New tax year tips for freelance hair & beauty professionals
If ‘doing your books’ fills you with fear, you’re not alone. A recent study found 55% of self-employed people don’t like doing their tax returns (is that all?), and 22% spend 10 hours or more to complete it. Given the amount of receipts you’ve got to a. find and b. organise, it’s no surprise that sorting your accounts can feel overwhelming.
Here are six tips for keeping your finances in check for the new tax year...
1. Keep a record of all your receipts
As a freelance hair and beauty professional your mobile phone is your lifeline. From keeping track of appointments to marketing yourself on Instagram. You can also use your phone to keep a record of all your business expenses.
Using phone apps like Quickbooks or FreshBooks allows you to record your expenses as you go along. Each time you make a business purchase you can use your phone’s camera to scan and save the receipt. This means no more scrabbling round for receipts as the self-assessment deadline approaches!
These apps not only simplify doing your taxes, but they can help you see your profit/losses, online payments, keep track of your bills and manage your income. Remember to keep your documents for at least five years in case HMRC want to see them.
“Make yourself aware of all the business expenses you’re allowed to deduct from your tax bill - otherwise you could be losing out”
2. Know what you can claim
There are lots of business expenses that you can write off against tax. These include:
- Hair and beauty products
- Travel expenses
- Marketing and advertising
- Mobile phone and landline - business use
- Fuel and vehicle running costs
- Accountant fees
Make yourself aware of all the business expenses you’re allowed to deduct from your tax bill - otherwise you could be losing out. Check out this useful guide on self-employed expenses.
3. Create a forecast
The end of the financial year is the perfect time to plan for the new tax year ahead. Review your previous year’s accounts: were there any surprises you weren’t prepared for? Based on last year, do you think you are going to make more money for the year ahead?
Create a budget sheet and forecast of earnings so you know how much you can spend and when. Looking at last year’s accounts is a really helpful way to predict peaks and troughs. While you might already know that you’re super busy around Christmas time and less so in January, it will give you an understanding of how you’re doing throughout the year.
4. Stay organised
Make a note of all the key dates in the financial year ahead. This way you won’t lose track of what you’re meant to be paying and when.
The key dates for the tax year 2019/2020 are:
- 6 April 2019 - start of the 2019/2020 financial year
- 31 July 2019 - deadline for payments on account
- 31 October 2019 - deadline for paper tax returns
- 31 January 2020 - deadline for online tax returns
- 5 April 2020 - end of the 2019/2020 financial year
5. Set aside money for tax and National Insurance
As a self-employed hairdresser or beauty therapist, make sure you put money aside from your earnings to cover tax and National Insurance. It is a good idea to keep it in a separate account so you’re not tempted to dip into it over the year. Setting aside between 25-30% of your income should be enough to cover tax and NI payments.
And remember, your standard personal allowance - the amount you can earn before paying tax - has increased to £12,500 for the 2019/20 tax year.
6. Take a free course
Keeping accurate records and understanding your payments on account can be really confusing when self-employed. So why not register for some of the free webinars on the HMRC website, from business expenses to filing your self-assessment.
Share your tips
We’d love to hear your top tips for staying on top of your business records and expenses. Join the conversation on our Facebook page @SalonServicesUK.
Salon services isn’t a financial advisor, this information is for reference only.