All Accounted For
by Kevin Gallagher
I would guess that most magicians keep a simple accounts book which keeps a note of all incomings and all outgoings to be accounted for on the dreaded tax return but I offer here a strong monitory tip. Use an accountant.
I use an accounts software package which provides good visibility and reporting and for many years, I simply managed my own accounts unaided. This entailed recording any payments received together with any costs and all seemed very straight forward. A few years ago, uncertain about a particular aspect, I decided to take a consultation from a professional accountant at the cost of several hundred pounds. I have never looked back. Each year, I now take a single consultation after I have prepared my accounts for return for his approval. Suffice to say, each year he has paid for his fee several fold. He is able to do this because accounts are his profession and as such, he takes it upon himself to understand all of the implications of the apparently minor details which crop up in each budget which generally pass straight over my head.
By way of example, did you know that as a benefit to small businesses this tax year, it is permissible to write down one hundred percent of all capital purchases involving computer or IT equipment. This extends not only to computers but to all associated equipment, like for example, my new invaluable digital camera, purchased exclusively for magic. One of the things that used to be irritating about hi-tech equipment which is now more tolerable is that it can be depreciated at an astonishing rate as it too quickly becomes obsolete to legitimately disappear from the books in but a few years.
Car benefits are incredibly complex and there are a number of different ways in which travel may be accounted. If your business is healthy enough, you may be able to purchase or lease a car through it so that insurance, tax, servicing, depreciation and the like become a business rather than personal expense. In my own circumstances, this is not the case and I claim a mileage allowance against each consultation, visit to a potential client or booking. Many magicians that I have talked to have been very surprised to learn that the accepted allowances are 45p for the first 4000 miles and 25p per mile thereafter for cars ranged from 1500 to 2000cc. This rises to an astounding 63p and 36p for cars over 2000cc which can mean in some favourable cases, you could actually be better off driving that nice larger car! Again, I know of some magicians that do little more than claim back petrol at cost.
Every single magic expense can be written down including society memberships, conventions, books, videos, accommodation and sustenance, dry cleaning and not just props and outfits which first come to mind. This is not trying to cheat the taxman, they are very legitimate allowances. For each show, you can claim for all of those consumables so go on, for your own entertainment if nothing else, get that waffle dust accounted for!
© Kevin Gallagher January 2003