2 hair salons to fix, good or bad idea?

[amijayne]

Hi, the 2 salons I am going to be marketing sell no retail at all or next to none, last year one of them did £100 in retail sales for the whole year! So the vat is going to be a blow! At the moment they are rum separately by 2 different people so they don't reach the £81k threshold but once the are under the same owner they will have to be vat registered! I was also thinking of staggering the increase to soften the blow on the clients but as I've said in previous posts both salons are only just squeezing a profit as it is!

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[BannerPenguin]

Hi, the 2 salons I am going to be marketing sell no retail at all or next to none, last year one of them did £100 in retail sales for the whole year! So the vat is going to be a blow! At the moment they are rum separately by 2 different people so they don't reach the £81k threshold but once the are under the same owner they will have to be vat registered! I was also thinking of staggering the increase to soften the blow on the clients but as I've said in previous posts both salons are only just squeezing a profit as it is!

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If it was me I'd run each salon as a separate limited company.

 

[amijayne]

Hi, funnily enough I was just looking into doing that exact thing, if they were separate limited companies but still owned by the same one person, would that mean they don't need to be vat registered? Provided that neither one goes above the £81k threshold individually?

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[BannerPenguin]

Hi, funnily enough I was just looking into doing that exact thing, if they were separate limited companies but still owned by the same one person, would that mean they don't need to be vat registered? Provided that neither one goes above the £81k threshold individually?

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No. Both are stand alone companies in their own right. They can be affiliated with each other perhaps but you wouldn't need to VAT register.

I think it would be the most tax efficient way.

The owner would essentially just be managing director of 2 companies. You could then be a director with no shares for your salary. There are various ways to explore the options, an accountant knows best but this is what I would do. I'd also make the ltd company names very different. They can still trade as whatever name they want above the door, it just stops any confusion at companies house and HMRC.

 

[amijayne]

Thank you for the advise I will talk to the new owner and see the accountant on friday to see what he says. Hope fully will get a look at the girls contracts on Friday too so will see if the perks and pay structure are in there.

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[Hair Princess]

Hi, funnily enough I was just looking into doing that exact thing, if they were separate limited companies but still owned by the same one person, would that mean they don't need to be vat registered? Provided that neither one goes above the £81k threshold individually?

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I think you need to take advice on this. I tried doing something similar last year but was advised against that because if you are the owner of 2 limited companies doing similar trades, they are deemed one and the same. In extreme cases, HMRC could accuse you of trying to evade tax and there could be penalties.

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[Cholo]

Thanks that's a great idea, I haven't seen the girls contracts yet but with run through them with a solicitor first, I will have to draw up new contracts for them all anyway as the new owner will be their employer from now on and their contract will be with him.

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New contracts? Are you sure that's right? They should be subject to TUPE and so will retain their Ts & Cs

Some basic info-
http://m.acas.org.uk/index.aspx?articleid=1655

Guidance on changing their contracts (post business transfer)-

http://m.acas.org.uk/index.aspx?articleid=1655

 

[amijayne]

Hi, thanks so much for sending this link, it had so much info that needed!

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