9.1: Insurance

When working in any profession, the sincere hope is that nothing will ever go wrong.

Having already completed the module on Health & Safety and Risk Assessments, you should now know the best ways to prevent any potentially dangerous situations from arising, but you can never plan for the unexpected. Unfortunately, when you are working with other people around you, especially children, you cannot predict their actions or movements accurately enough to know that nothing bad will happen. This is why it is extremely important to take out a comprehensive insurance package, so that in the event of an accident in which someone gets hurt, you are fully covered.

The equipment that you will need to be a professional balloon modeller is not necessarily very expensive when you look at individual items, but if all of your equipment were stolen or damaged in one go, it would cost a lot to replace everything. As well as insuring yourself and your clients against harm, you should also insure all of your professional equipment, so that if it is lost, damaged or stolen, you will be able to replace it and be back in business in next to no time.

9.3: Accounting

When you run your own business you become accountable and responsible for every area of that business.

It can be a daunting feeling, to know that you suddenly have complete control over the finances of your entire business; especially if you have never done anything like this before. The important thing is to keep an accurate and comprehensive record of all of your transactions. Every time that you pay for something for the business, or someone pays you for work which you have done, you will need to log it in your records. Doing a little bit of accounting every week will save you from having to put in hours at a time, all in one go, when things get out of hand.

It is really important to stay on top of your accounts, as this is a crucial measure of how well your business is doing. If you are up to date with your accounts then you will know how much profit you have made and can make projections for how much you are likely to make in the future. This will help you to plan ahead to make bigger payments, such as buying new equipment or paying your tax bill.

Keeping track of your accounts will also show you if there is anything about the business model that you need to change. For example, if you find that you are spending too much on petrol, then you can start to charge an extra fee for clients who are further away.

If your costs have increased due to inflation or a rise in the price of balloons, then you will need to see if you have to pass this extra cost on to your customers in order to continue to turn a profit.

9.5: National Insurance

Don't forget that along with having to pay tax on the profits from your business, you will also need to make national insurance contributions in line with how much you earn.

There are two separate rates of national insurance which you will pay if you are self-employed. Class 2 is the rate for anyone earning £6,365 or more a year, and Class 4 is what you will have to pay if your profits are £8,632 or above each year. Class 2 equates to a straightforward payment of £3.00 every week. Class 4 is slightly more complicated and requires you to pay 9% on any profits between £8,632 and £50,000 a year and 2% on any profits which are above £50,000 a year.

Whether you qualify to pay Class 2 or Class 4 national insurance rates, you will need to pay them through self-assessment. This is a system used by HMRC in which you fill out a tax return and send it after the end of the tax year. You can either choose to fill out a paper form or to complete your self-assessment and tax return online. The deadlines for completing your tax returns are 31st January and 31st July. You will need to allow an extra 3 weeks the first time you fill out a tax return as you will have to go through the registration process first.

Once you have filled out all of the information necessary to complete your tax return, HMRC will calculate how much tax you owe them based on what you have said in your report. Exactly how much tax you will have to pay will depend entirely on how much you earn and what tax band you fall into. Once your tax has been calculated, you will be given a certain period of time in which to pay the amount to HMRC. It is essential that you make the payment within this time frame.

Now that you have finished reading this chapter, hopefully you will understand more about the types of insurance that you will need to purchase to cover your balloon modelling business, as well as why it is vital that you stay on top of your accounts and how you go about filling in a tax return.