T: 0131 341 4250|E: andrew@salonfrog.com
T: 0131 341 4250|E: andrew@salonfrog.com
If HMRC come a knocking, what’s the top things they’ll look at, and how (as a salon owner) are you protected?
We’ve put together a summary below on how Salonfrog’s Clients protect themselves with our help; and it is definitely worth making sure that you have the same controls in place:
| What HMRC will investigate:————————— | What HMRC is after:———————————— |
Your controls: How you protect yourself from HMRC——————————————————————- |
| 1. Income | Are you declaring all your income for tax? | i. All your Client sales go through a POS system, which salonfrog independently pulls in to your accounting software.
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| ii. Rental income from your self-employed are invoiced independently by Salonfrog.
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| iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.
————— |
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| ————————— | ———————————— | ——————————————————————- |
| 2. Expenditure | Are you overstating your business allowable expenses? | v. Only business expenditure is paid for through your business bank account.
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| iv. All expenditure is supported by adequate paperwork (i.e. you scan every bill into hubdoc), which Salonfrog attaches to the expense in your accounting system.
————— |
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| iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system. | ||
| ————————— | ———————————— | ——————————————————————- |
| 3. Payroll | Are you reporting employee wages via RTI (PAYE)? |
vi. All your staff are paid via your payroll system, which Salonfrog independently runs for you; and reports to HMRC via RTI.
————— |
| Are you paying them minimum wage? Big fines if not. |
vii. Staff wages are only paid from your business bank account.
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| Are you auto enrolling them when you should do? |
iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.
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| Are tips being declared and tax paid on them? | xi. Both you, and salonfrog check minimum wages every pay period.
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| xii. Salonfrog independently assesses each employee, every month, to ensure they are correctly enrolled, and paying in the legal amount.
————— xiii. You have a Tips Policy, which all staff have signed. Further advice here: https://salonfrog.com/2021/09/29/tips-hmrc-getting-firmer-with-a-new-employment-bill/ |
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| ————————— | ———————————— | ——————————————————————- |
| 4. Self employed
(chair and space renters) |
Are your self employed actually employees? |
xi. Salonfrog specialises in understanding the salon rental business, the related legislation, and follow HMRC attacks against salons through the courts; then keep you up-to-date with the latest.
————— |
| viii. You have up-to-date contracts with all your self employed; the terms of which are actually followed in real life (e.g. they can come and go as they please). You follow the NHBF/HMRC self employed guidance points (which Salonfrog has distrubuted) and can be found at: https://www.gov.uk/hmrc-internal-manuals/vat-taxable-person/vtaxper69100 ————— |
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| ii. Rental income from your self-employed are invoiced independently by Salonfrog. | ||
| ————————— | ———————————— | ——————————————————————- |
| 5.VAT | Are you under-reporting the VAT you owe? |
ix. Salonfrog ensures that the VAT relating to all income and expediture is correctly accounted within your accounting system; and that a VAT return is submitted on time to HMRC.
————— |
| iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.
————— |
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| iv. All expenditure is supported by adequate paperwork (i.e. you scan every bill into hubdoc) which Salonfrog attaches to the expense in your accounting system.
————— |
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| v. Only business expenditure is paid for through your business bank account. | ||
| ————————— | ———————————— | ——————————————————————- |
| 6.MTD VAT | Are you MTD compliant? | x. Salonfrog ensures that you are MTD compliant for VAT; especially that there is the required end-to-end digital link in your accounting systems; and that your VAT return is submitted via MTD approved software. |
| ————————— | ———————————— | ——————————————————————- |
| 7. Records | That you keep a copy of all your records for the minimum required time? |
There are different requirements for different records, for example: for a Ltd company, you must keep records for 6 years from the end of the last company financial year they relate to.
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| Salonfrog keeps all your records for the time you’re with us.
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We don’t keep your records from before you joined us though, so make sure you keep these safe.
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Rishi Sunak has expanded the Bounce Back Loan Scheme’s (BBLS) Pay As You Grow repayment plan.
Businesses can delay repayments for a further six months and extend their loan term:
Delay repayments
Originally you had to start repaying your loan 12 months after taking it out. You can now extend this another 6 months – i.e. start repaying it after 18 months rather than 12.
Extend loan term
Also, you can extend the loan repayment period from its original 6 years, to 10 years.
All options summary
In summary, all businesses will be offered the following options by their lender:
Talk to the Bank you took your bounce back loan out from to organise any of these changes.
Salonfrog joined Shine Connect in a webinar that covers what to do when a Client tries to use an expired voucher:
Salonfrog was delighted to have been invited by Shine Connect to give a webinar on Tips yesterday.
A great session with some good questions at the end!
To see it, you will need to join the Shine Connect facebook group.
Also, here’s the link to our guide: Tips!
Performance Report | a stand-back overview on how your Salon is performing
KPI’s | key performance indicators – measuring the key goals of your Salon
To keep control over your business, you need to know where you want it to go, and then make sure it’s going that way. As the British artist The Streets says:
“If you don’t know where you’re going then any road will take you there.”
Day to day, you’ll be stuck in the detail (often being sucked into your bookings system hour by hour) and it’s hard to take time to step back and see the bigger picture. This is where the Performance Report comes in.
Performance Report
The Performance Report is a monthly overview of what’s happened in the month and where your Salon is headed so far year to date. By using it, you get to see a more holistic view.
It revolves around a summary ‘profit and loss account’ (which shows the amount of income generated and from where this income has come from (e.g. from Clients or from Contractors). It also shows key parts of your balance sheet – such as the amount of cash in the Bank, amounts still owed (for example to HMRC or to your employees if the payment run is yet to happen).
Some Salons will have already put together a Budget for the year and the Performance Report will show the actual results against it.
KPI’s
The Performance Report can also include KPI’s which are used as part of a more sophisticated control mechanism, to ensure your Salon is achieving its goals (or at least heading in the right direction). You don’t need many KPI’s but the ones you do have should highlight the most important (say) 5 areas you want to control.
Some KPI’s you will obtain from your Salon Software directly (e.g. Phorest, VendHQ, SalonIQ, GetTimely etc.) which may include:
Other KPI’s you can include in your Performance Report:
*Stats per the NHF (and Salonfrog has seen this sort of range in its own Clients as well.)
Your own KPI’s
You need to consider what’s important to you and your Salon, then decide which KPI’s you want to measure and report.
Motivating Staff
You can use KPI’s to motivate staff and measure their performance. They also come in handy to backup performance ‘issues’ with staff members.
In Summary
Set your goals, put in place a way to report them, then take action if your salon or barbershop is moving away from them.
What is Open Banking?
New EU standards come into place from 14 September 2019 and will affect your business bank account(s).
Called “Open Banking”, it means you can choose to share your bank account information securely and electronically with anyone else. It is designed to encourage competition in the banking industry, giving you more choice, as well as greater control of your data and how it’s used. Every business will be affected differently depending on the bank they are with.
How might it affect Salonfrog’s clients?
The new rules will change the way some banks connect to Xero (the accounting platform all our Clients use).
To comply with the new requirements, many of Xero’s bank feeds (i.e. where we currently take a read-only feed from your bank account) will be replaced by new direct feeds using Open Banking.
We may be required to update your existing bank feed to a new direct feed, so that your transactions continue to flow into Xero each day.
We’ll let you know about any changes we need to make as and when. In the meantime, let us know any questions you have.
This short video brilliantly covers 5 really key points on running your salon as a business.
Working on your salon as well as in it, is a key recurring theme here – whether or not you want to expand!
We’ve been pushing this concept with our Clients for a long time and can also highly recommend a book which Salonfrog follows to the ‘t’:
https://www.amazon.co.uk/Myth-Revisited-Small-Businesses-About/dp/0887307280/ref=asc_df_0887307280
We look here at the start to controlling your Salon/Barbershop by showing how you can measure your business goals using key performance indicators – KPI’s.