As a starting point, I think it is important to know the meaning of money management. Money management is the process of managing money, which includes investment, budgeting, banking and taxes. Both self-employed people and freelance musicians share the same goal - make money from their own business.
In order to start working as self-employed basis there are some things you need to consider. To begin with it is really important to plan your own business, set goals, set a budget, think about possible investments and register with the Inland Revenue. The Tax Year starts on the 6th of April and finishes on the 5th of April on the following year. In order to avoid some complications with taxes, it is important to register your new business with the Inland Revenue on the first day of the Tax Year.
Once you have registered with Inland Revenue, you have officially started working as a self-employed musician. It is important to keep a record of your employment income and self-employment income (in case you don’t work only as a self-employed musician); keep a record of the sales, which for a musician should be your music (including performances), records, merchandise items or even material you have that you might sell; keep a record of all the purchases for your business which might include the acquisition of new instruments, other musical material, electronic equipment or anything else that contributes for the development of your business; keep receipts from all your expenses such as travel expenses, haircuts, special coaching or training in areas related to your business, marketing and business meals; keep a record of your wages and your bank statements. You can claim all the expenses as long as you can give evidence that the items you acquired are required to run your business (Wholly and Exclusively rule).
In order to build up your entitlement to certain state benefits, including the State Pension, you need to pay National Insurance Contributions. The contributions you pay depend on how much you earn and whether you are employed or self employed. Once you reach State Pension age you stop paying National Insurance contributions. If you are self-employed you pay Class 2 and Class 4 National Insurance contributions.
If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance Contributions; if you earn between £5,315 and £7,225 you are expected to pay Class 2 National Insurance contributions at a flat rate of £2.50 a week; if you earn between £7,225 and £42,475 you have to pay Class 4 National Insurance contributions, which are paid as a percentage of your annual taxable profits – 9 per cent. If you earn over that amount the percentage is 11 per cent on your taxable profits. So that you are not faced with a huge tax bill, I think it is a good idea to estimate the amount of tax you will have to pay and save some money every month.
If your business and the goods or services you provide count as what's known as 'taxable supplies' you will have to register for VAT if your turnover for the previous 12 months has gone over £73,000, or if you think your turnover will soon go over that limit. It is unlikely for a self-employed musician to go over that limit unless it is a famous artist. You could decide to register for VAT, but if you do you might not be as competitive and it might not be worth it.
In order to start working as self-employed basis there are some things you need to consider. To begin with it is really important to plan your own business, set goals, set a budget, think about possible investments and register with the Inland Revenue. The Tax Year starts on the 6th of April and finishes on the 5th of April on the following year. In order to avoid some complications with taxes, it is important to register your new business with the Inland Revenue on the first day of the Tax Year.
Once you have registered with Inland Revenue, you have officially started working as a self-employed musician. It is important to keep a record of your employment income and self-employment income (in case you don’t work only as a self-employed musician); keep a record of the sales, which for a musician should be your music (including performances), records, merchandise items or even material you have that you might sell; keep a record of all the purchases for your business which might include the acquisition of new instruments, other musical material, electronic equipment or anything else that contributes for the development of your business; keep receipts from all your expenses such as travel expenses, haircuts, special coaching or training in areas related to your business, marketing and business meals; keep a record of your wages and your bank statements. You can claim all the expenses as long as you can give evidence that the items you acquired are required to run your business (Wholly and Exclusively rule).
In order to build up your entitlement to certain state benefits, including the State Pension, you need to pay National Insurance Contributions. The contributions you pay depend on how much you earn and whether you are employed or self employed. Once you reach State Pension age you stop paying National Insurance contributions. If you are self-employed you pay Class 2 and Class 4 National Insurance contributions.
If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance Contributions; if you earn between £5,315 and £7,225 you are expected to pay Class 2 National Insurance contributions at a flat rate of £2.50 a week; if you earn between £7,225 and £42,475 you have to pay Class 4 National Insurance contributions, which are paid as a percentage of your annual taxable profits – 9 per cent. If you earn over that amount the percentage is 11 per cent on your taxable profits. So that you are not faced with a huge tax bill, I think it is a good idea to estimate the amount of tax you will have to pay and save some money every month.
If your business and the goods or services you provide count as what's known as 'taxable supplies' you will have to register for VAT if your turnover for the previous 12 months has gone over £73,000, or if you think your turnover will soon go over that limit. It is unlikely for a self-employed musician to go over that limit unless it is a famous artist. You could decide to register for VAT, but if you do you might not be as competitive and it might not be worth it.
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