Finding Your Way Through Accounting as A Creative: Stay Tax-Savvy to Focus on Your Craft

The Importance of Creative Accounting 

Being creative can be an extremely rewarding experience due to how passionate you feel about bringing your creations to life, but it can also be a challenge when it comes to managing their finances.  

Unfortunately, ignoring finances can complicate accounting tasks, resulting in unwanted tax payments, additional compliance complications, and losing out on tax deductions that may deeply affect you.  

Having worked with countless professionals in the creative field, here at Creative and Numbers we know exactly how to eliminate the guess work out of tax and accounting.  So, make sure to get in touch with us for an informal chat. 

Difficulties Creatives May Face Regarding Their Finances 

Many professionals in the creative field struggle with bad budgeting primarily due to their income being so volatile and difficult to predict. Unlike traditional jobs that pay on a monthly basis, receive their payment at irregular intervals. Here are some common challenges to consider when it comes to the financial difficulties creatives face:  

• Multiple Irregular Income Sources -  can get commissions, grants, merchandise sales, crowdfunding, songs used in movies, and so much more. 

• Being Oblivious Towards Tax Responsibilities – There are quite a few artists who know nothing about deadlines, allowable expenses and VAT regulations, and therefore miss out on potential savings or penalties. For example, some artists forget that they must register as self employed with HMRC and file for a Self Assessment tax return each year. 

• Lack of Organisation – Not keeping track of finances can result in mistakes while filing taxes. Going through the hassle of keeping organised files can save an artist from underreporting income or missing claimed expenses, both of which lead to hefty tax bills. 

• Complying with VAT Laws – A lot of artists do not realise that they have crossed the VAT registration limit of £90,000, and they get caught up in the fines and administrative tax burdens that result from them being unable to register in time. 

• Blending Private and Professional Finances – A lot of independent artists are self employed and tend to have business dealings through their personal bank accounts, resulting in transactions that blur the line between professional and personal spending. This can complicate tax filings and increase the chance of missing funds. 

The Importance of Proper Accounting and Tax Management for Artists 

Having a tax accountant for artists helps with compliance, saves money, and provides financial clarity. This is how; 

1. Claiming Business Expenses Deductions 

As an artist, there are several business expenses you may claim towards your tax bill. These expenses include:  

• Art Supplies and Materials  

• Rent/Utilities for the Studio  

• Software and subscription fees (Adobe Creative Cloud, Pro Tools, Final Cut Pro etc.) 

• Professional Development (courses, seminars, books) 

• Travel for exhibitions, gigs, networking and other events 

• Marketing Websites 

• Membership fees (The Association of Illustrators, The Society of Authors) 

With help from a professional accountant, you can legally lower your taxable income by ensuring you claim all necessary deductions and staying within HMRC regulations. 

2. Understanding VAT and Staying Compliant 

If you make more than £90,000 a year, you will need to register yourself for VAT. This may feel overwhelming, but a tax accountant for artists should be able to tell you if it’s necessary and assist you with registration.  

Some artists would benefit from the VAT Flat Rate Scheme. This scheme has easier calculations for VAT because you do not monitor VAT after each sale and purchase. Instead, you pay a fixed percentage of your earnings. You can consult with your accountant to check if your business model enables the usage of this scheme.  

3. Efficient Record Keeping 

Well kept documents are essential for planning finances, tax returns and VAT records. Accountants are able to implement appropriate systems through accounting programs like Xero, QuickBooks, or FreeAgent. With these, you are able to monitor income and expenditures effortlessly. Not only will this enable correct financial documentation but it will also lower the anxiety that comes during tax season.  

4. Avoiding Penalties and Late Payments 

While these dates may seem superfluous, overlooking deadlines can cause heavy fines.  

• You need to file a Self Assessment tax return by 31 January every year.  

• If you are already registered for VAT, be aware that returns will have to be submitted quarterly.  

• HMRC are notoriously known for charging interest to late payments. 

Leaving tax returns to the professionals minimises the chances of filing them late or inaccurately, thus saving from any undue penalties. 

5. Planning Finances for Sustainable Career Paths 

The right accountant can help you forecast, manage, and allocate cash resources, and also prepare you for quiet phases in your business cycle. This covers: 

• Budgeting for variable income – Helping you create a financial cushion for unproductive months. 

• Tax reserve planning – Making sure you adequately reserve funds for tax payment. 

• Pension plan contribution – Advising on payment into pensions and savings over a long period. 

Why Work With Creative and Numbers? 

Creative & Numbers is here to help with your accounting and taxation concerns related to art, film, and design. We are well versed in the day-to-day financial difficulties that you face and give you our professional assistance to maintain your finances in check. With our deep understanding of the creative economy, we provide tailor-made answers that fit your economic needs. 

We Offer Services Such As: 

• Financial Admin Services – Managing and organising documents for proper tax claims. 

• Tax Self Assessment & Returns – Helping with filing and ensuring all deadlines are met together with all range of expenses having been claimed. 

• Registration for VAT and control of it – Making sure you register, and we assist in managing the VAT. 

• Century21 Project Management & Consultancies – Developing and executing strategies for effective and viable capital and operational expenditure throughout the project life cycle. 

• Client Account Manager – Renewal Specialist – Representing and communicating on behalf of the client where needed and safeguarding the client’s key interests. 

Let’s Lift the Burden of Accounting Off Your Shoulders 

Your wealth can be organised in a straightforward manner. With assistance, it is feasible to comply with regulations while optimising profits and concentrating on your core business functions.  

We can help you maximise your imagination while we take care of your financials. Reach out to us at Creative & Numbers today so that we can tell you how to make finances less of a headache and more about propelling you into an artistic career.