Accounting is often a word that is whispered or buried in the back of one’s mind until a dreaded deadline approaches or the tax man comes knocking.
People often comment upon the power of social media and those little e-footprints that are left online. The use of social media into tax investigations and collection of evidence, is becoming more popular.
With a little education, businesses can ensure they don’t expose themselves to any potential prosecution or penalty for incomplete records and failure to submit returns. Some of the most popular topics in my DMs at the moment are as follows:
Limited Companies – when to incorporate?
One of the key factors about this model is that the business is viewed as a separate legal entity to the owner you can read more about this in an earlier blog here.
The decision to incorporate is often based on the limited risk and tax savings.
VAT Threshold – How to manage this!
Once turnover reaches £85k, companies’ and individuals must register for VAT. This can be daunting for some businesses as this also means that VAT must be collected on all sales and paid to HMRC. A tip when reaching the VAT threshold is to plan early on and before reaching the registration threshold, so you can introduce price increases gradually. I often hear some businesses are reluctant to increase selling prices but work with your accountant to plan a strategy for maximum sales and the introduction of price increases that wont damage your business. There are also VAT schemes available, if you would like to learn more about this check out the VAT blog.
Staff Models – What is the best structure
A growing trend at the moment within the industry, salons and organisations is the use of self-employed contracts within the business. You may be familiar with a chair hire, column hire or the like. If you are a business owner and you use self-employed individuals, please do ensure that your agreement does not in fact fall under employment. Self-employed individuals are individual businesses as they are renting a space or column from you. These individual businesses should be free to collect their own takings, promote their own services wherever and whenever they like, choose their working hours, decide on their own clothing and any potential customer should be aware that the individual is their own entity.
This is a grey area and there are lots of opinions on this but my biggest piece of advice would be if you are treating individuals as staff, deciding work hours, providing equipment and materials, advertising as your own business name with uniform etc then you should check with your accountant or legal team as soon as possible in case the contract is in fact one of employment. Read our blog on self employed workers to learn more.
When employing staff, you are required to take care of national insurance contributions and adhere to employment law. This can be a very expensive mistake to make if you are seen to be employing individuals by a tribunal. The cost to your business could be extensive especially when you consider any damages that can be made against you for breaking an employment contract. Definitely research this area and discuss with a qualified professional to ensure you are using the right model for your business.
Here at Ria-Jaine & Co Ltd we offer an additional service via our associate HR expert DayHR Consultants. Get in touch for more info.
Self-employment
HMRC define a self-employed individual as someone who runs their business for themselves and takes responsibility for its success or failure.
For more information on the difference between the sole trade business structure and limited company read the Sole Trader Vs Limited Company Blog.
Whichever model you decide upon ensure you carry out the research needed to make the best decision for your business, your lifestyle and your future plans. If you are not sure on what to do next get in touch today or book a free discovery call here.
Friendly disclaimer: The information contained in this article is for guidance and information purposes only. It should not be relied upon as full and complete accounting, tax or legal advice. For specific advice relevant to your own situation please speak to Ria-Jaine MAAT or another professional direct. “
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Check out my interview with the amazing Carl Reader on his The Carl Reader Show’ – Ria-Jaine Raw & Uncut.
and the amazing Katie Godfrey, owner of KG salon, KG franchise and Lash training academy on ‘The Life Of KG’ – Guest Ria-Jaine
Ria-Jaine Lincoln is an award winning accountant ranking in the top 50 women in accounting worldwide.
With a special interest in beauty and income taxation Ria-Jaine is your go to for all your accountancy needs.