This is the 1st article in a 10 part series covering all aspects of getting paid as a business.
Coming up: 6. Profit & Tax, 7. Maintaining A Money Mindset, 8. Getting Paid As A Sole Trader, 9. Getting Paid As A Limited Company, 10. Saving For Tax & Your Future. Sign up to get the next article in your inbox so you don’t miss any.
Getting paid is one of the Best Things Ever.
Even above cake, as money means we can buy the ingredients to make the cake or buy the cake.
Money is awesome.
Money also pays your mortgage or rent, your bills and that business retreat and coaching you’re dying to do. We love money.
Ready to get paid?
Let’s get some money in your bank account 🙂
Are You A Business?
First things first. Doing work doesn’t automatically means you’re a business.
You may be freelancing, but are you a business?
You can receive freelance income without being a business.
When you accept a freelance project, do not submit an invoice, it’s a one-off, and you aren’t looking for more work or for clients, then you aren’t a business. Tell HMRC about the extra income or add it to your self assessment as casual earnings. Remember you can’t claim expenses.
If you have a blog, read Tax For Bloggers and download the Is My Blog A Business flow chart.
You’re a business when you:
- Send an invoice
- Are looking for clients (even if you don’t have any or they haven’t paid you yet)
- Have a website/social media saying you’re open for business (ie. doesn’t have a sign on it saying ‘available for work from [date] etc)
Sole trader or limited company?
Your main options for being a business are sole trader (self-employed) or a limited company (separate legal entity).
Being a freelancer is a description of how you work, rather than a legal definition or legal structure.
It’s an important decision, so it’s worth taking time over.
A third of my clients hire me for coaching about whether a limited company is right for them, how it works and the legal obligations.
It’s important to feel confident about your decision and understand what it means for you.
Congratulations, you’ve a new, shiny business.
Now you want to be paid.
Your options depend on what services you’re offering and who is buying.
You can start with a basic Paypal button, but for most of us, the invoice rules.
(Learn more about payment options in Getting Paid: Ways For People To Give You Money, coming later in this series).
There are a few rules about invoices you need to follow.
Some of these are legal requirements and some are just plain sensible:
- Your name/business name, business address, phone number and email address
- Your client’s/whomever-is-paying name and address
- How you accept payment
- Your payment details
- Your payment terms, if you have them
- Your terms of business, if you have them
- Details of what services you are asking to be paid for and how much it is (+VAT if you’re registered)
- Details of expenses you are asking to have reimbursed and how much they are (+ VAT if you’re registered)
- Your VAT number, if you’re registered. That you aren’t registered if you aren’t
- Your logo, if you have one
- Your client’s home made chocolate brownie will be sent to them on payment (that’s just my clients, yours may vary)
It’s easy to get yourself into knots about getting your invoice perfect.
Your invoice doesn’t need to be perfect.
It needs to be legal, easy to read, have the needed information to contact and pay you, and look professional (that means no hearts or unicorns unless it’s your branding).
Download a free invoice template
This is the invoice I used when I started my business.
You can download this template and adapt it to your business if you’re a sole trader who isn’t VAT registered.
Now I use a fancier one with this photo of me offering my new client their brownie.
Your chocolate brownie is mentioned in all my client agreements and invoices so you don’t forget that tax means cake. It will also puzzle tax inspectors but that’s their problem if they don’t understand the obvious miraculous benefits of cake.
You have your business, you have your invoice, now you want to be ready to receive the money your new clients are going to send you.
You need a bank account.
There have been reams written on bank accounts, businesses and business bank accounts.
Most of it leads you feeling more confused and in analysis paralysis than when you started. (And bank managers, all the fun of the fair, they are).
Are you a limited company?
If so, it’s a requirement to have a business bank account.
Learn more: How Do I Choose A Business Bank Account?
It’s ok to use your personal account as a temporary measure while you open a business account. Keep good records and give them to your accountant.
Are you a sole trader?
The priority is to receive money.
Pretty much anything (except fraud) can be sorted out later with little bother if you have good records.
Just get the money in.
Don’t use OMG the BANKS, as an excuse to not get your finger out and be in a position to receive money.
Keep Good Records
You need to keep good records.
It’s a legal requirement, and also good karma.
You need to record all the income coming in (turnover) and all the money going out (expenses).
Download these handy income and expenses spreadsheets and get started in the next 3 minutes.
You also need to record all your income, not just business income, for your self assessment tax return.
It’s not difficult, it just needs to be done. (For help knowing what income HMRC want to know about and what’s in a self assessment tax return, consider buying my How To Do Your Tax Return course).
Getting Started Getting Paid
One of the biggest fears people have when starting a business is how they’ll get paid and it stops them making the change from their job or starting a part time business.
Don’t let that happen to you and your dreams.
The most important action you can take is to get started.
If you want support with understanding all this getting paid business, what’s right for you and a safe space to ask as many silly questions as you want, have a look at my sole trader or limited company coaching packages. I can also create an individual package just for you.
Excited to get started getting paid as a new freelancer?
This article is part of a series about getting paid as a business.
- Professional Payment Procedures
- Ways For People To Give You Money
- Late Payments & Not Getting Paid
- Getting Paid Faster & On Time
- Profit & Tax
- Maintaining A Money Mindset
- Getting Paid As A Sole Trader
- Getting Paid As A Limited Company
- Saving For Tax & Your Future
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