Part Time Self Employed - When is an accountant worth it?

[xrrr]

I do some part time self employed photography work and I was wondering at what point the benefit of having an accountant is greater than the cost. I only make a small amount of money (circa £1500 a year) but it is growing month on month.

I am a 40% tax payer on my day job if that makes any difference.

What sort of cost would I be looking at for basic tax return and tax advice service? £300 a year?

[Eric Mc]

Is £1,500 your self employed sales or profit?

If profit, 40% tax on £1,500 is £600.

Depending on how complex your other affairs are, the fee for preparing simple accounts and the related self assessment tax return should not exceed £300 - I would think.

Edited by Eric Mc on Monday 17th January 11:07

[anonymous-user]

typically if your part time self employed stuff is too small to require VAT registration, it is probably too small to separately justify an accountant.

if you are already a 40% tax payer and filling in an SA return, the extra work required to account for your sideline is small. if you can manage the SA form yourself, you can manage the additional page imo.

[Eric Mc]

As long as the OP is aware of the allowances he is entitled to - especially for capital expenditure purposes. In my experience, most "non-accountants" are totally unaware of claims they can legitimately make for capital costs. They get hung up on "what can I claim for domestic costs" without realisuing they could have had 100% relief on a van.

[xrrr]

Eric Mc said:

As long as the OP is aware of the allowances he is entitled to - especially for capital expenditure purposes. In my experience, most "non-accountants" are totally unaware of claims they can legitimately make for capital costs. They get hung up on "what can I claim for domestic costs" without realisuing they could have had 100% relief on a van.

That is exactly right. I have no clue!

I keep accounts for all legitimate (a.k.a 'defendable') business expenses and photo related income. Filling in the 2 boxes on the SA form is not the issue. It was more of a what am I missing in terms of additional benefits/tricks etc. Plus I am mindful of the revenue's view on 'funding a hobby' vs 'serious business' and wanted to make sure I was dancing on the correct side of the line.

e.g. Things like (not expecting answers here but for illustration)...

• Can I claim petrol to get to a landscape shoot even if the light was rubbish and it was a wasted trip? Sounds fair. What if I need to do it 10 times before I get "the shot"?

• I use my main camera gear for personal use as well as commercial (approx 50:50 ratio), therefore I am not adding the purchase cost to the accounts. Is this the best way to do it?

• Seeing as I use the gear for commercial use and the 'business' is dependent on it would I be able to claim repair costs or the cost of the insurance as a business expense?

• When is it acceptable to call a "holiday" a "business trip" if I get a few stock images out of a trip?

• etc etc

So it seems I am more after a tax advisor rather than tax accountant I suppose. The theory was that if the advisor's superior tax knowledge saves me more than the fee then it is worth it. There ought to be some sort of tipping point when it becomes a serious consideration. I was curious if it was £1500 or £15000...!

BTW, £1500 pa was income before expenses and tax.

[dirty boy]

xrrr said:

• Can I claim petrol to get to a landscape shoot even if the light was rubbish and it was a wasted trip? Sounds fair. What if I need to do it 10 times before I get "the shot"?

Maybe claiming petrol is not the best solution (maybe it is) but you could keep a mileage 'log' and claim those miles at a rate of 40p per mile.

It's a legitimate expense, you're incurring a cost in the pursuit of income.

xrrr said:

• I use my main camera gear for personal use as well as commercial (approx 50:50 ratio), therefore I am not adding the purchase cost to the accounts. Is this the best way to do it?

You could claim the purchase cost, then add back 50% of the capital allowances as a private restriction

xrrr said:

• Seeing as I use the gear for commercial use and the 'business' is dependent on it would I be able to claim repair costs or the cost of the insurance as a business expense?

As above.

Add back the personal restriction (very honest of you to say you use it for so much personal use )

xrrr said:

• When is it acceptable to call a "holiday" a "business trip" if I get a few stock images out of a trip?

Dual purpose holidays are not allowable.

[Eric Mc]

xrrr said:

Eric Mc said:

As long as the OP is aware of the allowances he is entitled to - especially for capital expenditure purposes. In my experience, most "non-accountants" are totally unaware of claims they can legitimately make for capital costs. They get hung up on "what can I claim for domestic costs" without realisuing they could have had 100% relief on a van.

That is exactly right. I have no clue!

I keep accounts for all legitimate (a.k.a 'defendable') business expenses and photo related income. Filling in the 2 boxes on the SA form is not the issue. It was more of a what am I missing in terms of additional benefits/tricks etc. Plus I am mindful of the revenue's view on 'funding a hobby' vs 'serious business' and wanted to make sure I was dancing on the correct side of the line.

e.g. Things like (not expecting answers here but for illustration)...

• Can I claim petrol to get to a landscape shoot even if the light was rubbish and it was a wasted trip? Sounds fair. What if I need to do it 10 times before I get "the shot"?

• I use my main camera gear for personal use as well as commercial (approx 50:50 ratio), therefore I am not adding the purchase cost to the accounts. Is this the best way to do it?

• Seeing as I use the gear for commercial use and the 'business' is dependent on it would I be able to claim repair costs or the cost of the insurance as a business expense?

• When is it acceptable to call a "holiday" a "business trip" if I get a few stock images out of a trip?

• etc etc

So it seems I am more after a tax advisor rather than tax accountant I suppose. The theory was that if the advisor's superior tax knowledge saves me more than the fee then it is worth it. There ought to be some sort of tipping point when it becomes a serious consideration. I was curious if it was £1500 or £15000...!

BTW, £1500 pa was income before expenses and tax.

Accountants in practice (like me) ARE tax advisers - it's what we do.

The fact that you have listed so many questions indicates that you might need an accountant after all. If the tax saved is greater than the fee charged, then it's been worthwhile. Also, there is a "peace of mind" aspect to getting your return submitted professionally.

[xrrr]

Eric Mc said:

Accountants in practice (like me) ARE tax advisers - it's what we do.

The fact that you have listed so many questions indicates that you might need an accountant after all. If the tax saved is greater than the fee charged, then it's been worthwhile. Also, there is a "peace of mind" aspect to getting your return submitted professionally.

Do you want to PM me a quote to discuss further?! I work in Farnborough so am local based on your profile.

[Eric Mc]

YHM.