The quickest and easiest way of getting started is by registering with HM Revenue & Customs (HMRC). It’s important that you do this as soon as your income (not profit) goes over £1,000 during a tax year (the tax year runs from 6th April to 5th April). You’ll need to have registered by the 5th October following the end of the tax year you went over the £1,000 threshold. In order to give your clients the best service, you might want to attend training courses or events that help you stay up to date. Luckily, you can claim the expense of relevant training courses on your tax bill. You can claim back on the tools of your trade, such as the cost of buying scissors, shampoo, colouring and styling equipment, and electrical tools.
Not only do you need to keep a record of your expenses and income for tax purposes, but you need to understand what your budget is from year in and year out. With detailed information, you can find out how much you need to spend on supplies and where you can cut down. Your records include things like receipts, cash you get paid as well as receipts for any expenses you may wish to claim, along with bank statements. There may some expenses you pay for that you use personally and for business, like your mobile phone. In these cases, you can only claim a portion as a business expense.
Your Complete Guide To Self-Employed Hair Stylist Taxes
Spend a little bit of time every day managing the ins and outs of your business account, instead of spending hours pulling it together at the end of the month. Using an app such as Countingup can help save your hours of accounting admin as it automatically creates profit and loss reports for you. Some self-employed hairdressers choose to rent a chair in a beauty salon.
Opening a business account will help you manage your finances more efficiently. You won’t have to sort out which expenses are personal and business-related, which can get confusing quickly. Think about all the methods available and choose the simple and suitable ones. Come up with a payment policy bookkeeping for hair stylist and communicate it with your clients. Have several payment methods such as debit cards, money transfers, and cash payments to offer every customer convenience. Accounts receivable is the ledger where all the records of what customers owe a business after purchasing goods or services are recorded.
Consult a professional for more self-employed hairdresser tax deductions
However, they often carry more reporting responsibilities meaning you need to engage an accountant. If you’re a self-employed hairdresser, you’ll know how much time financial tasks require, adding stress and an extra workload to the end of each busy day. Self-employment is common in the hairdressing industry, usually with the individual hiring a chair in a salon and bringing their own independent clients into the business.