Running your own business: Session Review

Three journalists and one accountant gave useful tips for freelancers to set up in business at the 3rdUK Conference of Science Journalists (UKCSJ14)

Chaired by Martin Ince, ABSW president, three speakers including Toby Murcott, Richard Hollingham and Martin Connell, filed the concern of journalists when considering stepping into the business world. Murcott previously worked for BBC Radio Science Unit, BBC World Service Radio, as Science Editor for Maxim magazine and Einstein TV. However, he began his freelancing path after an unexpected incident. Until now he has still not been on “the wrong side of the Inland Revenue”. The income from his freelancing job ensures that he has finance stability for a year at a time. Besides that, he has a balanced life in which he can enjoy both work and leisure time. Hollingham took a slightly different path when setting up a company that produces science programs for BBC radio and TV reports for the European Space Agency. His business has run pretty well so far. On the other hand, Connell is an experienced accountant with over thirty working years working with sole traders and small business owners. Although he has advised numerous sole traders and small companies, this is the first time he has clients who are science journalists.

Beginning as a freelancer

There are many ways to become a freelancer - both intentional and un-intentional. Like Murcott, it was an unexpected path. “Sometimes the company you work for goes bust and you don’t really have much choice”. Hollingham also didn’t intend to be a freelancer. He lost his job and then he decided to be a radio presenter. However, he became a freelance as his preferred choice when he realised the best way to guarantee the future was by going down the freelancing path.

Keeping hard - earned - money 

One of the most frequent questions for a freelancer is how to know that you can earn enough money? The answer of the two experienced journalists was the same; “by opening a business account”.

As a sole trader, Murcott’s saving tip is to divide total income every month into 40% for the reserved account and 60% for the bank account. The money in the reserved account will make sure that at the end of the year Murcott can pay his taxes without any difficulties and could leave an extra bonus for him from the remainder. It works like a back-up for him to make sure that he already has money aside for paying tax. Well, like the practical American often said “in this world nothing is sure but death and taxes"; tax is something that a freelancer should bear in mind first.

Meanwhile, Hollingham also agreed that having a business account is necessary. However, he had a slightly different formula. For the reserved bank account he puts aside 25% of his income. From his observation, that amount is “a little more than I have to.” It seems that a freelancer would have to base a decision on the particular personal circumstances to decide the right amount of money to be placed into separate accounts to pay off tax.  

From the accountant’s view, Connell urged that in the case where a freelancer sets up a company, that person has to have an account because it is needed for paying tax as well as for many other business expenses.  

Seeking professional help if necessary

In the conference, the panel drew on another key financial point: to encourage the journalist to manage a business with an accountant. Although Murcott said what the accountant reports bears “absolutely no resemblance whatsoever to what I think I do over the year”, it makes the tax burden at the end of the year become reasonable. Besides that, the accountant also makes the tax payment process become much smoother as they know about when, where, who and how to do that. 

Connell said there is a lot of faulty information on the internet. He also stated that freelancers are choosing self-employment and doing the tax by themselves. If they have questions, they should find answers from the correct source. Connell suggested “in terms of finding an accountant, I would recommend speak to a friend and get their recommendation.” 

And remember “happier earning a little bit less”

Murcott only earns £30,000 a year, which is as he said “not huge” but “enough”. The current work allows him to spend time with his family and to have plenty of leisure time. He said he is probably able to earn more but he feels happier now with the present situation. Hollingham also emphasised the necessity of a balanced life. He said the freelancer tends to think that they have to work every day and it’s crazy to have two freelancers in the one house-hold.

There are advantages and disadvantages in being a freelancer. However, careful preparation and professional work will help if you follow this path.