July Retrospective: Back in July 2014, I wrote a daily series exploring the realities of navigating the creative economy. Twelve years later, looking back at these entries (and my original awful hand-drawn illustrations!), I’m struck by how the core truths of a creative career remain completely timeless. Each day this month, I’m opening up the archive to share these foundational lessons—with a few modern reflections layered in. 

If you’re a new creative graduate looking to find your footing in the creative economy, a Gen X looking to pivot into a creative business, a side-hustler or someone who just wants to up their creative business game, there’s something for you in this series. Just don’t judge my drawings 😉

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Manage Your Money

Small businesses usually fold for one of two reasons: they can’t generate enough customers or they have cash flow issues (the money going out of the business is not on the same timeline as the money coming into the business).

Learning to manage money is a huge skill that artists need to embrace both in their business and in their personal life.

The number one rule about money? Learn the difference between gross and net

Even Virgin boss Richard Branson has come out that he didn’t understand the difference between gross and net until he was 50, so it’s not surprising that many people really struggle to grasp this and put it into action. It’s also the reason that many high profile artists, actors, and celebrities have gone bankrupt or to jail for tax evasion.

Gross is the total amount of money that you are paid for a job.

Net is how much of that money is yours after you deduct taxes, wages, supplies, etc.

Let me create an illustrative example:

If I get paid £1000 for an acting job, my gross income on that job is £1000.

I then have to pay (these are rough, indicative figures):

–        10% commission to my agent    £100

–        10% deducted as expenses for the job (travel, food, makeup, coaching)                £100

–        10% deducted as ongoing expenses for my business (website, equipment,  computers, professional fees, Equity membership,  accountant, etc)  £100

So that’s 30% off the top for business expenses. Leaving £700.

Tax is calculated AFTER expenses, so in this instance £700 is taxable.

Let’s say that my annual earnings (after expenses) are £35,000 which in the UK puts me into the basic rate tax band of 20% (for illustrative purposes I’m not going to address the tax-free personal allowance…).

So of the £700 gross (after expenses) I would owe £140 to the Government in tax.

There is also a National Insurance amount due – it’s quite complicated, so just for arguments sake let’s call it 5% or another £35.

So out of my £1000 gross earnings

I take out £300 for expenses, £140 for tax and £35 for national insurance which leaves me with a NET income of £525.

See the difference here?  My creative business earned a GROSS of £1000 but me as the artist earned a NET of £525.

Too often we earn £1000 and we spend £1000 and then we get into trouble because we haven’t covered our expenses, nor have we set aside money for tax. Then we panic when tax time rolls around and we are suddenly stuck with a big bill. That’s because you spent the GROSS and not the NET.

Cash flow – managing the cash that comes in and the cash that goes out can be really hard for all small businesses. It’s tempting to spend everything you earn in order to stay on top of all the bills, but you are only digging yourself further into a pit. You must learn to manage your money and that starts by setting aside money for expenses and for any taxes owed. It’s always better to overestimate and end up with extra money than to underestimate and find yourself short.

Learn to identify what money is yours, what money is your businesses and what money belongs to the tax man. It will make your life run much more smoothly so you can focus on making art instead of avoiding jail.

Action – calculate your annual expenses to run your creative business. Figure out what your tax bracket is so you have a rough idea of what percentage of your gross income (minus expenses) is due for tax. Knowing these numbers will help you quickly calculate your NET income on any job so you don’t accidentally spend your GROSS and end up in trouble.

Caveat: I am not an accountant. These are simply guidelines. Please seek appropriate accounting advice for your particular situation.

I’d be interested to know your particular questions regarding the financial management of your creative business. Please ask them below. I may not be able to answer them right away, but I can seek answers and write a future post about them.

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Longevity in a creative career isn’t accidental—it’s built on strategy.

While the landscape shifts, the core principles of thriving as a creative freelancer haven’t changed. For deeper, modern frameworks on building a sustainable creative practice:

• Read the Book: Looking for a step-by-step field guide to building a resilient career in the creative economy? Pick up my recent book The Thriving Creative: Successful Freelancing in the Creative Economy available from Amazon, Barnes and Noble, and from my publisher Routledge.
• Stay Connected: Join my community and to receive the complete 31-day hand-drawn playbook as a single PDF at the end of the month. Sign up below.