Hi there, I run a salon in my garden. When I built it I had no intention of having anyone work with me. Once built and about to start my price list etc, a friend said she wanted to get back working in the salon after having time off having her daughter. She wanted to be self employed as she needs flexibility with her daughter. I thought it would be lovely to have some company and it is. My question is, I don’t earn enough to pay vat, but I’m reading on different places that I may have to pay vat on the chair rental? I intend to call nhf and my accountant when they open but just thought I’d ask on here too. It’s come to light as she had been doing a 60 40 split in her favour as if she only has one client in she can just do that one and leave again. She came to me asking to do a daily fee as she’s getting busier, which is fine but with January (our quiet time fast approaching) I worried that it wouldn’t be worth it for her. I believe daily fees are set to say if she works 2 days abweek that she would pay regardless of being busy or not? I can’t switch between the two as it gets too confusing between paperwork. I want this friend to have the flexibility as I appreciate that you need that with children but it’s also got to make me money or there is no point in me doing it as it takes my time up too xx like I say it was never my intention and the lady wants to be self employed. Doing a percentage if she has one client she comes and goes as she pleases, handles her own money, takes her own booking, the lady chooses to use my products as it’s more convenient for her, she also uses my prices as this too is her choice. If she wanted to do anything else she could xx
VAT and chair rental
- Thread starter Eloise86
- Start date
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salonfrog
Accountant for salon owners
Hi
If the income you earn from the services you personally provide your clients, plus the amount you charge your friend for chair rental exceeds the vat threshold in a 12 month period: then you will need to register for vat and charge vat on both the services and the chair rental.
Threshold is £85,000.
If the income you earn from the services you personally provide your clients, plus the amount you charge your friend for chair rental exceeds the vat threshold in a 12 month period: then you will need to register for vat and charge vat on both the services and the chair rental.
Threshold is £85,000.
squidgernetball
Ubergeek
If you’re not turning over £85,000 you don’t pay vat.
Whether you do a percentage or a daily rate is up to you. To me, a daily rate is nice and clear. She has to pay it though, whether she comes in or not. You could make it whatever you want, but remember to make sure you take into account the products she uses.
Vic x
Whether you do a percentage or a daily rate is up to you. To me, a daily rate is nice and clear. She has to pay it though, whether she comes in or not. You could make it whatever you want, but remember to make sure you take into account the products she uses.
Vic x
Thank you for getting back to me, yes I’m way under the vat threshold with mine and the ladies rental... ppl say that it should be the cost of 1 cut and finish but that is not going to cover the costs of the salon running, if I go on maternity etc it needs to cover the cost of the running of salon as I won’t be there to bump it up. So what happens if she needs time off for school holidays etc?
When i rented a room in a salon i paid a set weekly price whether i was in or not, so even if she took a week off she would still pay you the rent. If you go on maternity ect it shouldn't drop down to your chair renter to cover the salon costs, it's your business, your salon to pay for xx
salonfrog
Accountant for salon owners
If you charge a fixed rental, it’s no different to (say) renting an office or a house to someone long term. They have to pay whether they use it or not.
If shes working on a set weekly rent she would use her own products ect. A 60% split to you she would use your products. I think the % split would be best in this case then if she doesn't have clients or takes time off then you won't be loosing anything but on the downside you won't make anything either. To be honest, me personally, i wouldn't rent out to a friend. It ends up in too many problems xx
If shes working on a set weekly rent she would use her own products ect. A 60% split to you she would use your products. I think the % split would be best in this case then if she doesn't have clients or takes time off then you won't be loosing anything but on the downside you won't make anything either. To be honest, me personally, i wouldn't rent out to a friend. It ends up in too many problems xx
What would it cost you when there is only her working there? If she is using her own tint would a weekly set rent be better to cover for electric ect ? xx
The daily rate is normaly the cost of a cut and finish. So if she wants the salon available to her anytime she has an appointment any day then she has to pay this ×7, if she decides to take a couple of days off, thats not your problem, she still needs to pay her rent. For example if you charge her £70 a week, she can stay off the full week or be in everyday but either way she still needs to pay you the £70 rent xx
I have pm’d you xx
salonfrog
Accountant for salon owners
Hi
That’s not quite correct. It’s a rolling 12 month period and if you are registered for VAT, you then report and pay amounts due quarterly via a VAT return.
Thanks
Andrew
