Self employed stylists/beauticians

[libbylou]

They give me set hours they hold client data, I could just decide when I want to come on I have to request holiday I feel employee, on a self employed wage. Which is peanuts at the moment as it's not busy

What they are doing is illegal , you are not self employed. I would ring HMRC & ACAS and i would report them. They should not be allowed to get away with this. Unless you speak up they will keep on using you and abusing their position. x

 

[libbylou]

I own a salon , and i have a self employed therapist renting from me. Being self employed your therapists should be taking their own money, and then give you what they owe, vat should not come into it on their side if they are not vat registered, even then it would be up to them to pay their own vat, not you. They are a separate business inside your salon. Apart from rent/commission you should have no say in the day to day running of their business, that includes their takings.

 

[Nails<3]

From a salon owners perspective...

I have a couple of self employed therapists amongst my employees. I do not have self employed staff to dupe them out of holiday/ sick pay etc or to get out of paying them a proper wage.
They are self employed as they are experienced therapists wishing to move up in their career and their earning potential is far higher. They take approx £2000 a month...more than most employed therapists could dream of. I would make more if they were employed.
Their % is given after VAT as it is a profit split. If the salon applied VAT to just its share it would leave us with a pittance and barely even cover product cost. This is how alot of salons operate as advised by accountants as if they didnt the salons would go under and nobody would have a job...employed of self employed.
My self employed therapists are very grateful and happy to have such a great opportunity to make good money and further their careers. They certainly don't feel it's unjust.

If the therapists that rent from you are not VAT registered then they shouldn't be paying VAT on their takings full stop regardless of what the salon takes from it.

It is not down to the self employed persons to pay VAT on your behalf of THEIR earnings nor is it their issue if you do not earn enough after the % split.

If salons are not making enough to cover costs then don't have self employed persons in the salon.

There is no way I would be giving out a % of my wage I have earnt for VAT if I didn't have to make sure the salon I was in made enough money.

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[Sazash]

It's quite a big company so I assumed it was all normal? No one else has picked up on this? Maybe I should call and find it

 

[libbylou]

They are aware of the terms of working in the salon and more than happy with them because they benefit so much for working there.
It is either that or lower their percentage to compensate.
They would be gutted if I said they would have to go employed.
They don't have to work there they choose to because they get high end products to use, free training, advertising, a receptionist.Overheads they couldnt afford working independently.They are more than happy to work with us under the terms which allow us to afford to have them.

Then your therapists are not really self employed, and technically you are breaking the law.

 

[Nails<3]

They are aware of the terms of working in the salon and more than happy with them because they benefit so much for working there.
It is either that or lower their percentage to compensate.
They would be gutted if I said they would have to go employed.
They don't have to work there they choose to because they get high end products to use, free training, advertising, a receptionist.Overheads they couldnt afford working independently.They are more than happy to work with us under the terms which allow us to afford to have them.

This is blurring the lines of employed and self employed.

Whether it works for your business or not it is wrong. You shouldn't be charging them VAT if they are not VAT registered.

Its like you have all the joys of an employed person without the issue of tax, ni etc which is illegal.

Ita crazy giving free training to a SE person when they can just get up and go and take all their clients with them.

If you aren't making enough money on a % split, that isn't down to the SE person, you should be charging accordingly to make sure you don't have a shortfall instead of making someone pay VAT when they don't have to.



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[squidgernetball]

If a salon is vat registered then the salon has to pay vat on the income from either a person renting a room or on the money paid to the salon as a percentage. You are not strictly charging the therapist vat but you may have to increase the rent or the percentage to cover the vat you as a salon owner have to pay.

I'm literally going through this now and have to decide whether to absorb the costs myself or increase the therapists rent to cover the vat I will have to pay.

I just wish they would increase the vat threshold although our retail is so high it may benefit us in the long run!

Vic x

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[ColourGirly]

From a salon owners perspective...

I have a couple of self employed therapists amongst my employees. I do not have self employed staff to dupe them out of holiday/ sick pay etc or to get out of paying them a proper wage.
They are self employed as they are experienced therapists wishing to move up in their career and their earning potential is far higher. They take approx £2000 a month...more than most employed therapists could dream of. I would make more if they were employed.
Their % is given after VAT as it is a profit split. If the salon applied VAT to just its share it would leave us with a pittance and barely even cover product cost. This is how alot of salons operate as advised by accountants as if they didnt the salons would go under and nobody would have a job...employed of self employed.
My self employed therapists are very grateful and happy to have such a great opportunity to make good money and further their careers. They certainly don't feel it's unjust.

Unjust or just doesn't matter. It's about being legal or illegal, it does mean they have to put up with just because you pay them well. Taking home £2000 a month is great, but what about when you are on holiday, sick pay, maternity pay.


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[princessamie]

There's no way I'd pay for a space on a daily rate and a percentage split and I certainly wouldn't be paying towards the salons VAT bill.

I can't advise on the legalities, because I simply don't know, but I do find it odd that a SE would be responsible for keeping the salons head above water. They have their own business to think about.

The initial day rate or percentage split should reflect the costs the salon incur to have a SE there. I think its taking advantage of someone's desire to succeed and work for themselves to charge a rate and a percentage, because they'll pay it if they think they have to.



The best advice I ever received - "Work smarter, not harder". Thank you, geeks!!

 

[ColourGirly]

They are aware of the terms of working in the salon and more than happy with them because they benefit so much for working there.
It is either that or lower their percentage to compensate.
They would be gutted if I said they would have to go employed.
They don't have to work there they choose to because they get high end products to use, free training, advertising, a receptionist.Overheads they couldnt afford working independently.They are more than happy to work with us under the terms which allow us to afford to have them.

That's like say foreign workers are happy getting paid lower than national minimum wage as it keeps them in and job. Keeps my business running so we are all happy!

As for the comment about training, I'm employed and I have been given oooodles of training and then I've left jobs, or I could use it to do clients. Does that mean I should get it? I'd rather offer these things to my staff and make them great workers when I have them.
You could give them free training and then they leave, get pregnant, get sick, open up next door? Does that mean we stop training in this industry? Then you get know as the salon that offers no training ladder, who would want to work for someone that doesn't train their staff incase they use it for something else?


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[princessamie]

They are aware of the terms of working in the salon and more than happy with them because they benefit so much for working there.
It is either that or lower their percentage to compensate.
They would be gutted if I said they would have to go employed.
They don't have to work there they choose to because they get high end products to use, free training, advertising, a receptionist.Overheads they couldnt afford working independently.They are more than happy to work with us under the terms which allow us to afford to have them.

This, to me, seems very much like you're taking advantage of the fact they feel they can benefit so much from working in your salon.

If you're covering your costs etc with them being SE and you charging what you do, why would they earn less as an employed member of staff? The money they take wouldn't differ so you'd be able to afford them that wage, surely?

Except, if they wanted paid holiday or sickness.

The best advice I ever received - "Work smarter, not harder". Thank you, geeks!!

 

[ColourGirly]

They are aware of the terms of working in the salon and more than happy with them because they benefit so much for working there.
It is either that or lower their percentage to compensate.
They would be gutted if I said they would have to go employed.
They don't have to work there they choose to because they get high end products to use, free training, advertising, a receptionist.Overheads they couldnt afford working independently.They are more than happy to work with us under the terms which allow us to afford to have them.

I'm really confused, you rent some rooms in the back of a hair salon, how are you a salon owner? How do you have a team of therapists that earn £2k a month. I know it's a very busy salon but it's not beauty. Sorry if you think this is putting it out there but I'm curious as is doesn't seen to correlate with your posts?


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[the_owl]

Before I give my opinion, I should tell you that before I became a beauty therapist I was a certified accountant working with small businesses for many years.

There are two things I'd like to say. Firstly, I know someone who works for HMRC and they have decided to really focus on clamping down on employers who claim they work with self-employed people rather than employees. It's not just in the hair and beauty industry that it happens, but if I had an accountancy client who told me they had a set-up similar to what has been described by previous posters, I would advise them to think very carefully about the implications of being audited by HMRC which could happen if they believe you are 'fudging' the books.

Secondly, self-employed status is based on Common Law rulings and the following needs to be shown to occur in order for a person to prove they are genuinely self-employed and not just doing so for tax purposes (this is taken directly from the HMRC website):

1. Can they hire someone to do the work or engage helpers at their own expense?
2. Do they risk their own money?
3. Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
4. Do they agree to do a job for a fixed price regardless of how long the job may take?
5. Can they decide what work to do, how and when to do the work and where to provide the services?
6. Do they regularly work for a number of different people?
7. Do they have to correct unsatisfactory work in their own time and at their own expense?

As an accountant I would also ask the questions:

1. Who keeps hold of the money on a day to day basis?
2. Who does the advertising for the therapist?
3. Are they trading on the back of the name of the salon they are working in, if that salon has a high profile reputation?

Basically, what it comes down to is asking whether the person has complete control over whether their business is a success or failure. If the answer is yes, they are most likely self-employed.

I feel there is a lot of confusion around this area, so please feel free to ask me any tax related questions. I don't like people being taken advantage of, and would be happy to help if I can.

Lucy x

 

[ColourGirly]

They just need to loiter around salon geek to catch a few people out &#128584;

 

[the_owl]

I have to say, I agree. I'm amazed at how open people are about their set-ups. I can't help but wonder if it's just sheer brazenness or maybe they genuinely believe there is nothing wrong or illegal about what is going on.

 

[Cheshire_Gal]

You can't have rent AND take a percentage lol it's one or the other!

I have rented space twice, at one it was £25 a day rent and at the other it was 40% per week.

Rubbish. You can have whatever you want if it suits both parties. I wouldnt rent a chair out for less than £50 per day or £1000 per month, if i was ever going to rent one out. Sound alots, but bear in mind the earning potential for a beautician is average £1000 per week for a 5 day week.

 

[Cheshire_Gal]

The salon should not be taking your money, you should. You are a separate business within that salon. Do they give you set working hours or are you allowed to start & finish when you wont. Do you book your own clients. Who holds all the clients data ? x

This is a tax fiddle and Mr Taxman is clamping down. The sooner the playing field is fairer the better!!!

 

[Cheshire_Gal]

You can register for VAT at any point you start your business.
However, legally at £75K you must register for VAT. (Ideally before you reach the threshold which you should have forecasted)
Companies under the threshold may choose to register for VAT in order to claim VAT back on the products and services that they buy which has VAT.

In the beauty/hair industry there is no sense in registering for VAT unless you have to. You can not claim back the VAT in relation to the service cost of a treatment, just the product cost. As we all know the majority of the cost of the treatment is for the service, not the product.

E.g. with cost of product for tan at £4

£20 spray tan for Non VAT business = £20 - £4 = £16 profit

£20 spray tan for VAT reg business = £20 - 20% VAT = £16.66 - £4 = £12.66 + (reclaimed 20% VAT on £4 product = 66p) + £13.32 profit

 

[charlie109]

New law states that if u rent a chair, room etc in ur business u must pay vat on it, so from what I can gather the salon is happy for you to rent from them providing you cover the cost of the vat the will be charged, and yes you can work self employed but have set hours etc it's like a building contractor for example they are self employed but the have to been at work every day and have the job done and have to book time off

 

[surf girl]

If ur earning £70 odd grand a year why the hell is everyone clambering to diddle the tax man lol &#128514; it's not like u can't afford the tax bill!