I have just finished being a student (well actually thats a lie, but now Im a part-time PGCE student I dont think it counts!) and thought it about time I started getting things ready for the unavoidable tax stuff that no doubt I will get collared for at some point.
But basically, my only form of income is from my private pupils but I dont know how to keep records of them to present to the tax people if/when they want to see them? I mean, I keep a little register but its very basic. I have only just started giving out receipts to those that pay in advance.

Any ideas on how and what I should do to keep everything above board would be great!

PS I really hope no one reading this post is a tax man!

I just keep a 'cash book' in which I write all the income I get from lesson fees and all the expenditure associated with my teaching activities. If you are earning less than £15,000 a year from being self-employed they won't need to see your accounts anyway, although you should of course keep a record in case they want to check up on you.

Oh crikey yes Im practically poverty line (I get a teacher training bursary but at the rate they are going, I wont see any of it til December) but just thought that I had better keep a record of it somehow. Also Im applying for a shortage subject scheme fund and they want to see details of my income. Dont think theyd appreciate my puppy register (no not made out of puppy skin, just pictures of them!).

So have you got say an A4 exercise book that just has all your details on eg A. Smith 10 lessons@£20 £200 received 20/9/2005 ?

More or less, yes.

I have a two-page spread for each month. Income on the RH page, outgoings on the LH page. Keep the dates more or less even on opposite pages (not essential to be too exact on this, but it makes it easier to read and keep track of. Some months take two double-pages but I always keep "in" on the right and "out" on the left - if one page gets full I turn over for both if you see what I mean.

Don't forget you note down your expenses too - books, music, bus fare or petrol to the music shop etc etc. You can subtract these from your earnings when you total up.

I have a weekly outgoings book and a monthly incoming book....it gets tedious being paid weekly and you know how much income you have if being paid monthly.If I was you adopt this.

You don't need a business account,just a current account. Keep all your receipts.

An accountant sorts my books out and I go into the tax office to have my self assessment form checked over.Very handy when you are stuck on a box. I then leave it with them and they do the rest.
National Insurance: Set up a DD for Group 2 and depending on how much you earn you may have to pay group 4.

Set aside enough dosh to pay income tax ( if any).Worth checking out the inland revenue website and you may be eligible for tax credits.

Bank statements et al,have to be kept for a minimum of 6 years.

I hate banks. If you are with a bank consider changing to Nationwide or even the Halifax,for example.

One more thing. It is pretty obvious,but being self employed it is even more important.

Write down your outgoings each month ie all DDs,Mortgage, Money for yourself,Petrol...literally everything...and budget for the lean months.

Good old pen and paper is the best for me and using online banking to check the depleting bank balance every day or so.

The IR are also very helpful,so it might be worth a trip into your local tax office to discuss things.And it's free advice.

Hope this helps.

I'm self-employed and employed. For the self-employed bit I keep a cash book and put in all my income and expenditure keeping a balance as I go along. Every few weeks I then write it up into my Simplex D book. At the end of the year it is very easy to sort out the self-assessment form (well, with some help from a friendly accountant!).

It's a good idea to have a separate bank account for your lessons. National insurance, professional fees, exam fees, piano tuning etc can all come out of that then!

Even if you don't have loads going on now, it's best to get a good system sorted out so that when you do expand, there are no problems from el taxo mano.

I hope that helps.

I keep all my records on spreadsheets - one for earnings, one for expenses and then there's a third that feeds off the other two and calculates the tax I owe! I actually work for my accountant in my spare time (ho ho ho) so do PM me if you want any greater detail. Good luck.

I issue all my pupils with formal invoices and keep those on my PC (backed up, of course). I also run an Excel spreadsheet showing who owes what, who's paid what and other expenses set against the income from my work. I also keep copies of my teaching and playing diaries for at least six years in case there's any query about when I undertook work.

At the end of my financial year I prepare simple accounts from the spreadsheets and these then help me to complete my self-assessment tax return on-line.

It's really important to keep good records (no matter how you do it) so you know what you've earned and spent and so too, if you ever needed to show him, would the tax man.

Remember, also, to keep all receipts for anything you want to claim against your income and that any large items of capital expenditure (eg a new instrument, computer etc) which are essential to your "business" can also be set against tax.

When I first started teaching I had a short consultation with an accountant and he helped me set up my systems - though in those days they were paper-based. As technology improved so I moved onto computers but the basic structure remains unchanged. All you need to do is set up something you can work with but which can also be understood by others if needs be.

I have a double entry cash book, in which I also include my register. As the others have said, keep a record of everything you spend connected with your business. Don't forget to claim an amount for heat and light if you are working from home. You can also claim tax relief if you buy a new instrument or a computer in connection with your teaching. I'm lucky to have a daughter who is an accountant, (we swap piano lessons for accountancy services) so she sorts out what I am allowed from the information I give her and then I do an online tax return.

I like to keep my teaching money separate from my other finances, and have a business account with Abbey - as far as I know they are the only one who gives a free banking service to small businesses and I have found them very good.

Gosh, this is all really interesting, I have only had to start all this caper myself very recently!

If private teaching is your only income, you must declare yourself self-employed with the Revenue within three months or you'll be hit with a 100 pound penalty! I had to do this recently and because I'm on poverty earnings, will probably be excused my National Insurance for a while till things pick up and then will pay via Class 2 on a Direct Debit (just over 2 pounds a week). You have a Personal Tax Free Allowance of £4895 and earnings above that are elligible for tax. It was recommended to me that I put around 22% aside for the tax bill in January.

Like the others, I keep all my receipts for music, paper, computer and audio equipment for returns and have a little 'accounts book' with all the margins helpfully already ruled in. Terribly basic, Date, Pupil name, Amount, Cash or Cheque, but it does the job! I also keep invoice records and tear off a receipt slip for parents. I have a big teacher planner for planning lessons (when I remember... ) and keep attendence records (also helps when I find I get too many cancellations so I can take action..)

Do contact the Revenue for more advice, I round them really helpful and they have sent me information on local (free) courses to help with self employment and self assessment.

Further to Suepea's point, I have a business account with the Alliance and Leicester and that is free too - for normal banking stuff anyway. I had banked for 15 years with Midland/HSBC, but they decided to put their prices up by 120% a month earlier this year so I moved accounts!

Thanks very much for all of your ideas everyone! I have actually kept a simple spreadsheet on my PC for the last year and have just started a second one for the new 'school' year. Its income/expenditure amounts and basic details.
I think I may take the advice on having a separate teaching spreadsheet.
I think I earn just over that personal allowance limit someone mentioned...so I guess that means I had better declare myself self-employed eh? I think I can stretch to £2.00 a week...it will just have to be economy beans on toast for a while!

Thanks for all of the advice here, and I'm glad someone else took the plunge to ask the question. I'm in the same situation as JohnS in that I have employed and self-employed income.

Now another question (maybe for Suepea's daughter) - am I right in thinking that anything which could reasonable be a legitimate teaching expense can be counted as a tax deductible expense, e.g. new reeds as an example? Answers on a postcard to the usual address.

I too have employed and self-employed income, but the Inland Revenue always seem to find this impossible to understand. They are one of the most unhelpful organisations I've ever had to deal with. When I was starting up they could offer no advice at all apart from saying I didn't fit in with what they were used to dealing with! Useless!

David

Deborah "am I right in thinking that anything which could reasonable be a legitimate teaching expense can be counted as a tax deductible expense"

Yes!



David

No organisation can be as bad as the Child Support Agency!!!

Have you had a browse on the IR site,as there is a section dealing with your issue?

I can't say I've ever had dealings with the CSA but I gather it is a disaster. I think now I've sorted my tax out. I'm registered as employed and self employed and I simply fill in the tax return at the end of the year. Has taken nearly 3 years to get to this stage though.

David

I can't say I've ever had dealings with the CSA but I gather it is a disaster. I think now I've sorted my tax out. I'm registered as employed and self employed and I simply fill in the tax return at the end of the year. Has taken nearly 3 years to get to this stage though.

David

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That's not bad...3 years!!! I've been fighting with the CSA for ten years now

It used to be nightmare when I had two lots of employed income as well as being self-employed - I had 3 different tax offices who didn't communicate. I had to pay two lots of tax each year and claim one back . It's quite easy now - just one tax office to deal with Have you tried the on-line SA forms? They are surprisingly quick and painless

W