Setting up a business is not simple. It is important to know who you are as a photographer so that you can know what type of business you want to set up and create for yourself. The main types of businesses for photographers are sola trader, Partnership and Limited partnership.
A sola trader is the most popular for photographers as it is a simple working method and you have freedom with your own actions. Sole traders exclusively own the business and are entitled to keep all profits after TAX has been paid. A partnership is between two or more people who cooperate to manage and operate a business together. A limited company means that the business is a separate identity to you. Companies register under the companies act are separate legal entities in own right.
Each one has pros and cons to them and depending on yourself depend what would work best for yourself over all. With sole trader the business has to understand that an invoice is not personal money but belongs to the business and the business costs need to be met before any profit element can be spent or saved. A benefit though is you can decide what work you want to do and have the full copyright to your images.
Within a partnership or company it is hard to work out exactly who has the copyrights to the images. Also with a partnership it can sometimes get to the point were one person does more than the other meaning they should be earning more but might not be. Can also have clashes of ideas which can cause problems within a partnership. Being a sole trader does not mean you can not work with others but just means that you have the rights to what happened to your images.
A limited company you can work as an employee and hire others in to help you. It just means that you can have people helping in all other areas that might not get as much attention in a partnership or sole trader.
When setting up your business VAT is something that has to be thought about. Weather you want to be VAT registered or not, would it benefit you. VAT means value added TAX it is a goods and services tax which is based of increase in value of products or services. Individuals pay the TAX but businesses do not. The VAT fresh hold is at the moment £85,000. Vat you have to charge on top of your charges. One of the benefits working with VAT companies can give you credibility.
When starting up many businesses have to get loans to help set them up which you can not get without a business plan. A business plan is a document setting out a businesses future and aspects it wants to achieve, this is what would be taken to a bank to help get a loan to make it happen. Also you have to register for self-employed on the HMRC website.
There are many other aspects as well that have to be taken into consideration when setting up a business such as branding and marketing, which when setting up a business is covered under advertising cost which can me claimed for on TAX. This is because they are an out going expense of the business. This is also a way of networking as you do not always just network directly with people but through social media and advertising you are also networking and creating contacts. Now days online presents is a huge part of getting your name and business out for everyone to see and connect with. Everyone Pay TAX, it is a compulsory contribution that is payed to the government, based of a workers income and business profits.
Every year you submit a TAX return along with records of income and expenditure. Now within TAX there is a stranded personal allowance, which is the amount of income you do not have to pay TAX on. This amount is £11,850, this was announced in the budget back in 2017,it is eventually proposed by the government that the TAX allowance will be £12,500 a year. If you end up paying too much TAX a rebate is a particular refund to claim back what you have over payed. Now to help with TAXs you have to keep record of keeping invoices, receipts and bills.
The basic rate of TAX depends on what you are earning: £11,850 - £46,350 is 20%, £46,350 - £150,00 is 40% and over £150,000 is 45%.
It is important to look into all different types of insurance that you would need in a business s like photography, liability insurance and equipment insurance are the first that come to mind. From all this information I and researching into everything in more depth is appears to me that the right kind of business for me to go down is a sole trader. That way I can have the freedom to work with people or on my own in whatever type of photography field that I want to take. Eventually with all this information helping me I will be able to accomplish what I am setting out to do, which is run my own photography business.