Author: Chris Wheal

The taxman cometh (4)

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Choosing your accountant

Choosing the right accountant for you and your business is crucial. You need to be able to trust your accountant to do the best for you, to give you accurate advice and to present your affairs in an honest and accurate manner to the taxman.

Get it wrong and you may face the wrath of HMRC and full-blown investigation into your affairs, in which you will be expected to produce all your records going back years and you may be expected to justify each and every item of spending.

My first recommendation is that you choose professionally qualified and regulated accountant. In effect that either means an ACCA-qualified accountant or, more likely, an ICAEW-qualified accountant. ACCA and ICAEW are accountancy institutes that not only set qualification standards but regulate their members. ACCA members are generally called certified accountants and ICAEW members are called chartered accountants.

"It's fun to charter an accountant.....and sail the wide accountancy" - Monty Python

Be warned: anyone can call themselves an accountant. Many are not qualified or only partially qualified. Only regulated firms come with any official guarantee and back-up – they must carry professional indemnity insurance, for example, to cover any errors or omissions they make.

It has been known for an accountant with a large entertainment-based clientele to come unstuck with the Revenue and have certain expenses challenged. This results in HMRC investigating every single client and demanding back payments of tax for exaggerated expenses claimed.

Why a chartered accountant?

Michael Izza, chief executive of the ICAEW, said: “When hiring an expert for any job, a client wants to know they are buying expertise based on quality, honesty and efficiency. It is also vital that the ‘expert’ is suitably qualified, has undergone the correct training and is subject to some kind of regulation to ensure a high quality of service.  This is true of doctors, teachers and lawyers, and ought to be for accountants too.

“Chartered accountants have all these qualities, and we want people to know that even in their day-to-day life our members can be an invaluable help in saving you money. You can definitely count on a chartered accountant.”

Before becoming a chartered accountant and using the designatory letters ACA or FCA, ICAEW members must:

  • undertake a period of at least three years’ training with an organisation that is authorised by the ICAEW
  • pass exams covering financial management, auditing, business strategy, taxation and IT
  • undertake a programme of Continuing Professional Development, which demonstrates their commitment to high standards.

The ICAEW said it also ensures that chartered accountants develop communication skills, business awareness and professional judgement.

Finding an accountant

To find a chartered accountant, the ICAEW provides a search function on its website (new window), which will list firms by name or location and by their specialist area.

But try to find one that others in your field use. They will know the rules governing your sector and have a good idea of what others like you have successfully claimed as legitimate expenses.

You may also want to think about whether or not you have ambitions to be more successful in the future. Some accountants handle thousands of similar clients sausage factory style – and that may be ideal as it keeps costs low.

But if you hope to be more successful and have a growing income, consider a slightly bigger accountancy practice with a broader range of skills and experience. It will be able to grow with you and provide new, different advice and accounting support as your circumstances change.

And spare a thought for the chartered accountant who really wants to be a lion tamer.

The taxman cometh (3)

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Get an accountant

Every creative freelance should hire an accountant to do their accounts and file their tax returns.

Many freelances refuse to pay an accountant, preferring instead to struggle through their self-assessment form themselves. Well good luck to you, if that’s you.

That’s exactly what the government wants you to do because it knows you will not be deducting all the costs and making use of all the allowances that you could have used. You will be paying more tax than you should have done and Chancellor George Osborne will be delighted.

I’m good a maths. I understand numbers better than most journalists (many of us think of ourselves as wordsmiths first and foremost). I’ve worked on several financial and accountancy magazines and websites. I’ve interviewed chancellors of the Exchequer, accounting standards setters and bigwigs in Her Majesty’s Revenue and Customs. But I pay an accountant to go through my books and put everything in order.

Pay for professionals

Actors hate it when non-Equity extras get used, when the am-dram queens think they’re as good as drama-school trained professionals. Journalists get riled when teachers get the job of covering sports matches or students get to write gig reviews, just because they’ll do it for the free entry ticket rather than charge a proper fee. We’ve all seen the well-meaning amateur make a hopeless hash of a job we could have done to a professional standard.

Well, it’s the same with accountancy. Being good at maths doesn’t make me an accountant.

An accountant will be able to do your accounts faster and more accurately. They will know the tax allowances that benefit you. They will know what expenses you can legitimately offset against your income and those you cannot. And they will know where to find answers to questions much faster than you can.

 Knowing the market

If you use an accountant who knows your sector and has other clients in similar lines of business they will know the specific schemes that operate in your sector – film and TV have their own rules, for example - and what others in your field have successfully claimed or unsuccessfully tried to claim.

And there is an additional benefit of using a professional accountant: should the taxman investigate and discover your accountant has got things wrong, you can sue your accountant – those regulated by their professional bodies are required to have professional indemnity insurance to cover just such an error.

Next: How to choose your accountant.

The taxman cometh (2)

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Paperwork

Organise yourself. Ask for receipts and keep them. In fact, file them – don’t just stuff them in a carrier bag to deal with later.

Handing over a shoebox of receipts to an accountant at the end of the year is a guarantee of a more expensive accountant’s bill and you paying more tax than you should have done. Good record-keeping will save you money.

It’s the easiest thing in the world to leave admin until later but it’s the hardest thing in the world to catch up months later. Try to schedule an hour a week or an afternoon a month to catch up with all your accounts and admin.

Keep a diary and make sure you check your receipts against trips out. Most of us can expect to have receipts for trains or taxis or petrol, plus some subsistence – coffees or lunches – as a minimum on a day out, but there may be other items too. Did you buy an important newspaper or specialist magazine that day? Did you get some photocopying done or buy some stationery or something for your computer? By checking your expenses against your diary you will spot missing receipts in time to find and file them.

Check your monthly credit card bill and bank statement. Is there any spending there that you have not included or for which you can find the receipt? Have you got the bill that’s been covered by a direct debit payment – often bills are no longer posted and you need to go online and print them out. It’s much easier to do this each month than to try and print out 12 monthly bills at the end of the year. If you bought something online have you printed out the emailed invoice?

It is often easier to have one credit card for business spending – but always pay it off in full every month. You can then include your credit card bill with your accounts as evidence of spending, even if you have misplaced a receipt.

But don’t shy away from cash if cash is the cheaper option. I have seen people in coffee shops try to buy their cappuccino by card, only to be told there is a minimum charge that requires them to buy a pastry too. There’s no saving there. Paying by cash and keeping the receipt is a better option, providing you are efficient enough to keep that receipt and file it as soon as you get home or back to your office

The key is being organised. Put in place a system that suits you – and stick to it.

 

The taxman cometh (1)

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Happy new year

Today is the first day of the new tax year (it runs to 5 April 2013). As of today you can earn £7,440 over the next 12 months without paying any tax.

But that is £7,440 after expenses. That’s after you have deducted the cost of travel, of equipment, of any studio time or other professional services you might have needed during the year. It’s after you have deducted the cost of working from home (if you do). It is even after you have deducted the costs of being a member of the appropriate union.

So April is a good time to start thinking seriously about how you keep your accounts, how you organise your financial affairs and how you operate as a business. That is key: as freelances, we are small businesses. When it comes to money we need to think of ourselves not as creative people but as businesses that provide creative services or products.

By the end of April I hope to have given you plenty of ideas about how you can make more of the money you earn yours by keeping better records and using the full range of tax allowances and benefits available to you.

Creative selling (8)

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Post-match analysis

Analyse in detail how you succeeded when you were successful, and what went wrong when you failed - learn from your successes and your failures.

Before calling a potential new customer - a prospect - or an existing supplier, we should have in our mind a sequence of logically progressive steps that lead to a conclusion that can only be a sale – a close.

We should, therefore, decide:

  • What do we already know about the buyer and his/her business?
  • What else do we need to find out?
  • How can we find this out?
  • What benefits are most likely to appeal?
  • What is the most effective way in which we can present these benefits?
  • What problems, snags, objections are likely to arise?
  • How can we deal with them?
  • What sales aids, literature, examples of our work, do we need?
  • What is the specific objective to be achieved on this call?

Our checklist for successful creative selling is:

  • Focus - we must focus the attention of the customer on what we want to talk about.
  • Involvement - we involve the customer by asking questions.
  • Need - we must identify the buying motives of customers.
  • Suitability - we must match the benefits of our products or service to the buying motives of the customer.
  • Objections - objections must be handled.
  • Action - remember to ASK FOR THE ORDER (we're bad at this bit).

Good luck.

 

Creative selling (7)

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Closing the deal

In sales jargon making the sale is called the close. And there are a number of ways you can close a sale. You have to judge which is suitable for each particular situation and each client (on the subject of jargon, someone who has not bought from you before is not yet called a customer or a client but a “prospect”).

Here are some types of close

  • Alternative close  - You give the buyer two alternatives: "Shall I deliver on Wednesday or Thursday?", "Would you like part of the order this week and part next or would it be more convenient to send it all at the same time?", "Would you like one or two?".
  • Summary close - Briefly summarise the major benefits, get agreement and start to write out or type up the order.
  • Comparison close - Compare a short list of disadvantages with a longer list of advantages and assume an order to be the logical outcome.
  • Assume order close - Ask a question, such as: "What time is best for delivery?" “When do you want it by?” “When do you need me to start?”
  • Last objection close - Get agreement that, if this one, final, objection can be overcome, an order will follow -  then overcome it.
  • Fear close - Show that some severe loss or inconvenience will result if the order is not placed. This can be used to close on a stall objection, such as "I won’t be able to do it at all if you leave it until next week".
  • Concession close - Offer to make a special concession in the case of this particular buyer.

Creative selling (6)

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Coping with rejection

First, think of it as an objection, not a rejection. It’s not that final yet. And let’s embrace and welcome objections. Points of disagreement help us to know that the buyer is at least interested.

An objection at this stage means:

  • We have not chosen the right benefits for that particular buyer
  • We have failed to get full agreement at each stage

It means that we have failed to sell effectively.

Objections should not come as a surprise. We need to anticipate objections and plan how to handle them. If possible, we need to build the answers to objections into our sales presentation.

We also want to keep objections small. That means checking continuously that the buyer understands and agrees with all points made so far, so they can raise small objections or ask minor questions early on rather than save them all up to the end. A good salesperson asks for the order, sale or commission early and often to see if any objections remain.

When an objection is raised, we must first of all decide what sort of objection it is. Ask yourself:

  • Is it a real objection?
  • Is it an excuse, a smoke screen?
  • Is there a hidden objective? Are they really just trying to barter down the price?

The smoke-screen

Confronted by a smoke-screen objection our objective should be to get it out of the way as quickly as possible.

There are various techniques that enable us to do this:

Simply repeat it (with a slight tone of astonishment) and pause. We should at this stage be in control of the situation, and able to be frank, without being belligerent. In effect, we are throwing out a challenge to the buyer to substantiate the objection. If it is really only an excuse, it is likely to evaporate.

Switch immediately to another topic, and ignore it. By ignoring it we are saying that we recognise it to be an excuse and we hope it will not be raised again. If what we thought was a smoke-screen is in fact a real objection, you customer will repeat it. In either event we will have made progress.

The stall

Confronted by a stall, our objective should be to prove that nothing will be gained by delaying but that something will be lost. We need to confirm with the client that there are gains that have been discussed. We then need to get them to accept that a delay will be costly.

The price

Confronted by a price objection, our objective should be to get agreement that what we are offering is value for money and that the client’s need for our product is greater than the need for the money or for some alternative. One options to propose reducing your offering in order to cut the price and ask which bit of the service they want you to drop to come in at the price they seek.

Use "yes, but" to agree that you may seem expensive but there are excellent reasons for you being value for money, and why the client, in particular, would benefit in important and specific ways by using you rather than someone cheaper.

What about hidden objections ?

Ask whether there are any other objections. Ask whether the objection raised is the only objection. Above all, listen to every single thing the customer says. The customer is certain to give hints if there are hidden objections.

The most effective way to handle objections is to anticipate them and to tailor your presentation so you overcome them step by step.

Creative selling (5)

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It’s the way you tell ‘em

What do we have to do in order to persuade someone to buy? We have to communicate. We have to influence another person's thinking and attitudes in such a way as to convince them of the desirability of a course of action that had previously either not been considered or, if considered, had not been thought desirable.

Such influence is brought about by a two-way flow of comment, information, views and suggestions and this can only happen in the right environment, in the right atmosphere.

We have two important communication functions:

  • To create a situation that allows easy communication, a natural flow of conversation
  • To control the process of communication in order to lead it to a specific conclusion

We communicate in two ways:

  • By what we say
  • By what we do

Everything we do, everything we say, must be effective in terms of creating and controlling the situation.

Communicating by what we do

  • Show respect
  • Look directly at the buyer
  • Don't fidget
  • Be a good listener
  • Demonstrate points visually
  • Use hands effectively
  • Make the buyer feel important

Communicating by what we say

  • Use the customer’s name
  • Use "you" and "we", not "I" and "me"
  • Use language that the buyer understands
  • Speak with enthusiasm
  • Use the full range of your voice
  • Do not talk too quickly - or too slowly
  • Never interrupt
  • Avoid arguments
  • Admit mistakes
  • Show an appreciation of what the buyer does - praise them
  • Never mislead the customer
  • Avoid undue familiarity
  • Do not "knock competitors"

Neither of these lists is exclusive – think of your own add-ons and learn to stick to them.

Selling is a specialised form of persuasion. We have to help the buyer to decide to buy from us. To persuade successfully, we normally have to progress by stages:

  • Gain attention
  • Create interest
  • Arouse desire
  • Enable action

And that last one is often a stumbling block. We may have convinced someone that they want to buy from us but they may have contractual, legal, administrative or budgetary hurdles to jump before they can buy from us. We need to work with them to get over those hurdles. We need empathy.

Creative selling (4)

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Sticking to the script

It’s time for you to do some work. Think of a client you want to sell to (or you want to work for). Run through what might motivate them and how you might stress that what you provide or the way you provide it will meet their need.

Write yourself six short presentations that will convince them that using you as their freelance will help them:

  • Make money
  • Save time
  • Reduce effort
  • Get convenience
  • Get good quality
  • Get good service.

Now try it on someone you know and see what their reaction is. What questions do they ask – did you have an answer prepared? Are they convinced and if not, why not? Work out what more you’d need to say and how you’d need to demonstrate it to convince them.

Remember, you may have to repeat the same message several times, so think of different ways of getting your message across so you don’t use exactly the same words.

A good salesman may look like they have been forced into providing discounts or offering extra for free in an unplanned moment of madness but it is all a script. You need to have worked out everything you need to say in advance and what price you are prepared to sell at – and stick to it.

Creative Selling (3)

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The Hierarchy of Needs

Your potential buyer is an individual human being. Buyers bring with them their own motivations but they also have motivations inspired by their business. The business, as a corporate entity, will have its needs and these are not necessarily identical to the buyer’s needs.

You may have to try to satisfy both needs - perhaps flagging up different benefits.

And if that sounds complicated enough, people’s needs change so you may have to push different benefits each time you try to sell to the same buyer.

A psychologist, Abraham Maslow, famously suggested that there are only five reasons why anybody ever does anything. He expressed this theory in what he called The Hierarchy of Needs. Some of these needs are pretty basic – to eat, sleep, have sex, excrete etc - so we need not concern ourselves with those. Instead, we’ll simplify the important ones into two groups of needs.

1. People buy to save

  • Time - speed of delivery; availability; ease of use; punctuality; deadlines
  • Money – cheapness; low cost in use; quality giving long life; quantity discounts; economy
  • Labour - you have skills they don’t; you can work faster; you can work for a fixed time or longer hours
  • Worry - simpler to use a well-known and well-tried supplier; a strong brand name

2. People buy to gain

  • Prestige - quality supplier; well-known; brand name
  • Respect – high-quality work; speed, a well-known product
  • Reward - in business this is usually financial; but it can also be public recognition or recognition by their boss; cost savings bringing them in under budget; quality
  • Fulfilment - Usually related to a quality service where recognition is the main aim; quality materials; examples of supplying similar products in the past; knowledge of materials
  • Profit - cost in use; cheapness; quality; special offers; large discounts; demand; scarcity
  • Comfort - pleasant to use; easy to use; tried and tested product or service; sensory satisfaction
  • Love - in business, this usually means appreciation: appreciation of work, people, and from the supplying freelance

If you can identify the need that is uppermost in the customer’s mind, and demonstrate that you provide a particular benefit that will satisfy that need, it is likely that the customer will buy from you.

Let me give you real examples. I can produce highly researched financially literate articles including serious numerical analysis. I can also produce articles that have very little of that (or even none) but will be controversial. I have sold both to the same customer. With the first they will gain respect from running it - it will lend them an air of gravitas and enhance their reputation. The second I sold to them on the basis that it would wind up their audience and provoke a storm of comments, ensuring widespread engagement with their readers.

I have sold other pieces to the same customer on the basis that I am prepared to be available during anti-social hours or that I can turn round an article much faster than my competitors.

If someone is motivated by low cost, it may be possible to offer them a discount if they agree to one piece of work from you every month. For many freelances not knowing when the next pay cheque is coming, a regular monthly gig, even at a discount, can be enough to keep the wolves from the door.

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