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  1. #1
    30-something Damsel bubbasweet
    Location
    Surrey
    Posts
    16,636

    Self-employed people - how do you manage your finances?

    Just further to my previous thread about debt, I've been thinking a bit more about my dis-organised husband's finances. He's self-employed, so no regular income - nothing for three months and then he'll get all that money all at once I'm sure other SE people understand what it's like! So it makes it difficult to budget on a monthly basis, which I'm sure doesn't help with the credit card paying off situation, or lack thereof. He currently has invoices being paid into his current account, and he also uses that account for all outgoings - mortgage, bills and other spending. Looking at his bank statements gives me a headache

    How do you manage things?

  2. #2

    Re: Self-employed people - how do you manage your finances?

    I've answered your other thread

    We have a separate business account that I am in control of Mainly because I do the tax returns, pay expenses, invoices etc.

    I have set up a DD for Dh's "wage", and regular expenses (phone, pension, life insurance), everything else stayed in there until we had a 6 month cushion built up. DH has been out of work for two months recently and it made a huge difference knowing we had 6 months before things got worrying, and DH was still getting his monthly wage so he budgeted better.

    We've recently changed over to a limited company, so I can draw an admin wage and offset tax a bit.

  3. #3
    30-something Damsel bubbasweet
    Location
    Surrey
    Posts
    16,636

    Re: Self-employed people - how do you manage your finances?

    I think we're going to do that once my maternity pay finishes - DH will pay me to do his admin!

    Do you have to pay for a business account? I must admit I've thought about these accounts before but always assumed you had to pay a fee Should actually have a look

  4. #4

    Re: Self-employed people - how do you manage your finances?

    I think the account we opened was first year no fees, then a %. Currently I think it costs us about 5 a month with is far outweighed by the tax and admin savings!

    Look into Ltd though- much easier on tax.

  5. #5
    Chief Damsel Damsella
    Location
    A hollowed out volcano in Hampshire
    Posts
    41,889

    Re: Self-employed people - how do you manage your finances?

    I have a business account, which all income goes into, then I transfer money from that to my personal account as I need it. So it's easier to work out the tax, expenses etc because income does not go directly into my personal account.
    Call me (Mrs) Damz

  6. #6
    Invisable Chell
    Location
    Northants
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    14,924
    You can have two personal accounts from one bank. That way you avoid charges. It just means cheques need to be in your name rather than the business name.
    DS July 2003, DD1 January 2005, DD2 August 2008

  7. #7
    Dazzling Damsel
    Location
    Somerset
    Posts
    892

    Re: Self-employed people - how do you manage your finances?

    Its always a good idea to transfer a % for income tax and stash that away so you dont have that panic when its due.
    CaroCaro
    x

  8. #8
    Damsel Diva Moffgal
    Location
    Here, unless I'm over there
    Posts
    9,942

    Re: Self-employed people - how do you manage your finances?

    Dh has a business account that all his earnings are paid into. Then every month he has a standing order to our bills account to cover everything. All his business expenses, trade accounts, etc, come out of the business account, so business and personal are kept entirely separate.





  9. #9
    Damsel Diva
    Location
    here & there
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    27,470

    Re: Self-employed people - how do you manage your finances?

    DH has a business account and has a monthly salary to our current account. Not sure what/if there are banking fees.

  10. #10
    Damsel Diva
    Location
    North West London via Edinburgh!
    Posts
    1,995

    Re: Self-employed people - how do you manage your finances?

    OH and I have been freelance/self employed for about 12 years now (although I've had a paye/staff job for the last year and a half)

    Its a nightmare as clients don't always pay you on time. We nearly lost our flat about 3 years ago as a client went bust and owed us loads of money We have never ever seen that money and I hate them for opening a new company under a new name whilst owing so much.

    Is your OH Self employed or trading via a Ltd company? We changed accountants about 3 years ago (He is in gerrards Cross,Bucks) and he specialised in film and tv. He told us that if you earn 20k or over then being a Ltd company is more beneficial. We did this and the tax rate is lower, you make the minimum wage but make this up in dividends. We also claim vat at 20% of the invoice amount. On the flat rate VAT rate we make about a couple of hundred pounds per quarter which I put back into the business account.

    So we have a joint business account where every invoice is payed into. Along side this we have a 2nd business account which I always move 21% of the invoice amount (when it's payed in) and also the VAT amount. This ensures that we have enough money to pay the tax and VAT. From the main business account I have set up all business expense direct debits (internet/mobiles etc) to come out of. Every month I transfer money from the business to our joint current account in which all the household expenses/mortgage come out of.

    I think that the first year we had our Businessa account there were no fees. We need to shift it now to another bank to avoid these but I haven't got around to do it. ALso the first year of trading with a Ltd company, you get 100% (I think its 100%) relief on all computer equipment)

    Hope this helps at all? Doing it this way seems to keep it simple and everything (business and personal) is layed out seporate.

  11. #11
    30-something Damsel bubbasweet
    Location
    Surrey
    Posts
    16,636

    Re: Self-employed people - how do you manage your finances?

    Quote Originally Posted by Amyb View Post
    OH and I have been freelance/self employed for about 12 years now (although I've had a paye/staff job for the last year and a half)

    Its a nightmare as clients don't always pay you on time. We nearly lost our flat about 3 years ago as a client went bust and owed us loads of money We have never ever seen that money and I hate them for opening a new company under a new name whilst owing so much.
    Unfortunately we've experienced 'phoenixing' a few times so I totally feel your pain! DH is tv (post production) and the most he ever lost was about 5k. We managed somehow! He's got quite a long list of people he now won't work with, or companies they own/are involved with. Defo misses out on some work that way, but I can totally see why he won't take the risk! He's working much more with broadcasters now rather than post-houses so touch wood we've not had any problems for a couple of years. Seemed to be endemic about three years ago!

    Would you mind PM-ing me the name of your man in Gerrard's Cross? DH is self-employed but everyone keeps telling him he needs to become a ltd company!

  12. #12
    Damsel Diva Peony
    Location
    NE UK
    Posts
    10,001

    Re: Self-employed people - how do you manage your finances?

    A business account all the way for us so we can tick off the invoices and expenses. In our industry it is standard to go through an agency and get our invoices paid within 30 days (it's usually about 5 days).

    We cheat and have an accountant tell us how much we can take out each month and how much needs to be left to cover VAT and corporation tax. Flat rate VAT scheme is a no brainer for us.

  13. #13
    Super fit Damsel Velvet Chain
    Location
    Wiltshire
    Posts
    7,944

    Re: Self-employed people - how do you manage your finances?

    I've pretty much always been self employed, the way I handled it was to always to put two piles separate at the end of each month - 1 for the tax and the other for contingency (out of work for a few months). It definitely helped with the budgeting and when tax had to be paid as I didn't feel it as much then - otherwise a tax bill of a few grand can be awful!

  14. #14

    Re: Self-employed people - how do you manage your finances?

    When I first set up a business account with Lloyds they were offering free banking for 18 months but I know you can get some which are totally free. I have all my income go into business acct and transfer my wage to my perosnal acct, much easier to keep track of for my accounts
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