail. Market research you have done,
examples of competitors, details of your target customers
Projected profit and loss accounts
Cash flow to illustrate to the bank when and where you need funding.
Funding requirements
Any other evidence to support your plan

6. Funding
Here is your opportunity to say exactly what you need for example:
“UWE Ltd require a loan of £5,000 to purchase equipment repayable over three
years and an overdraft of £5,000 until cash flow settles down”
Make sure your funding requirements agree with your cashflow.
Here is an example of Company A which expanded too quickly:
Company A’s sales were £1,000,000 in the first three months. Their customers took an
average of 90 days to pay. Their purchases were £500,000 and they had no credit rating
so they had to pay in advance for their supplies.
Although this company made £500,000 profit in three months the business failed as
without funding they had no cash.

7. Appointing Professionals
•
•
•
•
•
•
•
•
•
•
Take advice from the appropriate professionals
Many banks offer a first meeting without charge
Arrange a meeting with an accountant to help with your business plan and to ensure
that your figures work
Be clear with professionals about what you want them to do
Some legal firms offer free business advice
Financial advisor if you want a mortgage
Health and Safety experts
Food hygiene specialists
Insurance Advisors
Employment law specialists

8. Research
•
•
•
•
•
•
•
•
•
•
Business link http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073858805
Citizens advice
http://www.adviceguide.org.uk/index/your_money/employment/self-employment_checklist.htm
Princes Trust Enterprise Programme for advice, business skills training, funding and
mentoring http://www.princes-trust.org.uk/need_help/enterprise_programme.aspx
http://www.startups.co.uk
Possible grants which help to fund new businesses
http://www.startups.co.uk/grants-where-to-get-them.html
HMRC Advice http://www.hmrc.gov.uk/leaflets/se1.pdf
http://www.hmrc.gov.uk/startingup/
Starting a Company
http://www.hmrc.gov.uk/ct/getting-started/new-company/start-up.htm
http://www.startupdonut.co.uk/
Your business idea http://www.entrepreneur.com/article/70518
21 things to research before starting a business
http://www.smarta.com/advice/starting-up/starting-your-own-business/21-things-to-research-b
The Chambers of Commerce business advice http://www.britishchambers.org.uk/

9. Registering your Business
•
•
•
•
•
•
Incorporate your business with Companies House – You can do this online but I
would generally advise you seek professional advice
If you start a new limited company you must tell HMRC within three months by
completing and send in form CT41G (New company details) to HMRC.
HMRC sends a newly formed limited company an 'Introductory Pack' within six weeks
of being told by Companies House that a new company exists. This pack contains
explanatory notes and forms CT41G (New company details) and CT41G (Dormant
company insert
It's important to complete these forms as HMRC uses the information you provide to
work out your Corporation Tax paying and filing deadlines. They'll send you form
CT610 (Corporation Tax Important Dates) to confirm these deadlines. See
http://www.hmrc.gov.uk/businesses/iwtregister-a-new-business.shtml
You don’t need to register with the registrar of names
You may need to register with organisations for legal reasons depending on the
business trade e.g. accountants, lawyers, doctors etc

10. Bookkeeping
The type of bookkeeping records you need to keep will vary according to the type of
business you have.
Look into the different software options that are available to you.
•Excel – good if well kept for business who are not VAT registered
•Cashflow Manager - a brilliant programme for businesses who are VAT registered and
need more detailed bookkeeping (about £150 +VAT) and easy to use
•Quickbooks - can be difficult to use unless you are a bookkeeper
•Sage – brilliant pro market leader but overkill for small businesses. Good Sage
Bookkeepers charge £30 per hour indicating that it is a complicated programme.

11. The Importance of Cashflow
PROFORMA CASH FLOW PROJECTION FOR ………………
APRIL
Bal b/f
Capital Introduced
0
1000
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER DECEMBER
JANUARY
FEBRUARY
MARCH
-5335
2463
7347
16545
27543
32077
43759
55957
59291
70989
82687
10000
11500
12000
13500
14500
14500
14500
14500
14500
14500
14500
2000
2300
2400
2700
2900
2900
2900
2900
2900
2900
2900
1000
6665
16263
21747
32745
44943
49477
61159
73357
76691
3666
1833
1833
1833
1833
1833
1833
1833
1833
1833
Sales
Vat
Total available
MAY
FOR Y/E …………………..
88389 100087
Less Expenses
Purcahses
Premises Costs
1833
1833

12. Profit and Loss
PROFORMA PROFIT AND LOSS ACCOUNT FOR ………………………….
for the 12 months ended …………………
example
£
Income
175,000
less cost of sales
Purchases
-22,000

13. Record Keeping for Self Assessment
• There are minimum periods for which you must keep records, e.g. six years for VAT
or five years from the latest date for filing your return for Self Assessment. You may
need to look back at them yourself, and HMRC may need to see them if there is any
question over your tax.
• You can claim expenses that are wholly & exclusively for business use. These
expenses vary from trade to trade.
• Examples of allowable expenditure:-
Materials
Research materials
Photography / video
expenses
Studio expenses
Telephone
Protective clothing
Proportion of home
studio rent & rates
Printing / Postage /
Stationery / Cleaning
Capital expenditure
on equipment
Motor expenses
Exhibition expenses
Insurance

14. Annual Accounts
•
Your annual accounts help a business to analyse it’s activities during the past
financial year
•
When you form a limited company, you’re obliged by law to file annual accounts with
Companies House
•
Most small companies will qualify for reduced disclosure in their accounts, and
therefore the accounts that are filed at Companies House, often only show a balance
sheet and some notes (‘abbreviated accounts’).
The first set of accounts will need to be filed with Companies House within 21 months
of the date of incorporation. Thereafter, they will need to be filed within 9 months of
the ‘accounting reference date’ (effectively the company’s year end), unless the
accounting reference date is subsequently changed.
•
There is no fee for filing your Annual Accounts with Companies House but you do
have to pay for filing your Annual Return.

15. Tax Returns
• If you are self employed each year you must submit a tax return declaring your
income on paper by 31 October or online by 31 January after the end of the tax year.
• The tax year runs from 6 April to 5 April so if you trade in the years 6 April 20X0 to 5
April 20X1 your tax return for 20X1 will need to be submitted online by 31 January in
20X2 and all the tax due needs to be paid by then. The same applies to any losses
you wish to claim.
• If you fail to submit your tax return by 31 January following the year of trade you will
get an automatic £100 penalty.
• Limited companies must pay corporation tax. You must file your company or
organisation's Company Tax Return within 12 months of the end of your company or
organisation's Corporation Tax accounting period. If your company or organisation
has taxable profits of up to £1.5 million, you must pay your Corporation Tax by the
normal due date, which is nine months after the end of your Corporation Tax
accounting period. For example, if your company's accounting period ends on 31 May,
your Corporation Tax payment is due on or before 1 March the following year.
•http://www.hmrc.gov.uk/ct/index.htm

16. How Tax Affects You
Income Tax allowances
2013-14
2012-13
2011-12
Personal Allowance (1)
£9,440
£8,105
£7,475
Income limit for Personal Allowance
£100,000
£100,000
£100,000
Personal Allowance for people aged 65-74 (1)(2)
£10,500
£10,500
£9,940
Personal Allowance for people aged 75 and over (1)(2)
£10,660
£10,660
£10,090
Married Couple's Allowance (born before 6th April 1935 but
aged under 75) (2)(3)(4)
N/A
N/A
N/A
Married Couple's Allowance - aged 75 and over (2)(3)
£7,915
£7,705
£7,295
Income limit for age-related allowances
£26,100
£25,400
£24,000
Minimum amount of Married Couple's Allowance
£3,040
£2,960
£2,800
Blind Person's Allowance
£2,160
£2,100
£1,980
Rate
2013-14
2012-13
2011-12
Starting rate for savings: 10%*
£0-£2,790
£0-£2,710
£0-£2,560
Basic rate: 20%
£0-£32,010
£0-£34,370
£0-£35,000
Higher rate: 40%
£32,011 £150,000
£34,371£150,000
£35,001 £150,000
Additional rate: 50%
£150,000+
(45%)
£4,250
£150,000+
£150,000+
£4,250
£4,250
Rent a Room Limit

17. Employing Staff
•
•
•
•
•
•
•
Research the implications of employing staff. See http://
www.startinbusiness.co.uk/flowchart/4flowchart_employment.htm and
http://www.nowletsgetstarted.co.uk/thinking_about_taking_on_staff.aspx
Set up a PAYE scheme. See http://
www.hmrc.gov.uk/paye/payroll/year-end/annual-return.htm#12 and
http://www.startupdonut.co.uk/startup/tax-and-national-insurance/how-to-work-out-tax-and-ni
Don’t use freelancers or self employed “contractors” without taking professional
advice
Make sure you have adequate employers liability insurance
Give staff clear job descriptions
Give staff a contract of employment within two months of their start date
Know your responsibilities regarding sick pay, holiday pay, maternity pay, when and
how you can dismiss staff

18. Making a Success of your Business
•
•
•
•
•
•
•
Pay attention to your business plan – if your plan doesn’t work your business will fail
Check your bank weekly and ensure your bookkeeping is up to date
Ensure you don’t sign anything without reading it first and if in doubt get all legal
contracts checked
Always deliver to customers what you have promised
Don’t bleed the company dry
Pay serious attention to cashflow
The more effort and energy you put into your business the more you are likely to
succeed

19. Subsidising your Self-employment with
income from other sources
•
•
•
•
You can receive up to £4,250 tax free with the rent a room scheme
Work part time
Tax credits www.hmrc/taxcredits for over 26 year olds
Look at maximising the benefits of your business – i.e. teaching about your trade

20. VAT
• You will need to register for VAT If your turnover of VAT taxable goods and services
supplied within the UK for the previous 12 months is more than the current registration
threshold (£79,000 for 2013/14). The VAT Deregistration threshold is £77,000.
• Who can register for VAT?
An individual, a partnership, a company, a club, an association, a charity,
any other organisation or group of people acting together under a particular name,
such as an educational or health institution, exhibition, conference, etc. For VAT
purposes, the individual or organisation that is in business is known as a 'taxable
person'.
• Who can’t register for VAT?
Any individual or organisation that sells only goods or services that are exempt from
VAT or that isn’t in business according to the definition that HM Revenue & Customs
uses for VAT purposes
• Voluntary Registration
Available if you supply to other VAT registered business or if your capital outlay is
high

21. National Insurance
2013-14
2012-13
2011-12
Lower earnings limit, primary Class 1
£109
£107
£102
Upper earnings limit, primary Class 1
£797
£817
£817
Upper accruals point
£770
£770
£770
Primary threshold
£149
£146
£136
Secondary threshold
£148
£144
£136
Employees’ primary Class 1 rate between primary threshold and upper earnings limit
12%
12%
12%
Employees’ primary Class 1 rate above upper earnings limit
2%
2%
2%
Class 1A rate on employer provided benefits (1)
13.8%
13.8%
13.8%
Employees’ contracted-out rebate
2%
2%
1.6%
Married women’s reduced rate between primary threshold and upper earnings limit
5.85%
5.85%
5.85%
Married women’s rate above upper earnings limit
2%
2%
2%
Employers’ secondary Class 1 rate above secondary threshold
13.8%
13.8%
13.8%
Employers’ contracted-out rebate, salary-related schemes
3.4%
3.4%
3.7%
Employers’ contracted-out rebate, money-purchase schemes
N/A
N/A
1.4%
Class 2 rate
£2.70
£2.65
£2.50
Class 2 small earnings exception
£5,725 per year
£5,595 per year
£5,315 per year
Special Class 2 rate for share fishermen
£3.35
£3.30
£3.15
Special Class 2 rate for volunteer development workers
£5.45
£5.35
£5.10
Class 3 rate
£13.55
£13.25
£12.60
Class 4 lower profits limit
£7,755 per year
£7,605 per year
£7,225 per year
Class 4 upper profits limit
£41,450 per year
£42,475 per year
£42,475 per year
Class 4 rate between lower profits limit and upper profits limit
9%
8%
9%
Class 4 rate above upper profits limit
2%
2%
2%

22. Premises
•
•
•
•
•
Read any lease you receive before signing and take legal advice
Look at shared space such as BV Studios www.bvstudios.co.uk Spike Island studios
for artists www.spikeisland.org.uk or Spike Design
www.spikeisland.org.uk/spikedesign
Look into hot-desking for instance at http://www.funkyspaces.co.uk/ or Paintworks
www.paintworksbristol.co.uk or Wilder Studio
http://wilderststudio.co.uk/open-office/30-2/#.TrmaiEOhlEo
Look into working at home
Find a location that is close to the amenities you need for instance near a reliable
printing studio or a post office

23. Additional Information
Norton Accountancy Ltd
7 Soundwell Road
Staple Hill Bristol
BS16 4AG
Tel: 0117 910 9858
bristol@nortonaccountancy.co.uk
www.nortonaccountancy.co.uk