This weeknotes focuses on the business of doing business, rather than the business of doing content. Most of the time I don’t think about this stuff much. But recently, it’s caught up with me and tackled me to the ground.
A couple of weeks ago, I realised that my turnover for the last 12 months was over the VAT threshold. If you’re not up-to-speed with UK taxes, VAT stands for Value Added Tax. It is a tax that’s added to most goods and services. Buyers pay the tax, but businesses must register for VAT and charge it on their sales. The VAT threshold is the amount of money a business can earn before they have to register for VAT (currently £85,000 a year). When a business is VAT registered, it can reclaim the VAT charged on the goods and services bought your business.
It’s always been my intention to stay under the VAT threshold for four reasons:
- £85,000 is a lot of money, even when you account for the fact that you have to pay expenses, tax, holiday, sick pay, etc from it
- my business expenses are pretty low, so the amount I can reclaim in VAT doesn’t come close to the amount I’d have to pay
- lots of my charity clients can’t reclaim the VAT, so they (understandably) don’t want to pay it if they don’t have to
- lots of the work I bid for has a set budget that includes VAT, so it made me more competitive (and meant I could take home more money)
- For example, if there’s a set budget of £10,000 for a piece of work, previously I got the whole £10,000. Now, I’d get £8,000 and the other 20% would be the VAT.
There’s also the reality that my turnover has never been close to £85,000 before, so I never had to worry about it. But now I’ve gone over the threshold for a few different reasons:
- Being very, very busy since the start of the year and working more hours
- Bringing in collaborators to supply extra skills, expertise, and time on a sub-contracting model (client pays me, I pay collaborators)
- A big new project that the client wanted to pay for in full, in advance
I know a lot of people would be happy about earning more. But the goal for my business has never been growth or profit. I want to do good work, make a living, and go home on time. So when I first realised I’d gone over, it felt like a disaster. Especially as I’m not feeling any financial benefits. Business has been tough for the last three years, and I’ve got to build my cash reserves before I can take money out of the business. Plus, all this extra work is facilitated by collaborators, who need to be paid.
I spent a while kicking myself, then started planning and trying to see this as an opportunity. Two things helped with this:
- Talking to Caroline Jory and signing up for some coaching/mentoring to help me get through this bumpy bit and safely into the next phase (See Caroline’s website.)
- Working with project and ops manager Lyndsay Borgonon to sort out my approach to running my projects. I was really, really stressed and having Lyndsay in the office made me feel much more positive, and I’m already reaping the rewards from the work she’s done in ClickUp for me. (See Lyndsay’s LinkedIn profile)
The big opportunity is that without this self-imposed limit on my turnover, I can take on bigger, more complex projects. I’m excited about this from a development perspective – I want to make sure I’m always learning and growing. It also means that I can collaborate more freely, which again, is great for my learning, and great for my clients too, because I’ll be able to do even better work. And on a personal level, living expenses are sky rocketing, I have no savings to speak of, I don’t own a house, and my pension pot is pitiful, so trying to earn a bit more is probably the sensible thing to do. At least until the revolution that finally destroys capitalism comes along. (Fingers crossed, eh?)
Back to the content strategy/design weeknotes next time.