My Money: Issue 2 by My Money Magazine

F I N A N C E S

F O R

T H E

S E L F - E M P L O Y E D

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SUMMER 2018

S M A R T

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My Money

EDITOR

Jyoti Rambhai DESIGN

Dunni Mustapha Martin Harling-Coward MARKETING MANAGER

Toby Tetrault

CONTENT MANAGERS

Patrik Wagner Alex Mahon REPORTERS

Tom Hayward Tristan Grove Tom Purvis

We understand that taking case of your money can seem rather daunting for many freelancers. That is why, to complement our regular magazine, Modern Work, we have created My Money – a hub of advice, information and ideas on all things freelance finance. Working with IPSE’s partners from across the world of self-

PARTNERS

Jyoti Rambhai, editor

Take control of your tax affairs

Suited and booted: interview with Zachary Falcon

Too good to be true: How to protect yourself from pension fraud

IPSE, Heron House, 10 Dean Farrar Street, London SW11 0DX

IPSE MEMBERSHIP ENQUIRIES

020 8897 9970 ipse.co.uk

How to start your online store with Wix

IPSE Explainer: Inflation

Shooting the Breeze: interview with Johnny Breeze

Managing your business finances

Building your credit score for business

This publication (and any part thereof) may not be reproduced, transmitted or stored in print or electronic form, or in any other format, without the prior written permission of IPSE. IPSE, its directors and employees have no contractual liability to any reader in respect of goods or services provided by a third-party supplier.

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Enjoy the read!

PUBLISHED BY

IPSE does not necessarily agree with, or guarantee the accuracy of, statements made by contributors or accept any responsibility for any statements which are expressed in the publication. All rights reserved.

Our second edition covers everything from credit scores and co-working spaces to pensions and taking control of your taxes. If you have ever wanted to find out how a suave sense of fashion

can lead to a suite of successful businesses, read our interview with Zachary Falcon. Or if you are new to freelancer, find out how inflation can affect your business in our IPSE explainer section.

Contents

ADVERTISING

marketing@ipse.co.uk Intuit Quickbooks Close Brothers Asset Management Wix Experian Optionis Aon

employment, we’re committed to bringing you a magazine that offers all the support you need as a freelancer to manage your money.

Is the rise of self-employment driving down home ownership in the UK?

Is your contract caught inside IR35?

Side hustle: piece of cake

Self-employed insurance 101: what cover do you need?

Quiz: test your knowledge

C LO U D B A S E D BOOKKEEPING Content provided by

INTUIT QUICKBOOKS

Take control of your tax affairs By Dominic Allon, vice president and managing director of Intuit Europe

When you become self-employed, filing taxes – like all aspects of running a business – is completely down to you. It’s just one more thing on a long list of tasks, such as developing products or chasing payments.

My Money

Considering most established businesses tend to handle their tax affairs behind closed doors, it can feel like a completely alien concept. The word is enough to fill some with fear. After all, it’s something you’ve never had to actively deal with in your day-to-day life as a fulltime employee. But getting to grips with every single one of your outgoings is crucially important when running a business.

According to our research, separating business and personal finances takes on average over two hours per week. That’s equivalent to 15 working days a year. The self-employed must find a cost and time-efficient way to untangle their accounts on an ongoing basis.

Using the cloud To those traditionalists still keeping paper records, going digital might feel a little daunting. However, millions of businesses have already benefited from going digital through software and apps. The cloud allows you to manage your accounts online, wherever and whenever it’s convenient. This means you can untangle your business and personal expenses on the go for instant tax estimates. You can also get a full view of income, capture receipts with a phone and categorise expenses with a couple of clicks on a mobile app. Easy! Using technology to give you confidence in your finances will help you get back to doing what you do best – running your business.

Thankfully, there are some really easy ways to take control of your tax affairs, so that you can file correctly and with minimal effort. We know that time is one of the most valuable resources for self-employed workers, so anything you can do to make the process faster and more efficient is worthwhile. It will help you get back to focusing on what’s important to you: delivering great work and growing your business. And, more than just being that next task on your to-do list; effective tax management will provide you with a better overall picture of your finances, helping you to make more informed decisions over how, when and where to invest funds. Here are my tips to help you master your taxes.

Getting up and running If you’re just starting out, the first step is registered with HMRC – this will ensure you are recognised as one of the nearly five million selfemployed workers in the UK. This allows you to send tax returns, check payment due dates and view your account status online. Doing this as soon as possible will also help you to avoid unnecessary ‘late fees’. A recent Intuit Quickbooks survey of over 5,000 self-employed workers across the UK found that they were fined an average of £437.44 across their self-employed career for filing tax returns late – an easily avoided cost that you could do without.

Avoiding end of year surprises When you’re not office-based or overwhelmed by financial admin, the temptation is to let financial admin build up until you’re able to sit down and manage it all in one go. But this means there is the potential for your accounts to run out of control. In the coming years, self-employed workers with a net turnover above £85,000 will be required to record their business-related

Summer 2018

transactions digitally using Making Tax Digitalcompliant software, and to update HMRC on a quarterly basis for income tax and National Insurance obligations. There’s no avoiding the fact that this will be a significant change, and it may take some time to familiarise yourself with this new technology.

Managing your taxes really doesn’t have to be a mammoth task. Implementing these small changes will help you take control of your financial admin and put your business in the strongest possible position to succeed in the years ahead.

It is far easier to budget throughout the year and pay your taxes comfortably if you keep on top of your accounts on the go. With Making Tax Digital set to be implemented in the coming years, quarterly reporting will become an obligation anyway – so best to master it now.

Tracking expenses Getting your taxes right is intrinsically linked to good expense management. Business costs – such as running a vehicle or buying specialist tools – can of course be deducted for tax purposes. But there is often confusion around what constitutes a business expense and what is a personal cost. Ultimately, failing to understand the difference could land you in hot water with HMRC. Get clued up on what you can and can’t claim for, and make sure you hang onto all your receipts – the government requires that you keep all records of your business income and expenses for five years.

My Money

INTERVIEW

Suited and booted Zacchary Falcon discusses how his style and etiquette inspired his business By Jyoti Rambhai

t’s not every day you turn up to interview someone at a local coffee shop and find them donning a tie and cufflinks – somewhat putting you to shame. But Zacchary Falcon did exactly that, which comes as no surprise considering he is the founder of The Perfect Gentleman and more recently, The Suited Chef. The Perfect Gentleman, operating since 2012, is an “online educational platform designed to teach men about style, etiquette, romance and all the good stuff they have forgotten.” Sitting there in a dark blue suit complete with a yellow tie and pocket square, it is obvious that good manners, elegance and style all come very naturally to Falcon. But it was only when a friend pointed this out to him that he considered making it into a business, he tells me. “A few years ago a friend of mine asked me to teach her boyfriend to be more like me. I laughed it off and said ‘I’m not going to do that as it would be rude’. But I did ask her why. And she said: ‘I’ve known you for 10 years and you have always behaved like a gentleman – you always walk me outside, you always open the doors and treat people with respect.’ “I said ‘okay’ and that was it. But then I noticed how certain things would really annoy me, for example, when I see people out on dates. The ladies make an effort, they dress up, but the men look like they have just fallen off the couch after playing PlayStation for four hours. And that’s what got me thinking there was a market for it.”

The perfect gentleman: Zacchary Falcon

Summer 2018

His most recent business venture is a weekly live cookery show on Facebook called The Suited Chef, where he and a guest, cook a three-course

meal from scratch in 90 minutes. His inspiration behind starting the business goes back to his roots, he claims. “My mum was a trained chef and my family had some restaurants when I was growing up. Whenever I wanted any pocket money, my mum would say ‘there is a 50kg sack of carrots… chop and peel’. “In my early entrepreneurial career, I set up bars, pubs and restaurants. However, I soon realised that even though I liked the industry, I didn’t want to run bars and restaurants. So I did other things.” The 45-year-old from London has been a selfemployed businessman since he was a teenager and during that time, he has overcome various challenges and learnt how to become a successful entrepreneur. So why did Falcon want to become selfemployed? Well, it was all down to his grandfather, he tells me. “I wanted to be an actor, so I went to drama school. But then I realised that I didn’t want to be an actor. At the same time, my grandfather wanted to start a contracting business, but didn’t want to run it, so he suggested I run it and he would be the guiding hand in the background. “And that was it. I got the bug for entrepreneurship and have been setting up businesses ever since.” When it comes to managing your finances when you start out, Falcon explains that back then, aged 19, things were a little different.

One of Falcon’s main jobs when he first started out was bookkeeping, though he admits that it is “much harder now” than it was back then. “I was doing double-entry bookkeeping. There weren’t any spreadsheets to work through; I had a ledger book and worked through the calculation. Managing cash flow was really important and relatively simple. “Nowadays, banking is much more complicated. It has taken me 12 weeks to open a single business bank account. It’s the longest one yet. It usually takes between six to eight weeks, and even that is ridiculous. I think that is the problem: banking has become transactional rather than customer service-led.” On the plus side though, Falcon does admit that advances in technology and software such as Quickbooks and Dropbox have helped him manage his finances. But the big question is: how does he budget? “I have been an entrepreneur for 20 odd years now, so I have ridden that rollercoaster ride.” “You kind of know what you spend on a yearly basis and you calculate from that base. I treat it like I am running a company and that company is 8

me. I have a burn rate, which is the money that goes out the door no matter what you do. And everything above that is treats and gravy, your savings effectively. “Generally, I do it on a yearly basis and tweak it quarterly. I learnt very early on to treat yourself as the business, especially when you are selfemployed. You have to put stuff away for capital investment, rainy day funds etc.”

Always have a bunch “ of accountants and lawyers

“

“The world was very different then. You could go to your bank manager and tell them you wanted to start a business. My grandfather put some of the seed capital up, but we still needed to take out a loan so the bank gave us an overdraft.”

as friends and take them out for a lot of lunches.

Saving, Falcon says, is essential when you are self-employed and if there was one piece of advice he would offer to anyone starting out today, it would be to save early on. It does not matter how you choose to save, as long as you understand the fundamentals, and commit to it. This advice is based on his own personal experience, he tells me. “I made a lot of money when I was really young and basically blew it and didn’t invest in anything. I was young and stupid – I went out and bought silly things. “I often think of Warren Buffet as the great oracle

of Omaha who said something like ‘frugality when you start is all well and good to buy the flash car, but if you can’t afford the flash car in ten years’ time…?’ “The other thing I would say is that it is a long game, not a short one. Everyone wants the short-term hit; they want to make money now. But it’s not like that. So, you need to invest in relationships and long-term planning for your career as a self-employed person.” This relates to a piece of advice that Falcon received when he first started out – in fact, it was one of his grandfather’s maxims. He says: “One of the things my grandfather used to say was always have a bunch of accountants and lawyers as friends and take them out for a lot of lunches, because lunch is cheaper than their hourly rate! “If you establish the relationship over a number of years, then, when you take them out for lunch and ask them a quick question about a particular accounting or legal problem, they are not going to bill you for it.” As we finish our coffee, Falcon adds one more thing: “If you are considering going out on your own, don’t think about or worry about what people will think, just f****** do it!”. My Money

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Too good to be true How to protect yourself from pension fraud

staggering £8.6 million has been conned from 24 people in a pension scam, according to figures released by the City of London Police.

This will often be to a hotel overseas; but it could also be any other high-risk investment from bamboo or diamonds, to vineyards and wind farms.

Pension scams are on the rise in the UK and reached a record high last year. Those who have fallen victim have ended up being robbed of all their financial security at a time when they most need it.

The price

More than £42 million has been lost to socalled ‘pension liberation’ since April 2014, according to a report by the Financial Times. This timescale is significant as in March 2014, the then chancellor, George Osbourne relaxed the rules surrounding pensions. This essentially gave people greater choice over when and how they could access their pension pot. It included the option to take out the entire pension in a single lump sum. The scam Scammers typically target retirees or people approaching retirement age, usually via phone, offering supposedly attractive investments with a guarantee of high rates on returns. This could be up to 10 to 12 per cent. The alleged conman will then attempt to persuade their victims into cashing in their pension – either the whole pot or a large sum – and transfer this money into the investment they are touting.

In some cases, scammers promise to help people unlock their pension before the age of 55; this is known as ‘pension liberation’. It is usually illegal for anyone under 55 to access their pension, except in rare circumstances such as terminal illness. The perpetrators might tell their victims they can borrow money from their pension scheme early in the form of a loan or an advance. They will then transfer the victim’s money into an account they have set up – a scheme probably based abroad. Other cases suggest the scammer ‘loans’ an amount from the victim’s pension in exchange for a fee that may be as high as 30 per cent. The rest of the victim’s money may then be invested in high-risk assets or projects, or simply stolen. As a result, the victim faces the prospect of not only losing their money, but also being saddled with heavy tax charges for accessing their pension pot early. The alert Unsolicited phone calls, texts or emails that relate to pensions are almost always a scam, explains the Pensions Regulator.

My Money

According to the watchdog, scammers tend to claim they are from Pension Wise or other government-backed bodies. However, these organisations would never phone or text to offer a pension review. Other signs of a scam are unregulated investments that offer guaranteed returns and time-limited offers. Some scammers even pressurise their victims by making a courier wait outside their door while they sign documents.

Pension scams are brutal, as once someone has handed their money to the perpetrator, it’s too late. A victim’s entire life savings might be gone, together with their dream of a comfortable and secure retirement. No one wants this to happen to them or to any of their friends and family members. While there are a number of actions that people can take to avoid falling victim to a scam, the most important one is to remember that if something seems too good to be true, it probably is.

How to avoid being scammed • Be wary of an offer that includes any or all of the following: • A free pension review • Guaranteed returns on your investment • Low tax or tax-free rates including tax-free lump sums • Exotic-sounding or overseas investments • Pressure to sign up quickly. • Refuse to deal with any pension company that is unfamiliar to you and contacts you using cold-calling methods. These methods include texts and emails, as well as telephone calls. • Don’t fall for smart websites or glossy brochures – expensive marketing material offers no guarantee that an investment is sound. Also, watch out if the contact details on a website only consist of a mobile number and a PO box address. • If the person who approaches you about an investment claims to be a financial

adviser, check that they are regulated by the Financial Conduct Authority (FCA) and that they are authorised to give advice on pensions. • If an FCA-authorised adviser recommends an early pension release scheme, ask them to explain the full consequences and risks of the scheme, and what other options exist. • Don’t make an investment that you’re not sure about because a friend recommended it – read the small print, do your own research and consult your financial adviser, if you have one. • Check out whether an investment pension opportunity that you have been offered is a scam by visiting the Financial Conduct Authority’s ScamSmart investor website. If you think you have been scammed, contact your pension provider immediately as that might prevent a transfer of funds that has not yet taken place. Then call Action Fraud on 0300 123 2040 to report the scam. You can also discuss it with your financial adviser.

Details: fca.org.uk

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My Money

WEBSITES

Content provided by

WIX

How to start your online store

with Wix

ith millions of online stores out there, generating over $300 billion a year (£216bn), there’s never been a better time to set up an eCommerce website. To help you get started, we’ve created the ultimate guide to setting up your store, including everything from learning from your competition to managing your site.

Summer 2018

Before anything else, you need to do your research. Find out the latest trends in your industry so you can position yourself well in the market. Got some major competition? Take notes! The best way to get ahead of your competitors is to learn from them. It’s also important to research your audience. You can do this by identifying who you want

to target, understanding what they’re looking for and finding a way to make your store their last stop. When you’ve done your research, you can start thinking about the actual layout and design of your website. First things first, imagine the structure and flow of it: from a storefront to draw customers in, to clear, easy-to-use 13

product galleries to guide them to what they’re looking for. If possible, get all the written content, videos and product images you’ll need ready in advance, so you can put the site together seamlessly when the time comes.

Build your website

•

Get your content right: Be sure to use clear, easy-to-read text on your homepage to entice your website viewers to keep exploring. You should also add some compelling content to your about us page.

Once you’ve got everything up and running for your visitors, you’ll need to go behind the scenes to manage your store efficiently.

•

Be proud of your praise: Build up your credibility and reliability by displaying positive reviews from your customers clearly on your site.

•

Answer before they ask: Set up an FAQs page to help answer your customers’ questions before they even ask them. • Display your rules: Lay out your rules – like return policies and shipping rules – clearly on one page to show you have nothing to hide. The more open and honest you are, the more likely your customers are to make a purchase and come back for more.

Let’s get down to business! Here are a few key steps to get your website off the ground: •

•

Choose a template: The first step is finding the perfect template for your store. Keep in mind that whatever template you choose can be customised to suit your products. Why not start with a selection of Wix’s most popular templates? Build your storefront: The first thing your visitors will see is your homepage – your storefront. Make sure to include your most popular products here to get your visitors excited before they explore the rest of your collection.

Over 60 per cent of all online shoppers abandon their shopping carts before payment, so it’s extremely important to keep the user journey in mind when building your site. You should try to make the journey from your storefront to your checkout as quick and simple as possible. One way to help your customers along is with clear calls to action like ‘Buy Now’ buttons on every page. •

•

Customise every detail: With Wix you can customise every element of your website. Start by finding a colour palette that complements your products, and think about your brand’s identity when choosing your fonts, storefront images and other general design features. Add detailed product pages: Make sure you continue your storefront theme in your product pages. Every product page should have two key elements: a detailed but concise description and, of course, a professional image to seal the deal.

Promote your store Even when you’ve got your online store up and running, there’s still work to do. Here are a few strategies for bringing in new business and keeping your existing customers satisfied. • Get social: An easy way to spread the word about your business and keep existing customers in the know is social media. Set up business accounts on Facebook, Twitter, Instagram, Pinterest and any other platforms that will help you reach your audience. Share behind-thescenes photos and upcoming collections across your channels. And don’t just share things yourself: add social sharing options to your product pages to get your customers sharing too.

With using the Wix Store Manager, you can monitor your inventory in real time, choose your special offers and update your inventory any time.

Earn your customers’ trust If you want to get your customers coming back to your website, you need to earn their trust. There are a few easy ways to go about proving you’re a reliable business: •

•

Be accessible: Having all of your contact information on one page is the simplest way to show website visitors that you’re accessible and trustworthy. Include all forms of contact – from email and phone number to your location on Google Maps. You can even add a contact form to encourage your visitors to reach out. Show who you are: An about us page is the best way to make your customer’s experience a bit more personal. Find a fun way to show off who the people behind the screen are.

•

Create a calendar that works for you: To help you plan out your promotional work, why not create a calendar for yourself? Include holidays, promotional sales, sales coupon releases and different discounts to get the customers coming in.

Keep your customers in the loop: A great way to keep your customers connected is a newsletter. Then you can use apps like Get Subscribers to encourage more people to sign up to it. And you can use your newsletter to promote new collections, seasonal sales and any events in your business calendar. You could even set up a blog for your online store, to talk about industry trends and the latest collection you’ve been working on. My Money

“Winning the Freelancer of the Year Award was an incredible honour and really fast-tracked my career to a point where I’m now gaining significantly more recognition and achieving much greater success. It was one of the most worthwhile things I’ve ever done in my professional career so, for anyone out there considering entering, I can’t recommend it enough. Any aspirations you have, awards like this make them possible.” Luke Nicholson, Freelancer of the Year 2017

Prizes of up to £5,000 at IPSE’s 2018 Freelancer of the Year Awards Now in their fifth year, the awards are designed to celebrate not only the country’s best and brightest freelancers, but also all the organisations and individuals supporting the world of freelancing.

The deadline for all applications is midnight, Friday 30 March 2018. Apply at:

www.nationalfreelancersday.com Summer 2018

OPINION

Inflation

What’s it all about and why does it matter for your business?

By Tom Purvis

Inflation is an economic measure that often grabs the headlines, but what does it mean, and how does it affect you? In short, inflation is the rate at which prices go up over a period of time, and there are a number of different reasons why this happens. Everybody is affected by inflation, whether you know it or not. If you travel by train, for example, this month your rail fares will be going up by 3.4 per cent. The rate of inflation impacts us all, but if you’re self-employed, it may have extra significance for you. Inflation should help inform all businessrelated decisions; from whether you borrow or not, to deciding whether driving or getting the train is the most cost effective way to travel.

110%

100%

75%

50%

25%

Why does it matter? Since inflation is the rate at which prices increase over time, it means that your money is gradually losing its value. For example, you can buy a computer today for £300. With inflation at five per cent, after a year, that same computer would cost five per cent more. So, instead of paying £300, you would pay £315. It also means your £300 is less valuable because it will no longer buy you the same laptop that it would have done a year ago. For the self-employed, who must invest far more in their business costs, it’s very important to consider what impact the inflation rate will have on the price. Inflation isn’t always bad news though. Indeed, if you’re borrowing to fund your business, inflation can actually be your friend. If you take out a loan for £300 at a rate of five per cent, you will pay back £315. If inflation for the year was also five per cent, in purchasing power

My Money

“In short, inflation is the rate at which prices go up over a period of time, and there are a number of different reasons why this happens.”

terms, you would be paying back £300, rather than £315. This is because inflation is weakening the value of your money. Why do prices always seem to be going up? One theory is that in fast-growing economies, inflation is created by an increase in the demand for goods and services. As demand increases, the price of the product will also increase so that businesses are encouraged to supply that particular good or service. Take ticket touts as an example. If a concert or show sells out, ticket touts sell tickets for a price far higher than face value. This is because demand is outstripping supply, and they know that people will pay for it. If people didn’t pay higher than face value prices, ticket touts would cease to exist. Demand isn’t the only driver of inflation, however. The cost of supply is also a major factor leading to fluctuating inflation rates. If the cost of production goes up, it is likely that this cost will be pushed onto the consumer so that profit margins can be sustained. The UK’s decision to leave the European Union has resulted in supply side inflation. This is because we import a lot of goods: £23 billion more than we export, to be precise. After the Brexit vote, the value of the pound began to fall. When the value of sterling falls, importing goods from abroad becomes more expensive. This is why food prices have risen in recent times. There are certain items which have a large sway over the rate of inflation. Oil is one of these items. The price of oil has been sliding for a while now. And as the price collapsed, it came as no surprise that global inflation also started to fall.

Summer 2018

However, what we are seeing now is the Organisation of the Petroleum Exporting Countries curbing supply. By curbing supply, demand will outstrip what is available to buy and prices will go up as a result. The price of oil is particularly interesting to self-employed people. One of the main reasons why inflation has continued to rise following an interest rate increase is because the price of oil has continued to creep up. The self-employed population of the labour force typically spend more time and money travelling. If the price of oil is going up, that means that their disposable incomes may be cut. People keep talking about interest rates – what does that have to do with inflation? Another accepted theory relates to the supply of money in an economy. The value of money is like any other market, with supply and demand dictating its value. So, as the supply of money increases, its value falls, and leads to weakened purchase power and higher costs as a result. At a time when interest rates are low and Quantitative Easing (when banks are creating new money electronically to help stimulate the economy) is still being used globally, there is now an oversupply of money. This leads to a decline in the value of money and purchasing power is therefore reduced. Interest rates between 0.25 and 0.5 per cent have contributed to the major inflation seen in the UK’s housing market. Access to credit has allowed people to take on more mortgages and advantage of the ever-increasing buy-to-let market.

if say interest rates were five per cent and banks performed income tests as if rates were nine per cent. This has enabled second home ownership to grow, as people that were already on the property ladder have found themselves able to afford another house. As self-employed people make use of properties to save for later life, those already on the property ladder will have done very well. Unfortunately, those that are not on the property ladder are likely to struggle. House price inflation has caused major behavioural shifts, and will continue to do so. What will be interesting is whether we revert to historic trends, if interest rates ever get back up to four or five per cent. What can/should you do? As inflation devalues your money, it is important that you find accounts that beat inflation. With inflation at 3.1 per cent, and interest rates at 0.5 per cent, you may think that this will be impossible. However, in an attempt to get people to switch, some banks are offering savings rates up to five per cent for first time account holders. The Current Account Switch Service makes it easy to switch banks, so now is the time to have a look at what your current bank is offering and compare it with other accounts. If you can find a better account elsewhere, now might be a good time to make the switch and protect your money from growing inflation.

This is because people have been in a better position to meet the affordability criteria, than

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My Money

INTERVIEW

Shooting the breeze Yellow Cat’s managing director, Jonny Breeze discusses mixing pleasure with business in co-working spaces with IPSE’s Tristan Grove

ou expect to meet all kinds of people in coworking spaces – that’s pretty much what they’re about. But one person you might not expect to meet is the managing director of a major recruitment agency. Let alone one named Jonny Breeze. Sitting in the airy common area on the fourth floor of WeWork South Bank, Jonny tells us he’s no stranger to co-working spaces: “I’ve been working in co-working spaces since 2009. We were in another one for about six years, then we moved Yellow Cat to WeWork in October 2016, and we’ve been here ever since. Summer 2018

“Yellow Cat is a recruitment agency specialising in design, advertising, creative and broadcast media. We’ve been going for about 12 years and built up a great brand across our markets.” So what’s running a recruitment agency from a co-working space like? “Well, it’s amazing for getting first access to creative talent. I’ve met some people I’ve ended up working with – both clients and candidates. In fact, I met someone here who not only became a client, but I ended up placing someone else I met here as a senior animator in that client’s business.”

It’s not just prospective candidates and employers either. Jonny adds: “If you need a designer or something for a project, quite often you can go up to the hot-desks on the eighth floor here and there’ll be someone who can help out. “They have a really good intranet too, and you can post work on there, promote your services or even just ask if someone can recommend an SEO agency.” Co-working spaces: are they worth the cost? For many people, the thought of signing up a 19

contract with a co-working space can be quite daunting. But for Jonny, they are definitely worth the cost. He says: “Spaces like this aren’t cheap, but they’re certainly worth it. And with WeWork in particular, what’s nice is that the contracts you sign are one-month rolling contracts, which means you can upscale the size of your office as and when you need. It’s great because you don’t overpay for office space, but you can also expand when you need to. “I’ve been at this WeWork for just over a year and I’ve already upscaled, then upscaled again! And we’re going to be moving to an office twice the size next month. To have that flexibility is great.” So co-working spaces can be a lot more flexible than many people assume. But what are the actual benefits over, say, working from home? “Well, being a freelancer can be quite lonely, but it’s not lonely here. “That’s one of the biggest perks of a place like this. It’s really good for engaging and networking with different people – whether that’s at the coffee station, in breakout areas like this one or just naturally wherever. “You can meet other business owners and generally just like-minded people. I think what they’ve done here is built up an environment where it’s quite natural for you to just bump into people. It’s very collaborative in that sense. “It’s not like the co-working space I was in before, where, although it was in a lovely building with great office space, all the companies were just left to their own devices. So when there was networking, it was forced, not natural.”

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Business, leisure or both? For Jonny, one of the biggest differences is the friendliness of the place, and how at WeWork, there’s far more opportunity to personally get to know people. He says: “I like that, because you don’t just think of the people around you as other working people; you can have conversations with them about plenty of different things and find out quite a lot about them. “I mean, the beer tap here is open from 2pm, so there’s plenty of opportunity to talk to people about all kinds of different things.

“Just so long as you don’t do that every day! And you’ve got everything here to allow for that, like common spaces and breakout areas. There are some great other spaces too, with table tennis and arcade machines that you can go and enjoy.” Why WeWork? WeWork is one of the world’s most successful co-working space companies, and for Jonny, that really comes across. “It’s definitely a premium service – especially with all the added benefits that come with it: everything from free coffee and beer to meeting room access. “Another thing that’s nice about it is that it’s an all-in charge. At the co-working space we were in before, you had to organise your own business rates, your own electricity, gas and all your other bills. “But with the all-in charge, everything is much simpler. It makes budgeting in particular much easier, because a lot of people don’t actually understand all the factors involved like different business rates.

Summer 2018

“Overall, I think WeWork has very much put the customer and the business owner at the heart of what it does. It’s very different to other coworking spaces I’ve been in. That’s probably why this WeWork, for example, is 99 per cent occupied and has such a long waiting list! We had to wait four months before we could get an office here. “Now we’re here though, it’s great. It was certainly a big transformation for us as a business moving from where we were to a WeWork office. It really helped in a lot of different ways.” Jonny reserves particular praise for his own South Bank WeWork. “We’ve been hiring recently, and when people come here and go up to the eighth floor, they’re just wowed by the place – the view, the location near the Oxo Tower and South Bank. “And it’s not just the appearance and location of it: it’s the environment, the professionalism and how friendly everyone is. I’d 100 per cent recommend co-working spaces like this; they offer so much to businesses and the people who work for them.”

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CREDIT

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EXPERIAN

Managing your The end of the financial year is often the busiest time for businesses. As we approach it, you may be starting to wish you’d put better financial processes in place throughout the year. Well, although it may not seem it, now is actually the perfect time to review your processes and get them prepared for the next financial year.

business finances

Here are five tips to help take the stress out of managing your business finances, from forecasting and budgeting to balancing your accounts.

your cash flow effectively, you’ll need good bookkeeping skills as well as robust processes for credit control. You also need to stay on top of your cash flow to make sure your business stays liquid and can meet all its financial obligations – from rents and mortgages to salaries and utility bills.

Budgeting and forecasting

Managing your business relationships

The end of a financial year is a great time to plan your finances. Try to assess what you expect to spend and what you expect to earn in revenue over the next year. This will help you prepare costs in advance and avoid nasty surprises. Creating a budget sheet ahead of time will also help you avoid over-spending. Look at trends from the last year, including peaks and troughs, and apply any seasonality to your forecasts.

Speaking of credit control… your finances rely, to a large extent, on the reliability of your business partners. If you get paid late (or not at all), your finances take a hit. So make sure you do your due diligence when it comes to reviewing existing clients and assessing new ones.

Stay on top of your cash flow Your cash flow is a fundamental part of your business’s finances. If you manage your cash flow well, you should be able to see whether your business is running a surplus or a deficit, allowing you to plan accordingly. To manage

Summer 2018

your specific circumstances. And with your finances in the hands of a professional, you’ll be free to focus on other areas of your business. If an accountant is out of your budget, however, you could consider one of the many sophisticated accounting tools available. Accounting software allows you to manage anything from cash flow to tax returns and, in some cases, even investments and foreign currency transactions.

Regular reviews

Accounting resources

Reviewing your business finances shouldn’t be something you only do once a year: it should be a regular process. Get into the habit of frequently checking things like your cash flow, your performance against budget and your business credit report. You can get this easily through Experian, and with it, you’ll be able to check your information and make sure there aren’t any errors in it.

Budget allowing, seek the advice of an accountant. Accountants can offer professional advice on how best to manage your business finances based on

Follow these five tips and you should start to find managing your business finances a lot less stressful.

It’s important to have an in-depth view of the credit profile of any business you work with or rely on, so that you can protect your own business from financial risk. Services such as Experian Business Express can give you insight and analysis at the touch of a button.

CREDIT

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Building your credit H

elping to run a company can be immensely time-consuming because there is so much to think about. When you actually take the helm of the ship and run it yourself though, it can be very arduous. And as for steering it in the right direction – well that’s even more difficult. So one of the most important things to consider is your business’ finances: what ongoing costs do you have? Where does your funding come from? How do you finance new initiatives?

they will look at is your credit profile. So if you want to secure a loan, you have to look at ways of building up your credit profile.

If you have, for example, a company credit card, you can help build up your business credit profile by using it regularly and responsibly.

There are many ways to go about this – here are nine of the best:

3. Make sure your business credit profile represents a ‘real’ business

1. Synchronise your company data and make sure it’s standardised across the board

This is where your friendly local bank manager should be able to help – unless, of course, your credit score is letting you down. In 2016, 324,000 small and medium businesses tried to secure a loan or overdraft. A surprising 26 per cent were declined.

Whether you’re applying for a new business bank account or submitting an application for credit, make sure you always provide the same information. You don’t want inconsistent data causing you problems. Using multiple addresses, for example, could not only cause confusion in future, but could even lead to duplicate credit files.

When banks and other providers are deciding whether to lend to your business, the first thing

2. Make use of any credit you already have access to

Having a complete and honest profile for your business – with fully accurate information – can contribute to your credibility and creditworthiness. If, on the other hand, you masquerade behind a number of different trading names, this could be detrimental to your profile.

4. Pay your bills on time It goes without saying that meeting your obligations on time looks good. If this is possible for you, and it works well for both parties, why not get things sorted as soon as possible? My Money

score for business 5. Own and manage a diverse portfolio of credit accounts Using different types of credit can be a sign of responsibility and stability. Even if it’s just shortterm loans or leases, each account gives you a more diverse portfolio of credit usage. And, if you’re paying everything off on time, this can do a lot to boost your business credit score.

6. Correct any inaccurate information quickly If you find any mistakes on your file, it’s important to get them rectified as quickly as possible. Each agency will probably have its own procedures for resolving disputes, so it’s a good idea to familiarise yourself with their processes and procedures before you contact them. Summer 2018

7. Make sure your SIC code (Standard Industrial Classification) is as accurate as possible It’s very important to communicate your principle activity clearly. This isn’t just for the benefit of creditors, but also to help prospective customers to understand your operation. For example, if you started out as a tech company but moved into retail, has your SIC changed too?

8. Submit financials on time and in full As far as tangible evidence goes, it doesn’t get much better than your company’s financials. Reports such as cash flow or profit and loss could help to boost your overall creditworthiness, so it’s important to get your financials completed and submitted.

9. Monitor your business credit profile as regularly as you can As useful as it is to build up your business credit profile, it’s potentially just as important to monitor it. As for how often you should do this, there isn’t a right or wrong answer. It depends on your schedule, but whether it’s monthly, quarterly or annually, it’s important that you actually do it. The sooner you know about any changes in your score, the sooner you can rectify any issues. Experian’s My Business Profile is specifically designed to allow you to not only access and view your business credit profile, but also monitor it in real time. With automatic alerts about significant changes to your report, My Business Profile can help you to act quickly to reduce any negative impact on your score, so you can make sure your business is seen in the best possible light by lenders. 25

MORTGAGES

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Is the rise of self-employment driving down home ownership in the UK? Specialist mortgage brokers CMME discuss how independent professionals are affecting the housing market

is increasing prices, pushing home-owning out of reach for all but the most affluent in many parts of the country.

The day after chancellor Philip Hammond announced the Autumn Budget last year, the headlines focused on the elimination of stamp duty on properties up to £300,000 for first time buyers. A measure that’s had distinctly mixed results since.

There are also other factors affecting the market, including foreign buyers who see the UK as a safe haven for their cash, as well as buy-to-let landlords parlaying the equity they have built up into additional house purchases, thus shutting out owner occupiers. Then there is the ‘Not in My Back Yard’ attitude that prevents houses being built in many areas, and also stamp duty increases, which keep people where they are so they don’t have to pay 10 per cent or more of their purchase price to the government.

wo trends have moved in precisely opposite directions since 2008: while self-employment has gone up every year, the percentage of Britons owning a home has declined. But the headlines have never connected these two trends.

There were also initiatives to help encourage more housebuilding – even though similar measures have done very little to move the needle in the past. The UK’s housing crisis is still raging. In fact, since 2008 the percentage of Britons owning their own home has fallen from 73.3 per cent to 63.5 per cent – a drop of 13 per cent in less than 10 years. So, what is going on? Well, essentially, as the UK’s population grows, not enough houses are being built to accommodate it. And the squeeze 26

But that’s not the whole story. There is another trend that no-one seems to be connecting with the housing market. At CMME, however, it’s something we see affecting it every day: the rise of self-employment. Since 2008, the number of self-employed people in the UK has grown by 26 per cent and now stands at 4.81 million. That’s approximately 15 per cent of the entire UK workforce.

Why might this affect the housing market? Well, most lenders make it much more difficult for the self-employed (including contractors, freelancers, consultants, interim managers, gig economy workers and business owners) to access mortgage finance. So, although self-employment is one of the fastestgrowing sectors of the UK workforce – and a productivity dynamo for the UK economy – people working in it are effectively being discriminated against in one of the most important areas of personal finance. For the most part this discrimination manifests itself in misinformation and indifference. Quite simply, because it is widely believed that if you are self-employed it can be difficult to get a mortgage, many people who work for themselves just don’t try. The other part of the problem is indifference. For example, an NHS contractor making £40,000 a year is likely to be told by their bank that they must have been contracting more than three years before they will even consider lending them a mortgage. My Money

26% 13% UP BY

The truth is, it is more time-consuming and resource-intensive for banks to evaluate the self-employed for a mortgage because their sometimes ‘messy income’ does not work with the data entry forms and algorithms banks use. So instead they create rules that effectively shut the self-employed out of the market – or only consider a fraction of their income for mortgage evaluations. What can be done? Well, the good news is that there are companies like CMME that specialise in helping contractors, freelancers and the selfemployed get the mortgage they deserve. Many of the banks that effectively shrug their shoulders when a self-employed person walks in have specialist underwriting teams who work directly with brokers like CMME. As a result, these brokers know exactly how to package self-employed mortgage applications to accurately reflect their risk and affordability and give self-employed people the best chance of acceptance. Summer 2018

DOWN BY

The rates and terms self-employed people achieve with CMME and other similar companies are on a par with what most people are offered on the high street. So there are actually some excellent mortgage options available to the selfemployed: the trouble is that not enough people know about them. Most clients we see at CMME have come to us after being brushed off by a bank or a nonspecialist broker. It’s important more people find out about specialist self-employed mortgage options before they give up on the home of their dreams.

And the banks themselves? In their drive to digitize and streamline their processes, they are making it harder and harder for people who don’t fit into their neat boxes to access critical financial services. All too often, that means that only people in full-time employment – not self-employment – can access the services they need. Instead of ‘algorithm says no’, perhaps the banks should start referring self-employed clients to providers who will take the time to understand their situation and find a mortgage deal that works for them.

But besides specialist mortgages from companies like CMME, what else can be done? What can the big players like banks and the government do to open up mortgage finance to the self-employed? Well, the government has focused a lot on small business lending as an engine of economic growth. Perhaps now it should focus more on the self-employed, getting lenders to open up details of self-employed personal mortgage finance as another assessment tool for banks. 27

You are unique We think your mortgage should be too. Being a freelancer takes guts, but the freedom, flexibility and financial benefits can be priceless. When it comes to obtaining a mortgage however, you could be penalised for being self-employed, as banks and lenders do not always look at your income holistically or consider your true borrowing potential. We are CMME - the UKâ&#x20AC;&#x2122;s leading mortgage specialists for freelancers, contractors and the self-employed. Deals designed exclusively for self-employed professionals Borrow up to 5 x your annualised income Access to some of the most competitive rates in the market Experts in complex income CMME has helped over 25,000 clients get the right mortgage for their individual needs. Weâ&#x20AC;&#x2122;d love to help you too!

Visit cmmemortgages.com

Or call 01420 592 642

Your home may be repossessed if you do not keep up repayments on your mortgage CMME is a trading name of CMME Mortgages and Protection Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: Albany House, 5 Omega Park, Alton, Hampshire, GU34 2QE. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.

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ACCOUNTING

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OPTIONIS

Is your contract caught inside IR35? It’s not the end of the world

IR35 has always been a hot topic of conversation for contractors, especially recently with its reforms in the public sector. With so much emphasis placed on the importance of remaining outside of the controversial legislation, what can you do if the situation arises where you’re caught inside? As a seasoned contractor, you will already be up to speed with IR35

Summer 2018

and what the on and off payroll rules dictate, but determining your status can be a hard task and varies from contract to contract. HMRC’s criteria is complex but as a rule of thumb, if your working practices are similar to a permanent employee, you will likely be caught. The only way to be sure, however, is for your set of circumstances to be tested by a specialist.

My contract is inside IR35! Now what? The detriments of being caught by IR35 are well-known: you will be liable for the same tax and national insurance contributions as a permanent employee, and there are some restrictions when it comes to planning your finances. Many panic-stricken contractors decide to jump to an umbrella company, only to find that this is not always the best solution: you could find yourself relinquishing some control as your money is at the mercy of a third party. But this doesn’t mean the end of your limited company, and contrary to popular belief, it’s not the end of the world. Though it could make your situation a little more taxing, there are ways you can operate efficiently and keep more of your money. It may make your life more complicated to begin with, but once you’re up to speed, you can still enjoy greater tax efficiencies working inside IR35 than you would by operating under an umbrella company. If your contract is found inside IR35, you may still have access to the following benefits. Access to certain expenses A common misconception about being caught inside IR35 is that you will be unable to claim tax relief on your business expenses. There may be less freedom about what you could claim, but there are still plenty of business expenses still available. Any materials purchased solely and exclusively for the use of your company are allowable and you can also claim back the cost of purchases on equipment over £2,000. Five per cent of your annual turnover if you’re working in the private sector

At the end of the financial year you can also claim back five per cent of the annual turnover of your limited company on administration expenses if you work in the private sector. There are two calculations here: • The deemed salary calculation, which is the company turnover with a five per cent allowance for admin expenses • The Corporation tax calculation, for which the five per cent allowance is irrelevant as it takes into account the actual business expenses incurred, which may be more or less than the allowance This allowance is designed to aid in the running of the business and will be subtracted from your deemed payment. Following the public sector reform, this allowance isn’t available if you’re inside IR35 within the public sector.

There is still the opportunity to pay yourself a combination of this salary and dividends at the end of the financial year, and this remaining amount will be tax-free. If you find yourself inside IR35 or you’re unsure about your status, the easiest way to decide on your course of action may be to enlist the help of a specialist contractor accountant. Specialists such as SJD Accountancy who deal exclusively with the finances of accountants and freelancers can better outline the implications of your IR35 status, how you could maximise your take home pay and run through the consequences. And remember – it’s not the end of the world if your contract is found inside IR35.

Interest of funds held within your company If you have business insurance, you can still claim the interest on any funds through your company. Access to the flat rate VAT scheme As a limited company contractor, you will still have the option to register for the flat rate VAT scheme. This grants you access to pay a lower fixed rate of VAT to HMRC rather than calculating the difference in the VAT you invoice and the VAT on your expenses. As the rate of VAT you pay is likely to be less than you’re charging, the difference will go into your pocket. Although this rate will differ from contractor to contractor, it could save you thousands. Ability to pay yourself dividends Any amount of your income which isn’t subject to PAYE tax or retained earnings from previous years can be paid via a form of dividends.

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Put your

where your mouth is Call for contributors Money is a big talking point for freelancers, and everyone has a story about it. We would like to hear yours. Are you a freelancer with something to say about money? Maybe a tip about how you learned to balance your budget, a money management lesson youâ&#x20AC;&#x2122;ve learned, or a finance themed opinion youâ&#x20AC;&#x2122;d like to share? If so, contact mymoneymagazine@ipse.co.uk to register your interest in contributing to My Money Magazine.

Summer 2018

OPINION

Side hustle: piece of cake By Tom Purvis

Whether it’s to supplement your income, test the waters for a possible career change or simply pursue a passion project, it has never been easier to embark on a self-employed ‘side hustle’.

However, there is a disadvantage in that the individual is personally liable for the business. If the business has debt, so too does the individual. This could lead to the loss of assets, which, if the debt is large enough, could include property.

With online platforms such as Uber, Deliveroo and PPH (PeoplePerHour) thriving in the digital age, you can now work for anyone, anywhere and anytime. Whatever your interest or areas of expertise, there is little to inhibit your pursuit of a little work on the side.

The second option, a private limited company, is common among businesses which get funding, either via a loan or trading equity for finance. In this instance the business is a separate legal entity which negates the liability issue, meaning if the business has debt, you would not be required to sell assets to clear it.

So, alongside your full-time job you’ve decided you want to supplement your income with a passion: baking and selling cakes. There are, however, a few considerations that you will have to bear in mind.

The downside though is the additional compliance, with the company director obliged to file annual accounts, host an AGM and ensure it operates in line with the articles of association. If you decided to go full-time with your business, or if you used debt to buy a lot of products to sell, it is likely that you would become a limited company.

Getting started First things first, you will have to register with HMRC. Be it sole trader, private limited company or partnership, the structure of your selfemployed business will impact several areas of its financial administration. As a sole trader, you and the business are the same legal entity, meaning that you are the business, and the business is you. This is a common option for someone starting out or selling goods on Etsy as a part-time venture. There are advantages to this model – most notably, its simplicity compared to the other options. A sole trader merely needs to register as self-employed with HMRC and they are ready to go. 32

Illustrations by Madeleine Stuart

The final option, a partnership, is a group of sole traders coming together who don’t want to form a limited company. Compliance as a partnership is still less burdensome than a limited company, hence its appeal.

However, like an individual sole trader, partners will be collectively liable for any business debt. Partnerships are common amongst professional service providers such as lawyers, consultants or accountants. What about my employer? So now you’re register and free to get underway. But what about that nagging doubt that what you’re doing wouldn’t be well received by your My Money

employer? Although it typically won’t be a problem, unless it interferes with your employment, it is understandable that you might have some concerns over your employer knowing that you are working on something else. The first point of call should be reading your contract of employment. Some employers may have clauses in the contract which restrict what work you can do. Some will say it is fine so long as you inform them while others will say it’s fine so long as it doesn’t interfere with your current job. Once you have read through your contract, you can decide whether you need, or want, to tell your employer about your part-time self-employment. It is worth noting that your tax affairs are entirely confidential, so you don’t have to worry that HMRC would inform your employer if you register as self-employed. However, if you decide to form a limited company, your details will be publicly available at Companies House. This means that you employer may find out about your business. Ongoing responsibilities As part-time and casual as it may sound, there is more to selling Summer 2018

cakes at a weekend food market, than just measuring and baking. There are various administrative burdens that must be looked after and getting your affairs in order immediately and managing them as you go along will make your life far easier down the line. Your main priority here should be looking after your financial records. Not only will this prevent you falling foul of HMRC, it is a great way of ascertaining whether the business is viable or has the potential to one day become your predominant source of employment. While tracking your income is relatively straightforward, what constitutes a business expense is a little more nuanced. The key point to note is that the expense is ‘wholly and exclusively for the purpose of the trade’. For example, a baker could expense ingredients for their baking but couldn’t expense materials to make birthday cards.

car journeys are spent driving to and from food markets, you are entitled to deduct 30 per cent of your petrol costs over the year.

in this instance the importance of networking and forming relationships with a website designer is evident.

When it comes to paying your tax, the equation is as simple as income minus allowable expenditure. You will then pay Income Tax if you’re a sole-trader or partnership, or Corporation Tax if you have registered a limited company.

Secondly, you might want to build relations so that if you have any issues relating to your parttime self-employment, you have someone to talk to. In other sectors it is not uncommon to see cyclists from Deliveroo congregate in one area or graphic designers attend industry-related conferences.

The deadline to file your selfassessment and pay any liability is 31 January, following the end of the tax year – which runs from 6 April to 5 April the following year. This means that if you were selfemployed between 6 April 2017 and 5 April 2018, you have until 31 January 2019 to file your tax return and pay any taxes that you owe. If you have decided to set up a limited company for your side-gig, the deadline for your company to pay any tax liability is nine months and one day after the end of the company year. Building connections with other self-employed people There are several reasons why you would want to build connections with other selfemployed individuals. Your skills are clearly in baking cakes, yet you might struggle with social media or website design. Clearly

There are thousands of co-working spaces in which the UK’s selfemployed workforce are thriving and these are great places to help you grow your network, liaise on ideas and find work. But it isn’t just co-working spaces that are useful for solving problems or building a network. At IPSE – from events to industryleading membership packages – we pride ourselves on bringing together self-employed people and helping them deal with a broad range of issues. The important thing to know is that while you’re striking out on your own, you don’t have to be alone. So, whether you’re baking cakes, driving a taxi or selling things on Etsy, there has never been a more rewarding or easy time to pursue that side hustle.

So long as an expense satisfies the badges of trade set out by HMRC, it is allowable expenditure and can be deducted from your income to arrive at your profit. Many of the most frequently asked expense questions relate to housing and vehicles. In this instance, you must apportion the expense accordingly. For example, if 30 per cent of your 33

Aon Risk Solutions

Donâ&#x20AC;&#x2122;t take the risk,

ensure you have adequate cover Professional Indemnity Insurance Designed to protect those who provide professional advice, offer consulting services or handle client data and want to protect against allegations of professional negligence.

Cyber Insurance Designed to cover both your businessâ&#x20AC;&#x2122;s liability following the loss of personal data, and the cost of meeting your obligations when personal data is lost. Cover can also be extended to cover the cost of interruption to your business if your systems are unavailable, and the impact of cyber fraud.

Office Insurance Designed to provide comprehensive cover for your legal liabilities, damage to your property or interruption to your business. Office cover also extends to include damage to documents, breakdown of any equipment, the cost of legal expenses, and theft by any of your employees. Aon is a leading global professional services firm, arranging a broad range of commercial and personal insurance solutions. Call us today on 0345 600 7885 for more information, or to receive a no obligation quote. Aon UK Limited is authorised and regulated by the Financial Conduct Authority. FCA registration number 310451. Aon UK Limited, The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN. FP.ENT.2294.TP

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INSURANCE

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Self-employed insurance 101:

What cover do you need? These days more and more people are discovering the joys of working for themselves, moving from traditional workplaces to self-employment and starting their own business. Whether you’re self-employed and work alone, or a selfemployed person who employs a small team, it’s up to you to make sure you have adequate insurance cover. It can sometimes be hard to know where to start with this. So, to help you make an informed choice, we’ve pulled together a list of the types of insurance cover self-employed people most often buy.

Summer 2018

Employers Liability insurance If you have employees, contractors, casual workers or temporary staff, you are required by law to take out employers’ liability cover. It’s basically to deal with any claims from employees who’ve been injured or become seriously ill in the course of working for you. Public Liability insurance This provides cover against claims from members of the public who have suffered an injury or damage (including to their property) that is somehow connected to your business.

Office contents insurance This is cover for your office contents and workplace equipment. It’s to make sure you’re not out of pocket in the event of loss – through theft, fire, water damage or any other unseen events.

For example, if you often have clients coming into your office, it is important to ensure you have protection in case they trip over a piece of equipment and injure themselves. This can also apply if you regularly visit their premises – in case you damage their equipment, for example.

Professional Indemnity insurance Important cover for any freelancers and self-employed people who give advice or provide a professional service to clients. It’s essentially there to pay for compensation claims and legal fees if a client suffers a financial or professional loss because of negligence in your work. For example, say you’re a web designer and a client gets sued by the owners of an image because you used it without a licence. The client could then sue you, but your insurance would pay out to cover the costs. Legal protection cover This covers you against the cost of taking legal action should a situation arise. It would cover you if, for example, there was a commercial dispute and a client or employee took you to court.

Directors & officers liability insurance This covers the cost of compensation claims made against directors or key managers of a business by shareholders, investors, employees, regulators or third parties. Cyber insurance This one’s particularly for freelancers and self-employed people who travel regularly with portable laptops and phones containing data about their clients. Cyber criminals are becoming more aware of the value of data and looking for easy targets. This type of cover protects you if you lose data – whether you were the victim of a malicious hack, or even if you were negligent. It also covers the response costs, such as notifying everyone whose data has been lost.

My Money

Spotlight on: Professional Indemnity Insurance Whether you’re an experienced old hand or just starting out in freelancing, no doubt you’ll want to provide an excellent service to your clients. No matter how good you are, however, you can’t account for everything. So, what if something goes wrong and your client thinks your work or advice led to financial or reputational damage to them? What happens when they want compensation? Well, that’s where professional indemnity cover comes in… What is professional indemnity insurance? Professional indemnity insurance covers individuals or organisations who provide professional services to clients. It’s there in case things go wrong and there is extra expense either for the client or the provider. This could include claims stemming from breaches of professional duty, negligence, or just plain human error. Protecting your finances with professional indemnity insurance means that even if you find yourself with a case against you, you have the peace of mind of knowing your business can keep on running. Do I need it? Unlike in some industries, professional indemnity insurance is not mandatory for self-employed or freelance workers. Nevertheless, for some it’s considered essential business insurance. If you’re providing advice or work that could involve the risk of financial or reputational damage, it could be a great help for you. Without it, if you’re hit with a compensation claim, you could find yourself having to pay the legal costs and damages out of your own pocket. How do I choose the right policy? Unlike home, car and travel insurance policies, which usually have a standard upper limit (the maximum amount your insurer will pay out), professional indemnity policies often have a choice of limits depending on your industry and your clients’ needs. You can often get advice on which limit you should choose from your relevant industry body.

For further information on the issues covered by this article, contact Aon on 0345 600 7885. Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article. This article has been compiled using information available to us up to 24-04-2018.

Summer 2018

Hoxby began when two curious where you want to work and how people decided there must be you want to work (we call that workstyle) - we can help make a better way of working. Hoxby that happen. The more you started to grow because those engage; the more you live and two weren’t the only ones, espouse the benefits, the more just the bravest. Now you’ve work will come your way, we started reading this because call that #GiveGet. Contributing you’re curious. We respect to the community never goes that. You were brave enough to unnoticed. The beauty of being go freelance. We respect that freelance and a Hoxby is that too. It’s exactly what we are you need never be alone looking for. And don’t worry, again (unless splendid no background is too varied isolation is your or strange for us - we’re here workstyle, then to create a new working world. we’re cool If you like what we do we’d with that). love you to apply and help us Have make the working world work better. Do you get confused by freelance agencies that define themselves by what they are not? We do too. We collect together clever, ambitious, dextrous, curious (there’s that word again) people who have grown tired of the corporate world, tired of being geographically restricted and know there must you be a better way to get the most ever out of life without spending thought most of their life working. We you would then curate all of those talented produce your individuals into bespoke teams best work if you also who work remotely for a range had time to indulge of established and new clients. your passion, whoever or Oh, and while we’re at it, we’re whatever that may be? Have creating the future of work. We you ever thought you would really are and if that excites you produce your best work if you we really want you to join us. were particularly passionate We are here for you if becoming about that work? We believe a freelancer didn’t make you you will. You’ve read this far any freer. In fact, we put the because you’re even more freedom into freelance and the curious than we first hoped. So self into self-employed. Choose be curious, be brave and apply how many hours you want work, when you want to work, now at hoxbycollective.com

Work for yourself, not by yourself

My Money

QUIZ

TEST YOUR

knowledge We hope we’ve given you plenty of useful tips and helpful facts, so you can flex your finance muscles. Why not test your knowledge by taking this quiz? All the answers are within the pages of this magazine.

a). Self-employed tax advisors with a net turnover of £60,000 b). Self-employed workers in any industry with a net turnover of £85,000 c). Freelancers who work in digital communications and earn over £40,000

a). Self-employed workers want to work from home b). Self-employed workers can find it easier to buy a home c). Self-employed workers can find it harder to buy a home

a). Whatever works best for you b). Once every quarter c). Every two weeks

Who will be required to use the Making Tax Digital software?

What is “Pension Liberation?”

a). A scam where the victim is robbed of their pension by scammers b). A scheme for self-employed workers to have someone else pay their pension for them c). The name of a popular pension provider

The Wix Store Manager is:

a). An operating centre where you can manage your online Wix Store b). A freelance web designer who creates online stores using Wix c). A retail manager who works at the Wix Store

How many small to medium businesses were declined in 2016 after applying for a loan or overdraft? a). 1,500 b). 26 per cent c). Three out of five

Summer 2018

How is the rise in self-employment affecting potential home-owners?

How much money is generated by eCommerce websites?

a). over $300 billion a year b). $500 a day c). $100 per click

How often should you monitor your business credit profile?

The Current Account Switch Service:

a). Is a new type of current account b). Is an easy way to switch banks c). Is a handy app for accountants

Finished? Answers on the next page...

Which of the following could make a contractor vulnerable to being caught under 1R35? a). If they waited until the last minute to file their self assessment tax return b). If the rates they are charging are too high c). If their relationship with their client is too similar to an employer/employee relationship

Which time of year is typically the busiest time of year for businesses?

a). The business owner’s birthday b). The end of the financial year c). Summertime

Answers

Answer:b “In the coming years, selfemployed workers with a net turnover above £85,000 will be required to record their business-related transactions digitally.” Read more on page 5

Answer:a “In some cases, scammers promise to help people unlock their pension before the age of 55; this is known as ‘pension liberation’.” Read more on page 10

Answer:a “With using the Wix Store Manager, you can monitor your inventory in real time, choose your special offers and update your inventory any time.” Read more on page 14

Answer:b “In 2016, 324,000 small and medium businesses tried to secure a loan or overdraft. A surprising 26 per cent were declined.” Read more on page 24

Answer:c “Most lenders make it much more difficult for the self-employed (including contractors, freelancers, consultants, interim managers, gig economy workers and business owners) to access mortgage finance.” Read more on page 26

Answer:a “With millions of online stores out there, generating over $300 billion a year (£216bn), there’s never been a better time to set up an eCommerce website.” Read more on page 13

Answer:c “One of the main reasons why inflation has continued to rise following an interest rate increase is because the price of oil has continued to creep up.” Read more on page 17

Answer:b “HMRC’s criteria is complex but as a rule of thumb, if your working practices are similar to a permanent employee, you will likely be caught. ” Read more on page 29

Answer:a “As for how often you should do this, there isn’t a right or wrong answer. It depends on your schedule, but whether it’s monthly, quarterly or annually, it’s important that you actually do it.” Read more on page 25

Answer:b “The Current Account Switch Service makes it easy to switch banks, so now is the time to have a look at what your current bank is offering and compare it with other accounts” Read more on page 17

My Money

Summer 2018

My Money

Summer 2018

My Money