As an influencer, the financial aspect of your career may not be the most exciting part of the job. However, if you want to stay compliant with HMRC regulations and avoid financial headaches down the road, organising your accounting records is essential. In this blog, we’ll explore practical tips for organising your accounting records as an influencer, ensuring your business runs smoothly and your financial health remains intact.
From tracking income and expenses to understanding your tax obligations, these tips will help influencers streamline their financial management. By the end of this guide, you’ll have a clear strategy to keep your accounts in order, saving both time and stress during tax season.
Tips for Organising Your Accounting Records as an Influencer
1. Separate Business and Personal Finances
One of the most important tips for organising your accounting records as an influencer is to separate your personal and business finances. If you’re receiving payments for content creation, brand partnerships, or sponsorships, mixing those earnings with your personal finances can create confusion.
Open a dedicated business bank account to keep your income and expenses separate. This will make it easier to track your cash flow and understand what’s coming in and going out. Additionally, having separate accounts will simplify tax filing, as you won’t need to sift through personal transactions to find business-related expenses.
A dedicated business account also portrays a more professional image, which can be useful when dealing with brands, clients, or even HMRC in case of audits.
2. Keep a Record of All Income
Influencers typically earn money from multiple sources, including sponsored content, affiliate marketing, ads, and product endorsements. Keeping a record of all your income streams is crucial for tax purposes and financial clarity.
Make sure to document each payment, whether it’s a bank transfer, PayPal, or cheque. You should note:
- The date you received the payment.
- The amount.
- The payer’s name.
- The reason for the payment (e.g., sponsored post, affiliate commission).
Maintaining an income record will ensure that you declare all earnings to HMRC and avoid any potential penalties for underreporting your income. If you’re VAT registered, these records will also help calculate the VAT you need to pay.
3. Track Business-Related Expenses
As an influencer, you’ll incur various expenses related to your business, and these can be deducted to reduce your tax bill. This could include costs such as:
- Equipment (cameras, lighting, etc.).
- Travel expenses for business trips.
- Office supplies.
- Marketing and advertising costs.
- Web hosting and domain fees.
- Professional services (accounting, legal advice).
To make the most of these deductions, you need to keep detailed records of each business-related expense. Save your receipts, invoices, and bank statements to prove these costs if required by HMRC.
It’s important to note that not all expenses are fully deductible. For example, if you use your mobile phone for both personal and business purposes, only the business portion can be claimed. HMRC’s website provides detailed guidance on allowable expenses, so it’s worth reviewing their guidelines or consulting an accountant to ensure you’re compliant.
4. Use Accounting Software
Gone are the days when bookkeeping involved a mountain of paperwork. Today, there are many accounting software solutions that can simplify your financial management. Tools such as QuickBooks, Xero, or FreeAgent are designed for freelancers and small businesses, offering features like:
- Automatic tracking of income and expenses.
- Receipt scanning and storage.
- VAT calculation and submissions.
- Real-time financial reports.
These tools will help you stay on top of your finances with minimal effort, reducing the risk of human error. Many accounting software platforms are also HMRC-compliant, allowing you to submit your tax returns directly from the system.
Using software also means you can access your financial data from anywhere, making it easier to manage your business even when you’re on the go.
5. Hire an Accountant or Bookkeeper
While accounting software can make financial management easier, there’s no substitute for professional advice. Hiring an accountant or bookkeeper can save you time and stress, especially as your influencer business grows. A professional will ensure your accounts are accurate, compliant with HMRC rules, and up-to-date.
An accountant can also provide strategic advice on tax planning, helping you maximise deductions and potentially save on taxes. They can guide you through complex areas such as:
- Determining whether you need to register for VAT.
- Handling capital allowances on larger purchases like equipment.
- Managing taxes if you have multiple income streams (e.g., from partnerships, YouTube, Instagram, etc.).
Additionally, hiring an accountant gives you peace of mind knowing that your tax returns will be filed correctly and on time, helping you avoid penalties from HMRC.
6. Stay on Top of Your Tax Deadlines
One of the most critical tips for organising your accounting records as an influencer is to stay aware of your tax deadlines. Missing a tax deadline can result in fines, interest, or other penalties from HMRC. Key tax dates to remember include:
- 31 January: The deadline for submitting your self-assessment tax return and paying any tax due for the previous year.
- 31 July: The second payment on account (if applicable) is due.
- 5 April: The end of the tax year.
- If you’re VAT registered, you’ll also have to submit your VAT returns quarterly. Your accountant or accounting software can help you set up reminders for these important dates, ensuring you stay compliant.
7. Save for Taxes
When you’re self-employed, you don’t have taxes automatically deducted from your pay as you would in a traditional job. That means you need to set aside money for your tax bill.
A good rule of thumb is to save at least 20-30% of your income for taxes, depending on your tax bracket and other deductions. It’s a good idea to deposit these savings into a separate account to avoid spending the money earmarked for taxes.
If you have an accountant, they can help you estimate how much tax you’ll owe based on your earnings throughout the year, so there are no surprises when the tax bill arrives.
8. Understand Your Tax Obligations as an Influencer
Influencers are subject to the same tax laws as any other self-employed individual in the UK. That means you need to pay income tax on your earnings and potentially national insurance contributions, depending on how much you make.
If your earnings exceed the VAT threshold (currently £85,000), you’ll also need to register for VAT. While it’s optional for businesses earning less than this, voluntary VAT registration might be beneficial in certain cases. For example, if you regularly work with VAT-registered brands or businesses, you may be able to claim VAT back on your expenses.
Make sure you fully understand your tax obligations and the potential implications of things like VAT registration, capital gains, or foreign income. This is another area where an accountant can be invaluable.
9. Regularly Review Your Financial Records
Finally, one of the most effective tips for organising your accounting records as an influencer is to review your financial records regularly. This will give you a clearer picture of your business’s financial health and help you spot potential issues early, such as missed payments, incorrect charges, or discrepancies in income.
Monthly or quarterly reviews can help you stay on top of your cash flow, ensuring you’re not spending more than you’re earning. It will also make tax season far less stressful, as you’ll have all your records in order well before the deadline.
Conclusion
Keeping your accounting records organised is a crucial part of being an influencer in the UK. By following these tips for organising your accounting records as an influencer, you can stay compliant with HMRC, maximise tax savings, and maintain a clear understanding of your financial health. Whether you’re just starting out or managing a growing influencer business, staying on top of your finances will set you up for long-term success.
Disclaimer
This article provides general information only and does not constitute financial or legal advice. You should seek professional assistance specific to your circumstances, particularly regarding HMRC compliance and tax obligations. By keeping your financial records organised, you can focus on growing your influence without the added stress of disorganised accounts or unexpected tax bills.
