Tax etc

[ClaireEharris]

Hi please can somebody clarify for me...
I’ve only recently registered self employed and have an opportunity to work within a salon, the owner is looking for a 30% split (I’m providing all products, equipment & advertising) due to it having a re furb as in the past it was horrendously out dated & only one stylist currently, so I’m hoping to bring in more clients (I provide beauty, nails etc) anyway my question is I’ve been told after my 30% split I will then pay 20% in tax, is this right as I’m now thinking it’s not really so profitable as out of £100 I will only come away with £50??

Any advise you have will be gratefully received x

 

[AcidPerm]

Regardless where you operate from (home/salon), when self employed you still have to pay income tax and National Insurance contributions on the profits you make above a certain figure.
For 2018/19 you are allowed to earn up to £11,850 before you start to pay 20% tax so if you earn say, £18000 a year, you will be paying tax only on £6150 which will be a tax bill of £1230. Your NI will also depend on your profit and you will be required to pay Class 2 NI on profit over £6205 which is currently set at £2.95 a week.

https://www.gov.uk/self-assessment-ready-reckoner

 

[ClaireEharris]

Regardless where you operate from (home/salon), when self employed you still have to pay income tax and National Insurance contributions on the profits you make above a certain figure.
For 2018/19 you are allowed to earn up to £11,850 before you start to pay 20% tax so if you earn say, £18000 a year, you will be paying tax only on £6150 which will be a tax bill of £1230. Your NI will also depend on your profit and you will be required to pay Class 2 NI on profit over £6205 which is currently set at £2.95 a week.

https://www.gov.uk/self-assessment-ready-reckoner

Thank you so much for your detailed response, that makes perfect sense.
I was aware I would have to pay it regardless of where I was working out of but obviously unaware that at least I can start to earn something before the tax man comes a knocking lol

So grateful to you for clarifying it for me x

 

[FlawlessBeauty]

Don't forget to keep all of your receipts for work expenses as these come off your takings before you are taxed. This includes receipts for your rent so make sure you get one every month.

Also your tax wouldn't work out as 20% off £100. It would be £100 - £30 to salon owner = £70.
£70 - 20% = £56 to you.

 

[ClaireEharris]

Don't forget to keep all of your receipts for work expenses as these come off your takings before you are taxed. This includes receipts for your rent so make sure you get one every month.

Also your tax wouldn't work out as 20% off £100. It would be £100 - £30 to salon owner = £70.
£70 - 20% = £56 to you.

Thank you, so salon owner taking 30% so would you suggest getting a receipt every week for whatever that works out at?
This is all such a minefield for me, I’ve always been employed before this and panicking now there’s so much to consider! I wasn’t planning on going solo so soon but circumstances have taken me down this road
So thankful for the advise on this site x

 

[FlawlessBeauty]

Yes definitely. You are paying an expense so you need a receipt.

You could write it out yourself and get her to sign it. They do those duplicate page receipt books in the pound shops and stationary shops. You could get one of them. Give her a copy and keep your copy.

If you plan to do your own accounts then i would recommend getting yourself a little box. Put all work related receipts in it and once per month log them all and move them into a folder x

 

[FlawlessBeauty]

You will also need your own treatment insurance as you arent an employee. Salon gold and Professional Beauty always seem reasonable x

 

[ClaireEharris]

Yes definitely. You are paying an expense so you need a receipt.

You could write it out yourself and get her to sign it. They do those duplicate page receipt books in the pound shops and stationary shops. You could get one of them. Give her a copy and keep your copy.

If you plan to do your own accounts then i would recommend getting yourself a little box. Put all work related receipts in it and once per month log them all and move them into a folder x

Yes that’s a great idea, I don’t think I will be doing my own tax though, I would be in one hell of a mess lol
Thanks again your an angel x

 

[ClaireEharris]

You will also need your own treatment insurance as you arent an employee. Salon gold and Professional Beauty always seem reasonable x

Yes I got my insurance sorted straight away I’m with ABT
Thank you x

 

[AcidPerm]

You could start by looking for a book keeper to help you set up and manage your accounts if you find it too difficult to do yourself.

 

[ClaireEharris]

You could start by looking for a book keeper to help you set up and manage your accounts if you find it too difficult to do yourself.

Thank you that’s gotta be my next objective x

 

[salonfrog]

Agree with all the good advice above. Just check the salon owner isn’t referring to 20% VAT on the 30% rental charge.

 

[ClaireEharris]

Agree with all the good advice above. Just check the salon owner isn’t referring to 20% VAT on the 30% rental charge.

Thank you will check this x

 

[AcidPerm]

Agree with all the good advice above. Just check the salon owner isn’t referring to 20% VAT on the 30% rental charge.

Must admit, I had assumed that after a refurb and only one stylist, I dismissed the possibility of VAT, and assumed she was advising the OP about saving money to cover income tax, NI and insurance. Obviously, she could have a high turnover generated from other business activities, so it’s definitely worth mentioning. Thanks.

 

[ClaireEharris]

Good morning all, my brain on overtime again...
I’ve been thinking, after doing quite an extensive leaflet drop in the local area, I’m hoping this will generate some new clients, I will then start telling new clients I will now be working in a salon let’s get you booked in. That’s all fine, can I confirm those clients are then my clients & that I have ownership, so record cards are for me to store? And should I choose at some point to leave those said clients are able to come with me?

 

[AcidPerm]

As a self employed person, any clients you do then ‘belong’ to you. By law, you must keep your client records secure and only you have access to them. Even though you are based in a salon, no-one else in the salon (a separate business entity) is legally allowed to access your client records.

So yes, you take your clients with you.

Obviously, clients can choose where to go/who to see at any time but once you’ve treated them, you need to keep their personal details secure.

 

[ClaireEharris]

As a self employed person, any clients you do then ‘belong’ to you. By law, you must keep your client records secure and only you have access to them. Even though you are based in a salon, no-one else in the salon (a separate business entity) is legally allowed to access your client records.

So yes, you take your clients with you.

Obviously, clients can choose where to go/who to see at any time but once you’ve treated them, you need to keep their personal details secure.

Thank you AcidPerm (so sorry sounds so impersonal to call you that but I have no idea if your name) I thought this was the case, only I had to inform the salon owner of his obligations to secure his current record cards after seeing an old fashioned box card system on his front desk [emoji33]
He had no idea on GDPR or anything it stood for!
So I’m quiet within my rights (& actually working within government guidelines) by keeping my own client cards, & takingbthhm home with me on a daily basis?
Sorry to keep asking further info from you but really want to start as I mean to go on x