Youäó»re a designer, youäó»re an expert at what you do and you produce amazing and beautiful creations. Yet many people in your field fail to realise that, to convert your talent into hard cash, itäó»s as vital to keep track of your business dealings as it is to design next seasonäó»s range.
Experience has shown that emerging design talent usually needs to gain some solid business acumen to rise above the competition and establish a commercial brand. The issues you face, such as securing the finance to produce a sample collection or for manufacturing, finding stockists and handling cashflow, can knock you back before you begin. Excellent advice and guidance can make the difference between your venture getting off the ground or collapsing in a heap of offcuts.
Weäó»ve spent several years cultivating a specialism in mentoring and supporting fashion designers and creatives across the UK. We blend our love of design with our business skills to provide more than simply accountancy: we help designers to show a tangible increase in profits without impacting on their own creative time.
One of the highlights of our job is mentoring students at the London College of Fashionäó»s Centre for Fashion Enterprise (CFE), Londonäó»s leading fashion business incubator. A fantastic example of a CFE success story is the British label Agi and Sam, whose quirky designs quickly rose to international acclaim, culminating in a collaboration with Top Man. Right from the start, the designers benefited from our business advice and accountancy support and were recently quoted in the national press: äóìWe learnt to think like a business. Someone was there to help with registering for tax and negotiating contracts.äó
Whilst advising fashion hopefuls on the realities of business life, there are five areas from an accountancy and taxation perspective that designers consistently need help with:
1. Business structure.
Is your business structured in the most effective and cost efficient way for you? What works well for someone elseäó»s business isnäó»t necessarily the best for yours. The choices are to run a limited company, LLP, partnership or work as a sole trader. Each of these structures provides different protection and your tax position is calculated according to your set-up, so itäó»s really important that youäó»re set up in the most appropriate way for you.
You may have an idea how British vat works, but if youäó»re hoping to create a label that will appeal to an international market, the rules are a little more complicated. If youäó»re planning to sell overseas äóñ or buy fabrics or other types of stock äóñ the rules change. And they vary depending where in the world youäó»re doing business… even dealing within the EU can be a minefield.
Some designers arenäó»t aware that youäó»re liable to pay tax on yourself as well as on your business. Your personal tax is a separate, yet integrated issue. Itäó»s essential that you know the effects of each type of tax situation, so that youäó»re able to draw money out in the most tax efficient manner.
If youäó»re fantastic at creating beautiful designs, you may find that youäó»re poor at the more mundane tasks that go with running a businessäó_ Itäó»s often the case! You donäó»t have the time or inclination to deal with the boring tasks, like maintaining records and recording financial details. Weäó»ve developed a simple system for handling paperwork that appeals to designers, as it doesnäó»t impact on creative time.
One of the main areas designers ask us about is how to finance their business and, in particular, their orders. Well, there are a number of different options available to you and chances are you may not have heard of them. These include routes such as trade finance, factoring or Kickstarter, all of which provide the financial support to take your designs to a wider market.
So, if your talent isnäó»t providing the income you deserve, take a step towards developing a more commercial mindset. Make sure your business is properly set up and running in the most tax-efficient way, keep accurate records of your income and outgoings, and secure any finance you need to jump to the next level. And weäó»ll look forward to seeing your designs make you a household name.
If you’re a designer in need of tax, accountancy or business advice, feel free to give us a call: 020 8530 0720. Or tweet us @NordensAccounts.