Professional Practice: Research Book 3

3.1) In becoming a self employed photographer and running my own business, there are some key areas I need to research and look into before this is possible.

Tax

If you're self-employed, you are responsible for declaring and paying income tax on the profits from your business. Self-employed people pay income tax on their profits, rather than their gross income. To work out the correct figure, you need to deduct business expenses from your business income.

You can also claim capital allowances and deduct any losses carried over from previous years. The resulting amount is your taxable income. The taxable rate is 20%.

National insurance

You pay National Insurance contributions to qualify for certain benefits including the State Pension.

You pay National Insurance if you’re:

16 or over
an employee earning above £155 a week
self-employed and making a profit of £5,965 or more a year

You need a National Insurance number before you can start paying National Insurance contributions. If you earn between £112 and £155 a week, your contributions are treated as having been paid to protect your National Insurance record. If you’re employed

You pay Class 1 National Insurance contributions. The rates for most people for the 2016 to 2017 tax year are:

Your pay	Class 1 National Insurance rate
£155 to £827 a week (£672 to £3,583 a month)	12%
Over £827 a week (£3,583 a month)	2%

Capital Expenditure

Capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset.

BREAKING DOWN 'Capital Expenditure (CAPEX)

In terms of accounting, an expense is considered to be a capital expenditure when the asset is a newly purchased capital asset or an investment that improves the useful life of an existing capital asset. If an expense is a capital expenditure, it needs to be capitalised. This requires the company to spread the cost of the expenditure (the fixed cost) over the useful life of the asset. If, however, the expense is one that maintains the asset at its current condition, the cost is deducted fully in the year of the expense.

The amount of capital expenditures a company is likely to have depends on the industry it occupies. Some of the most capital intensive industries have the highest levels of capital expenditures including oil exploration and production, telecom, manufacturing and utilities.

Capital expenditure should not be confused with revenue expenditure or operating expenses (OPEX). Revenue expenses are shorter-term expenses required to meet the ongoing operational costs of running a business, and therefore they are essentially identical to operating expenses. Unlike capital expenditures, revenue expenses can be fully tax-deducted in the same year in which the expenses occur.
(Information found at http://www.investopedia.com/terms/c/capitalexpenditure.asp#ixzz49JDaJOM6 on 21.05.2016)

For my own business this would be buying new camera, flash kits, new computer for editing, upgrade accessories & props.

Intellectual property

What is a copyright Notice?

Every piece of film, print, and digital file should have a copyright notice to assert your copyright, that is, expressing your rights and wishes.

The © symbol is the symbol recognised by the majority of countries as signifying copyright.

The year is the year of creation or publication of the image.

‘A Photographer’ is the name of the photographer, or organisation if the copyright is owned by a corporate body.

Who owns copyright in an image?

The person who creates an image (“the creator”) will generally be the first owner of the copyright. However, there are various situations in which this is not necessarily the case. For photos, it may depend on when the photo was taken, as different rules may apply if the photograph was taken before 1989. Creators also have what are known as moral rights (see example below on stopping the use of an image if you disapprove). If an image was created as part of the creator’s employment, rather than by a freelance creator, the employer will generally own the copyright. It is also possible that, in instances where a person has arranged equipment and made artistic decisions prior to taking a photo, but wasn’t the one to press the trigger, the person making the arrangements could own the copyright. An example of this could be where a photographer has made the creative choices in setting up a shot, but got an assistant to actually press the trigger. The creator of an image may choose to allow a person or organisation to license the work on their behalf, license the copyright directly themselves, or “assign” (transfer) the copyright to another person. The term ‘licensing’ means giving another person or organisation permission to use a work such as an image, often in return for payment and/or on certain conditions for a specific period of time.

I want to use photos taken for me by a professional photographer?

Where you commission a professional to take photographs on your behalf, for example wedding photographs, the copyright will usually remain with the photographer. This means that you need to get the photographer’s permission before printing further copies of the images, sharing them with your friends or family, or undertaking other acts restricted by copyright such as posting the images to social media sites. Many photographers will include licence terms setting out exactly what use you may make of images in their contract with you. If you have specific uses in mind, you should ensure these are discussed before contracts are settled. You could also agree with the photographer that the copyright will be assigned to you – this would be done by having a written and signed contract with the photographer saying you had bought the copyright from them. Depending on your needs, a less expensive solution may be to pay for a licence. Where a photograph is commissioned for private and domestic purposes, the commissioner does have a right that the photographs will not be issued to the public without their permission. This means that, although a wedding photographer may own the copyright in images of your wedding, they should not post them on their website or exhibit them in public without your permission.

What is a copyright Notice?

Every piece of film, print, and digital file should have a copyright notice to assert your copyright, that is, expressing your rights and wishes.

The © symbol is the symbol recognised by the majority of countries as signifying copyright.

The year is the year of creation or publication of the image.

‘A Photographer’ is the name of the photographer, or organisation if the copyright is owned by a corporate body.

Market Research

Market research is the process of assessing the viability of a new product or service through techniques such as surveys, product testing and focus groups. Market research allows a company to discover who their target market is and what these consumers think about a product or service before it becomes available to the public. Market research may be conducted by the company itself or by a third-party company that specializes in market research. Test subjects are usually compensated with product samples and/or paid a small stipend for their time.

For example, a company that was considering going into business might conduct market research first to test the viability of its product or service idea. If the market research confirms that company's predictions, they can proceed confidently with their business plan. If not, they can use the results of the market research to make adjustments and do additional testing. Though market research can be expensive and time consuming, it should be less expensive and time consuming than fully developing and bringing to market a new product or service that will generate little or no interest from potential customers.

Funding

Funding your business could work out costly for yourself if you don't have nothing to start with. For example if you need to buy everything from a camera, lenses, back drops flash kit etc, For all this equipment it does get quite expensive. If yo have money to fund yourself that is the simplest and most straightforward way. Other ways would be to get a bank loan this being if you have good credit ratings to be able to get a loan out.

Expenses

Expenses for a business would be travel costs, equipment costs, food and over night stay costs (if working away), studio premises if not doing it from home, council tax, tax, insurance, national insurance. All these expenses need to be taken into account when thinking about setting up, as you don't want to go into business blind.

Business registration

To register my business name on the national business register the cost will be £96.

To become a sole trader, you’ll need to:

register as self-employed with HM Revenue and Customs (HMRC) to make sure you pay the correct Income Tax and National Insurance
keep records of your business income and outgoings
pay your tax each year, usually in 2 payments on the 31 January and 31 July- use HMRC’s calculator to help you budget for this

sole trader/limited company (advantages/disadvantages)

Becoming a sole trader -

If you start working for yourself, you’re classed as a self-employed sole trader - even if you’ve not yet told HM Revenue and Customs (HMRC).

As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you’ve paid tax on them.

You can employ staff. ‘Sole trader’ means you’re responsible for the business, not that you have to work alone.

You’re personally responsible for any losses your business makes.

You can use your own name or trade under a business name

You must include your own name and business name (if you have one) on any official paperwork, like invoices and letters.

Advantages of being a sole trader:

you’re the boss

you keep all the profits

start-up costs are low

you have maximum privacy

establishing and operating your business is simple

it’s easy to change your legal structure later if circumstances change

you can easily wind up your business.

Disadvantages of being a sole trader:

you have unlimited liability for debts as there’s no legal distinction between private and business assets
your capacity to raise capital is limited
all the responsibility for making day-to-day business decisions is yours
retaining high-caliber employees can be difficult
it can be hard to take holidays
you’re taxed as a single person
the life of the business is limited.

Advantages of becoming a Limited Company:

Higher take home pay – You'll typically take home around 75% - 80% of your contract by working through your own limited company, you can take home as much as £15,000 per year more on a £350 daily rate compared with using an Umbrella Company.
Claim on a wider range of expenses - Anything that is solely classed as a business cost can be claimed back on expenses. Trading through a Limited company means you can claim on a wider range of expenses such as accountancy fees, equipment, software, phones, travel, Internet and much more.
Entitled to the Flat Rate VAT scheme - The Flat Rate VAT scheme can generate thousands of pounds of extra profit a year, with most contractors choosing to apply for this VAT scheme.
Personal assets are covered - As a non-limited business, personal assets can be at risk if the business fails, but this is not the case for a limited company. As the shareholder you can not be held personally liable for the debts of a limited company, meaning your personal assets are not at risk.
Complete Control of your Business - You keep complete control of your financial affairs meaning you do not have to risk your money with any third party administrator or umbrella company.
Ease of use - Running your own business isn't difficult; submit spreadsheets to your accountant - just like umbrella time-sheets and expenses. Working through your own limited company does require a certain level of commitment but typically most contractors tell us they spend around 15 – 20 minutes per month managing their company.
Greater opportunity for tax planning than PAYE Umbrella – It goes without saying that working through your own limited company is more financially rewarding, which is only fair bearing in mind the extra responsibilities and loss of full time employment benefit.
Company given more credibility - Operating as a limited company often gives suppliers and customers a sense of confidence in a business and quite often other companies prefer not to deal with non-limited businesses.
Protection of your company name...even if you are not contracting. Once your proposed company name is registered as a limited company, the name is protected by law and no one else is allowed to use it, waiting to register your company could mean you lose the name you had initially wished to trade under.
Accountancy fees are often less than Umbrella Company fees – It seems strange but it’s true, many accountants charge less than umbrella companies.

Disadvantages of becoming a Limited Company:

A certain amount of paperwork involved – As mentioned above, there is about 15-20 minutes of administration work required per month, not much more than that of an Umbrella Company.
Accounts need to be filed every year - You have to file your accounts at Companies House each year, which will be on public record however your accountant will help with this. You will also have to file accounts, company tax and corporation tax calculations with HM Revenue and Customs every year, but again your accountant will help with this.
Costly if contracting for a short period of time - Can be costly if you have a short term contract (anything less than a couple of months but it does depend on your daily contract amount) then decide to go back to permanent employment as you will still be required to submit end of year accounts.
Not ideal for contracts less than £25,000 per year - This is only a general rule, and in some circumstances, depending on the contract, it may be more beneficial trading through a Limited Company. We would recommend contacting an accountant and asking them for their advice.

http://www.sjdaccountancy.com/information/advantages_disadvantages_limited_company.html

3.2) SWOT ANALYSIS

This will help me to understand and identify my strengths & weakness's to help me progress in my business field.

Strengths:	Weaknesses:	Opportunities:	Threats:
Flexible	Better equipment needed	Make business cards/leaflets to give/leave out at parties & events	An overcrowded field I’m branching into
Portfolio of work	More confidence needed	Promote myself more on social media to get more potential clients	Technology – new tech & equipment always coming out allowing others to provide an extra something
My own equipment: Lenses Camera	Not in the public attention enough	Carry on with my course Into the top up year	Money not being able to fund the setup of my business
Social media	Still working on my professional website	Look out for potential events an opportunity to promote myself	Other photographers have unique selling points and a built up reputation with their clients
Qualifications
Studio set up
Own transport