Peter Norris | Finance

December 4, 2013 § Leave a comment

£25 an hour X 8 hours = £200 a day
£200 a day X 5 days = £1000 a week
£1000 a week X 4 weeks = £4000 a month
£4000 a month X 11 months (1 month holiday) = £44,000 a year

Over 1 year: your workload is not constant. You won’t have work all the time, as well as having finances to sort out etc, therefore reducing your overall yearly rate.

£44,000 then becomes £38,000

£44,000 is your GROSS income. You then have to take into account National Insurance, Tax and Pensions. You might end up with £23/24,000 a year then.

These deductions can be reduced if you charge correctly. It can also be reduced if you’re efficient in managing your finances for your business e.g. charging 25% of your heating/electricity bill (if your office is your home) to your company. If you drive to meet contacts etc, you can then charge for mileage. You need to take into account EVERYTHING.

£0 – £7000 is tax free
£7000 – £21,000 you pay 10%
£21,000 – £42,000 you pay 25%
£42,000 – £80,000 you pay 40%
£80,000 you pay 50%
(The % they take from you, they will give you back into your pension)

It is important to take into account all your monthly outgoing bills and make sure that your wage coming in balances this out. Make sure the company you’re working for at the time keeps up with their payments and keep an eye on your money flow.

Budgets

  •  Set amount of money that is committed to a project. Costings – Profit – Tax – Shareholders
  • Budget is not a set amount of money, it is only an estimate. A guideline as such. Each year a similar budget will be made and each year you will learn more and more on how to manage it better.

Expenditure

  • You always need to know how much is in your bank account and how much of it you can spend.
  • The best plan is to take out 10% straight away so that you know you have some spare in case of emergencies (or at the end of the project it becomes profit).
  • Always keep up with the maths. Deduct your expenses from your budget straight away to keep on top of it easily. This way, you always know how much you have left, how much you’ve spent and know where you stand.
  • Be prepared to cut corners, please the client – stop to understand what it is they will be paying for.

Hypothetical Project

New logo for Manchester Museum.

  • Meet with client to discuss what they want/want included and briefly explain what I will be doing – 1 hour
  • Research further into the company. e.g. what they are about, their audience, etc. Look into their past logos. – 2 hour
  • Sketch out 8+ ideas for the logo – 8 hours
  • Potentially meet with client again if requested. – 1 hour
  • Possible development and changes to sketches – 1 hour
  • Design logo in both variety of colours and B&W – 2 hours

Other costs e.g. software – £10

Total working hours = 15 hours. £25 hour = £375 + £10 = £385. Two days of work.

Poster

  • Meet with client to discuss what the purpose of the poster is for, what they want including and briefly explain what I will be doing – 1 hour
  • Research further into the company. e.g. what they are about, their audience, etc. Look into their past posters and colour schemes. – 2 hour
  • Sketch out 8+ ideas for the logo – 8 hours
  • Potentially meet with client again if requested. – 1 hour
  • Possible development and changes to sketches – 1 hour
  • Design logo in both variety of colours and B&W – 2 hours
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