Taming the Financial Beast: Saving Spaces for Freelancers and Small Businesses

Starting your own business or freelancing is exciting! But let's be honest, managing finances can feel like wrestling a hydra. When you think you've got one head (expense) under control, another two pop up (taxes, unexpected bills!). Fear not, brave entrepreneur, for there's a simple tool to help you conquer this beast: saving spaces.

Think of saving spaces like separate piggy banks within your main bank account. This lets you ring-fence money for specific purposes, so you're not left scrambling when those pesky tax bills arrive. And guess what? Starling Bank, a fantastic option for business banking, offers this very feature! Of course, there are other brilliant bank accounts, including Mettle, each with unique advantages.

Essential Saving Spaces (and how much to stash away):

VAT: If you're VAT registered, this is non-negotiable. Aim to save at least 20% of every invoice, assuming you're on the standard rate. (Pro tip: pretend that 20% doesn't even exist. It's not yours to spend, it belongs to HMRC!).

Corporation Tax: This one's a bit trickier to calculate as it depends on your profits. A good rule of thumb is to set aside around 20-25% of your profit after expenses. (Think of it as paying rent for the privilege of being a brilliant business owner).

Personal Tax: Yep, more taxes! This applies to sole traders and partners. Again, the amount varies, but aim for at least 20% of your earnings after expenses and any personal allowances. (Just imagine it's a forced savings plan for a future holiday...after you file your tax return, of course!).

Trivial Benefits: Want to treat your amazing team (even if it's just you and your cat)? Create three separate spaces for trivial benefits, each with £50. This allows you to give tax-free gifts to employees throughout the year. (Who doesn't love a surprise pizza or cheeky vino?!)

Why Saving Spaces are a Lifesaver (and Sanity Saver):

No More Panic Attacks: When tax season rolls around, you'll be cool as a cucumber, knowing the money is already there.

Avoids the "Accidental Spend": We've all been there. You see a shiny new gadget and think, "I have the money!" But wait, that's tax money, not "treat yourself" money. Saving spaces prevent these mishaps.

Keeps You Organised: No more messy spreadsheets or shoeboxes full of receipts. Saving spaces provide a clear picture of your finances.

Peace of Mind: Knowing you're financially prepared for anything is priceless.

Beyond the Essentials:

Once you've got the basics covered, consider creating spaces for other goals:

Leasing New Equipment: Leasing often makes more sense than buying outright for small businesses and freelancers. It helps preserve your cash flow and keeps you equipped with the latest technology. Create a dedicated space to cover those initial leasing costs and avoid any financial strain.

Rainy Day Fund: Because unexpected expenses are a part of life (and business).

Marketing Budget (Optional but Highly Recommended): Consistent marketing is the engine of growth. While optional, having a separate space ensures you have the funds to promote your awesome business. Consider this an investment in your future success.

Starling Bank and Saving Spaces: A Match Made in Heaven

Starling Bank makes managing saving spaces a breeze. Their app is user-friendly; you can create as many spaces as you need and easily transfer money between them. Plus, they have many other features that make business banking a joy (almost!).

So, ditch the financial stress and embrace the power of saving spaces. Your future self (and your accountant) will thank you!