In the podcast episode titled "Ask an Accountant: Finances for Creators with Leanne," listeners are introduced to Leanne, an experienced accountant who specializes in helping creators manage their finances. The episode provides valuable insights into financial management for creators, especially those in the digital content creation industry.
Understanding the Unique Needs of Creators
Leanne explains that traditional accounting firms often don't understand the nuances of the content creation industry. Creators are typically younger and may find traditional firms intimidating. Her firm aims to demystify accounting by providing simple and accessible advice tailored to the needs of creators.
"We are just trying to do something a little bit different... we're not scary, we're not intimidating, and we'll explain everything simply and easily."
The Importance of Tracking Income and Expenses
Leanne emphasizes the importance of tracking all income and expenses meticulously. She advises creators to set up a separate bank account for business transactions to simplify the tracking process. This practice not only helps in managing finances but also in preparing for tax assessments.
"Do not leave your receipts in a shoe box under the bed until January 26th to get your tax return in for the 31st of January. It is a bad idea."
Navigating Tax Obligations
The podcast delves into tax obligations for creators. Leanne warns against relying on misinformation online and stresses the importance of professional advice. She highlights that creators must register for self-assessment if they earn over £1,000 in a tax year and explains the implications of national insurance contributions and payments on account.
"You need to pay National Insurance potentially, depending on your earnings level, if you go over the threshold."
Business Expenses and Allowable Deductions
Leanne discusses the complexities of claiming business expenses, particularly for digital creators. She clarifies that expenses must be wholly, exclusively, and necessary for business purposes. The episode provides examples of what constitutes a business expense and the importance of keeping documentation to support claims.
"If you are going on holiday and whilst you are there you are posting to your Instagram stories, that does not make it a business expense."
Leveraging Accounting Software
The use of accounting software is recommended to streamline the financial management process. Leanne suggests starting with free options available through certain bank accounts and highlights the benefits of using software like QuickBooks for maintaining accurate records and complying with future digital tax requirements.
"As long as you're fairly computer savvy, I would just get software in the first place because it's just going to save you time further on down."
Final Thoughts
Leanne concludes by advising creators to be diligent and proactive in managing their finances. She stresses the importance of professional guidance and staying informed about the financial aspects of content creation to avoid potential pitfalls.
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