Task 8: Other considerations for businesses
Finance - what sources of funding exist within the creative industries?
Insurance - what types of insurance exist for the creative industries?
When running a creative industry, it is a good idea to look into taking out some kind of insurance as a safety precaution, with there being multiple, varying types of insurance existing for the industries, each responsible for their own section. 'PI insurance' (or Professional Indemnity Insurance) is seen by members of the industry as extremely important. This was specifically designed to protect any business that offers professional services, advice or designs from any professional indemnity claims which may be made against them. These claims are able to be made due to the subjectivity of 'quality' when it comes to creative work and projects, allowing clients to claim that the creator has not fulfilled their part of the agreement if they are unhappy with the final product in any way. This type of insurance protects the business the claim is being made against, whether it is made due to you making a mistake on the project, one of your clients claim to have experienced financial loss as a result of your work, you break any of the terms of any contractual agreements you agreed to, or become embroiled in a dispute over IP (Intellectual Property) issues. If you have this insurance, it will be able to cover any defence costs that need to be spent as a result of the claim which was made against you.
Business rates - what are they?
A 'business rate' is a rate which is charged on most properties if they are used for a 'non-domestic' purpose, such as a shop, pub, office or warehouse for example. When it comes to paying these rates, the local council is expected to be send a 'business rates bill' to the public who need to be sent it, usually around February or March time every year, for the following tax year. 'Relief schemes' do also exist, allowing the bill to be reduced by your local council in certain circumstances, either automatically or once applied for.
Geography, transport and accessibility - does it matter where a company / organisation is based? Does distance matter?
Due to how many differing types of businesses and professions fit within the description of 'creative industries' nowadays, the list of ways to get a hold of funding for one of these businesses is massive, ranging from extremely common and general funding options, to much more uncommon and specific ones. These sources of funding include options such as: receiving funding from customers in exchange for your product and/or service (subscription models, one-off payments, 'pay-per-views', or the license fee for TV specifically), advertising (running general ads on the business or getting direct sponsorships and/or product placements), private capital (funding your own projects), crowd-funding (using sites like 'Kickstarter' or 'Patreon') and using development funds (applying for a loan from a bank, or a grant from a private foundation or the government).
Insurance - what types of insurance exist for the creative industries?
When running a creative industry, it is a good idea to look into taking out some kind of insurance as a safety precaution, with there being multiple, varying types of insurance existing for the industries, each responsible for their own section. 'PI insurance' (or Professional Indemnity Insurance) is seen by members of the industry as extremely important. This was specifically designed to protect any business that offers professional services, advice or designs from any professional indemnity claims which may be made against them. These claims are able to be made due to the subjectivity of 'quality' when it comes to creative work and projects, allowing clients to claim that the creator has not fulfilled their part of the agreement if they are unhappy with the final product in any way. This type of insurance protects the business the claim is being made against, whether it is made due to you making a mistake on the project, one of your clients claim to have experienced financial loss as a result of your work, you break any of the terms of any contractual agreements you agreed to, or become embroiled in a dispute over IP (Intellectual Property) issues. If you have this insurance, it will be able to cover any defence costs that need to be spent as a result of the claim which was made against you.
Another type of insurance which is extremely useful to invest in would be 'Business Equipment Insurance', due to the many expensive pieces of technologies and/or equipment which is most likely needed for the business to run the best it can. This insurance will simply cover any costs that occur if any of this equipment becomes damaged or broken somehow, usually up to a specific limit depending on who the insurance is done through. Next, 'Tax Enquiry & Legal Expenses Insurance' will provide up to £100,000 for each claim for covering representation costs, in the event of an 'HMRC Investigation'. This policy in particular is quite extensive in terms of what it covers, providing extensive insurance for legal costs and expenses for: employment disputes, legal defences, contract disputes, debt recoveries, personal injury, tax protection, property protection, statutory license appeals, identity theft protection and jury service & court attendances.
Finally, there is 'Directors and Officers Liability' (D&O) insurance. It was found that many founders of limited companies do not realise that they still are able to face legal action, personal fines or prison sentences if a law was broken or a claim is made against said business as a whole, and that it would not just be their businesses which were put in danger as a result of those actions. On top of this, it causes the possibility of being disqualified from being able to be a company director from that point on. This insurance helps out those in these situations, covering legal representation costs if the policy cover is triggered, while also showing to potential investors that you take your responsibilities as a business runner seriously.
Working from home - what are the considerations?
While working from home may appeal to some people, there are lots of factors and important details that must be considered and known before committing to the idea. If regular work is done from your home, you may be able to claim 'tax relief' for additional household costs that will need to be considered, such as business phone calls (including dial-up internet access), metered water, gas and electricity costs - however, this tax relief is only available to those who are working from home because they need to - if somebody works from their home simply by choice, they are not able to claim. Something else affected by working from home is business rates, specifically with them not having to be payed by those that "use a small part of your home for your business, for example if you use a bedroom as an office" or "sell goods by post". However, if the property is actually "part business and part domestic" (like living above the shop you run), you "sell goods or services to people who visit your property", "employ other people to work at your property", or have "made changes to your home for your business" (like converting a garage into a hairdressers for example), business rates will still need to be paid, on top of Council Tax.
While working from home may appeal to some people, there are lots of factors and important details that must be considered and known before committing to the idea. If regular work is done from your home, you may be able to claim 'tax relief' for additional household costs that will need to be considered, such as business phone calls (including dial-up internet access), metered water, gas and electricity costs - however, this tax relief is only available to those who are working from home because they need to - if somebody works from their home simply by choice, they are not able to claim. Something else affected by working from home is business rates, specifically with them not having to be payed by those that "use a small part of your home for your business, for example if you use a bedroom as an office" or "sell goods by post". However, if the property is actually "part business and part domestic" (like living above the shop you run), you "sell goods or services to people who visit your property", "employ other people to work at your property", or have "made changes to your home for your business" (like converting a garage into a hairdressers for example), business rates will still need to be paid, on top of Council Tax.
Business rates - what are they?
A 'business rate' is a rate which is charged on most properties if they are used for a 'non-domestic' purpose, such as a shop, pub, office or warehouse for example. When it comes to paying these rates, the local council is expected to be send a 'business rates bill' to the public who need to be sent it, usually around February or March time every year, for the following tax year. 'Relief schemes' do also exist, allowing the bill to be reduced by your local council in certain circumstances, either automatically or once applied for.
Geography, transport and accessibility - does it matter where a company / organisation is based? Does distance matter?
While it may not be one of the first things that is thought about when starting and planning a business, the location that a business/organisation is based, depending on the type of business, can seriously affect its success. This could be in terms of profits, or amount of customers for example, with online businesses even still being affected by the location it is ran from. A company's 'Principal Place of Business', which is what the primary location a business is performed in is known as, can affect a business legally, due to them being required to follow that areas laws and regulations - these can of course vary quite significantly depending on location. Different areas across the country also may be more wealthy or poorer areas than others, affecting the prices of things sold there, (such as petrol, food and technology for example) which in turn, may decrease or increase the overall profits made each month, depending on if more or less of the company's budget is spent on these resources in the location it is based. For creative industries, using film making for example, hiring out of external equipment or workers can happen often. If the location of the studio is quite hard to get to in terms of transport options, or far from any of the big cities where a lot of these resources may be held, it could be expected that hiring these could cost more as well, due to the further distance costing more petrol or time, either for the business runners or for those that own the equipment that is being hired out. Competition also can play a part in finding where to place your business, not wanting to be ran somewhere quiet where lots of other, more well-known businesses also run nearby, as this will cost customers when compared to if it were placed in a busy area which was in need of that type of company.
References:
Working from home - https://www.gov.uk/tax-relief-for-employees/working-at-home
Business Rates - https://www.gov.uk/introduction-to-business-rates
Geography, transport and accessibility - https://www.investopedia.com/terms/p/principal-place-of-business.asp
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