As entertainment accountants, we cannot stress the importance of financial planning for independent entertainers and artists. Without it, you’ll find it difficult to turn your passion into your full-time career.
But what does financial planning actually mean, and how can entertainment accountants help? Find the answers to these questions and more in this guide.
Common financial challenges in the entertainment industry
The entertainment industry comes with a lot of unique financial challenges. Hopefully, just spelling out the main ones will hammer home how important it is to create a financial plan (and seek the help of professionals where appropriate!).
- Inconsistent income: While working as an entertainer can be extremely rewarding, the nature of the industry means you’re constantly on the hunt for new gigs, and you’re rarely guaranteed a consistent income. Without good forward planning, this can lead to unstable finances and cashflow problems, which in turn can make it hard to pay the bills, market yourself effectively and pay for business-related costs like transport and equipment. It’s a horrible spiral to be in.
- One bad day away from disaster: Many independent artists and entertainers face uncertain career prospects, and events such as a contract suddenly falling through or being dropped by an agent can significantly impact your earnings. One bad day could even spell disaster if you don’t have any savings to fall back on.
- A competitive industry: The entertainment industry is highly competitive, making it essential for artists and entertainers to focus on self-promotion, including marketing and networking. This can include paying for ads, headshots, business cards and flyers. The overheads may seem low on their own, but they can mount up.
If any of these scenarios sound familiar, don’t panic. As entertainment accountants, it’s our job to help you manage your money so you can secure a more stable financial future.
Top financial planning tips from entertainment accountants
At the end of the day, as an independent entertainer, you run your own business – in fact, you are your own business. That means you need to maintain financial stability, set achievable financial goals, manage your expenses, and plan for the future.
Entertainment accountants can take on some of those time-consuming admin tasks and give you the strategic advice you need to manage your money and tax liabilities effectively. That way, you can focus on moving your entertainment career forward and leave the finances in the hands of experts.
Tracking expenses and managing cashflow
Bookkeeping is an essential part of any business. Without a grasp on how much money is entering and leaving your business, how are you going to be able to ensure you have enough coming in to pay off your debts, buy equipment, etc?
If you want to stay on top of your books, it’s best to update them on a regular basis. That way, you can make sure you’re not forgetting to log anything. You may also be able to look at how much money you’ve made in the past to predict your future income – although this can be tricky with an unpredictable work schedule.
However, these tasks can be complicated and are often time-consuming. As entertainment accountants, we can provide in-depth bookkeeping services and keep your records up to date for you. We can also advise on the best bookkeeping software to use so you can easily access your real-time financial information on your laptop or phone – which can be hugely beneficial if you’re always on the go.
With your books up to date, expenses categorised, and income recorded accurately, we can use what we learn from your accounts to create forecasts that help predict your financial future. That should allow you to budget more appropriately and start the next chapter of your career with confidence.
Investing and retirement
If it’s long-term financial stability you’re after, then investing your money and creating a retirement plan is something to take seriously.
Depending on your financial circumstances, that could mean looking into ISAs, setting up a pension plan or building up a diverse property portfolio.
However, every investment comes with varying amounts of risk and reward. Working closely with financial advisers like us can help you make well-informed decisions that set you up for success. We take a proactive approach to supporting our clients, so we can also come to you with new opportunities to grow your wealth.
Managing your taxes
One type of expense that’s easy to forget about is tax. If you’re self-employed, you’ll need to pay at least 20% income tax on profits above the personal allowance threshold. You’ll also be required to file a self-assessment tax return to report your income and calculate your tax liability.
When it comes to tax planning for entertainers, one of the most important things you can do is claim every allowable expense you can on your tax return. These are purchases you make for business purposes and can range from a work laptop and phone to music equipment and travel costs.
Generally speaking, purchases must be made exclusively for business purposes to be tax-deductible. However, the rules on what qualifies as an allowable expense are complex, so it’s important to work with an expert to ensure that you’re making a legitimate claim.
Having an entertainment accountant on your side can be a lifeline here, as they can use their bookkeeping and tax expertise to help you maximise your expense claims.
Making pension contributions
You should also make the most of the tax relief on pension contributions. But if you’re self-employed, you won’t have an employer enrolling you in a workplace pension scheme. By setting up and paying into a personal pension plan, you’ll be able to minimise your tax bill, grow your wealth and feel more in control of your financial future all at once.
Managing the administrative burden with entertainment accountants
However, ensuring you submit accurate tax returns before the deadline can be complicated and time-consuming, especially if you have a lot of business expenses to account for.
Entertainment accountants can provide self-assessment services to take on this administrative burden for you, freeing up time for you to focus on your passion.
As media and entertainment accountants, we’d be happy to help. Get in touch with us today.