VAT question

#1
I own a salon as a limited company with 2 of us that own the company.
We've a few staff members (some are self employed) our employed stylist wants to go self employed, which is fine.
My question is, we just hit the vat threshold which kills our profits. We either need to be under or over but we always just hit it.
Would us salon owners be able to also work as self employed within the company, so all of us act as self employed but we pay the business a rent?
This way we can split our income meaning we will be below the threshold!
Is this legal?
Thank you for any advice in advance
 

#3
Thank you il check it out
 

#4

Traveller75

Active Member
#5
Yes that's how I read it. You have to draw a salary, you can't invoice your company in the way someone who is self employed would. So complicated isn't it? Maybe worth speaking to an accountant, they'd help you figure out your best options.
 

#6
Yes that's how I read it. You have to draw a salary, you can't invoice your company in the way someone who is self employed would. So complicated isn't it? Maybe worth speaking to an accountant, they'd help you figure out your best options.
Yes I need to speak to our accountant! Thank you anyway?! I always find the accounting side difficult to understand its. Never simple :)
 

#7
Yes that's how I read it. You have to draw a salary, you can't invoice your company in the way someone who is self employed would. So complicated isn't it? Maybe worth speaking to an accountant, they'd help you figure out your best options.
Thank you for your help though :)
 

salonfrog

Active Member
#8
Hi
Would us salon owners be able to also work as self employed within the company, so all of us act as self employed but we pay the business a rent?
The answer is yes, if you structure it correctly.
I looked at the greenaccountancy link and they say:

“A director cannot invoice his own company for his services on a self employed basis”

This is not applicable to your situation. If you became a self employed stylist, the Ltd Co would be invoicing you. This is the other way around to the greenaccountancy exert.

Definitely speak to your accountant! They should be able to help you.
 

CFBS

Well-Known Member
#9
You can be shareholders in a limited company. This way you pay yourself a dividend rather than wages.
The dividend is based on profits each year (but leaving enough money in the business for cash flow).
I can't see a reason why you could not pay yourselves a dividend each month if you choose.

Definitely have a chat with your accountant!
 

#10
Hi


The answer is yes, if you structure it correctly.
I looked at the greenaccountancy link and they say:

“A director cannot invoice his own company for his services on a self employed basis”

This is not applicable to your situation. If you became a self employed stylist, the Ltd Co would be invoicing you. This is the other way around to the greenaccountancy exert.

Definitely speak to your accountant! They should be able to help you.
Thank you so much I did wonder why it said invoicing the company! This will be a huge relief if we can
 

#11
You can be shareholders in a limited company. This way you pay yourself a dividend rather than wages.
The dividend is based on profits each year (but leaving enough money in the business for cash flow).
I can't see a reason why you could not pay yourselves a dividend each month if you choose.

Definitely have a chat with your accountant!
Thank you all for your help
 

TheDuchess

Well-Known Member
#12
I'm afraid that once you hit the VAT threshold you cannot the rearrange your affairs to stay under the threshold. So you must get advice in case what you want to do isn't Legit.

I am self employed in my own limited company salon. We will be registering for VAT very very soon (curses), but I'm not over the threshold for VAT in my self employment. I own machines personally which do not belong to the limited company which I provide treatments to clients on and I do other work not part of the limited company such as training, and I work in other sites not part of my limited company. I pay rent for services in the usual way.

It's dead complicated.

Basically, if someone contacts the salon and books say a leg wax and doesn't ask for a therapist then I might do it - but that person is a client of the salon and not of me personally. So the income belongs to the salon - even if it is passed on to me, and even though I am self employed. That client, and her data is the salon's not mine. So it's subject to VAT.

If the person rings up and says can I book with Beatrice for a leg wax. Then the money is Mine, all Mine, whahaha - unless I don't do it of course.

I've had this out with my accountant and he's ok with it BUT when I set up my salon I had another site and an existing client base and not all of my clients liked my new salon and I wasn't sure if the new venture was going to be viable - so I've maintained two distinct identities all along.

If you go self employed in your own business, you'll have to discuss with your accountant whether new clients coming to you are coming to the salon, or to you personally. In other words, you'll need to build your self employment column just like any other self employed therapist. You can't just pinch the salon's business and hijack their client data. You could reduce the hours when you work for the business, or stop offering some services as a salon, so that these are only offered by self employed professionals. But you must get professional advice.
 

#13
I'm afraid that once you hit the VAT threshold you cannot the rearrange your affairs to stay under the threshold. So you must get advice in case what you want to do isn't Legit.

I am self employed in my own limited company salon. We will be registering for VAT very very soon (curses), but I'm not over the threshold for VAT in my self employment. I own machines personally which do not belong to the limited company which I provide treatments to clients on and I do other work not part of the limited company such as training, and I work in other sites not part of my limited company. I pay rent for services in the usual way.

It's dead complicated.

Basically, if someone contacts the salon and books say a leg wax and doesn't ask for a therapist then I might do it - but that person is a client of the salon and not of me personally. So the income belongs to the salon - even if it is passed on to me, and even though I am self employed. That client, and her data is the salon's not mine. So it's subject to VAT.

If the person rings up and says can I book with Beatrice for a leg wax. Then the money is Mine, all Mine, whahaha - unless I don't do it of course.

I've had this out with my accountant and he's ok with it BUT when I set up my salon I had another site and an existing client base and not all of my clients liked my new salon and I wasn't sure if the new venture was going to be viable - so I've maintained two distinct identities all along.

If you go self employed in your own business, you'll have to discuss with your accountant whether new clients coming to you are coming to the salon, or to you personally. In other words, you'll need to build your self employment column just like any other self employed therapist. You can't just pinch the salon's business and hijack their client data. You could reduce the hours when you work for the business, or stop offering some services as a salon, so that these are only offered by self employed professionals. But you must get professional advice.
Thank you for your help, it's so confusing isn't it. I guess it was important to say before the business I was self employed and the clients followed me.
I'm fine with paying vat but we're only just hitting it and it's killing our profits.
I've asked my accountant for a chat on restructuring the business. Not to avoid vat but to basically make it profitable.
 
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