As a freelance musician, staying on top of your finances can be a challenge in today’s fast-paced world. But mastering the art of personal accounting is essential for success. From tracking expenses to managing income, here are the top 10 accounting tips to help you stay financially organized and on track.

  1. Records, records, records:
    Without keeping records of which jobs you’ve done where and when, you’ll have absolutely no hope of keeping track of your money. Whether you’re an old-school paper diary type, or if you just keep it in your phone calendar, keeping a list of jobs, who they were for, when, and for how much, is the starting point for your accounts.

  2. Software Solutions:
    Consider using ready-made accounting software to make your life easier. Popular accounting tools such as Xero, Quickbooks, and Freshbooks have been investing a lot of time and money into equipping their websites with everything you could possibly need to track your jobs and send out invoices to your clients. If you’re not into the idea of monthly fees, and feel like you can navigate your way around a spreadsheet, you can use Excel or Google Sheets to build yourself a custom solution. Make sure to keep as many pieces of data in there as possible, and try to link them together using formulas to keep on top of things.

  3. Split those banks up:
    A sure-fire way to improve your accounting is to have a number of separate bank accounts that you use for different things. For instance, if you sign up with Monzo Business (for a £5/month fee), you can set it up to automatically send a percentage of money paid in straight to a Tax pot, which keeps your tax money separate from other funds. If all the jobs are paid into your business account, you’ll hopefully have all the tax money you need sitting right there waiting for you without lifting a finger.

  4. Tracking Expenses:
    This point ties in with our point #1. You’ll need to keep track of your business expenses, so that when it comes to filling in your tax return, you’re able to list all of your expenses and work out their total so that you can deduct it against your income and only pay the tax you actually should owe! What counts as deductible expenses is somewhat of a grey area in the music industry, and you’ll find different answers everywhere you look, but you could start by reading the Musicians’ Union Website to see what they recommend. You can store these expenses in your accounting software or spreadsheets.

  5. Money in, money out:
    For those of you who are daunted at the idea of a tax return, here’s our super quick summary:
    Your income will be everything you’re paid by your clients (fees and reimbursed expenses), and you’ll claim your deductible business expenses (including the one’s clients reimbursed you for, as that technically looks like income so we need to offset for that). If you’re PAYE as well as self-employed, your PAYE tax will be taken at the source, so happy days, but you’ll need to fill in the tax return for your self-employed income.

  1. Calculate early:
    The sooner you submit your tax return after the tax year has ended, the sooner you’ll know for sure from HMRC how much you’ll owe them by the 31st January of the following calendar year. You don’t have to pay it straight away, but submitting it sooner rather than later will give you reassurance that you’ve got your numbers right, and that you’ll have the cash in place to pay the bill when the time comes.
  2. Use simplified expenses:
    You can use the UK’s simplified expenses system to claim for miles driven in a car you own, and there’s a similar simplified expenses chart for the time you spent working from home. If you worked more than 25 hours at home in a month you can deduct some money as allowable expenses.
  3. Consider registering as a company:
    There can be instances where registering a company, and getting paid via the company, can make sense financially. There are quite a few considerations to take into account for this, so be sure to consult a professional adviser.
  4. Don’t dodge taxes:
    Some people get paid in cash to avoid being taxed on income, but that doesn’t mean you should too! But there are lots of reasons why that’s a bad idea.
    – It’s illegal, and if you could get caught, you may incur huge fines.
    – You may be artificially deflating your income, to the point where you won’t be eligible for mortgages or other things you apply for.
    – Taxes are good! They pay for schools, hospitals, roads, and vital services for the country. Just make sure you claim the things you’re allowed to claim, as these are some of the few perks of being self-employed, and write down all your income.
  5. Pay a professional:
    If you’re at all baffled by accounting, get an accountant. If you’re not baffled, still consider getting an accountant! Often they can save you more money than they’ll cost you, and you’ll have peace of mind that you’ve nailed it.

Suffice to say, I’m not an accountant, so none of this should be considered as financial advice! But hopefully these 10 short tips can help you get on your way! Got any more great tips? Let us know!