Starting a home business is an exciting project, especially when you’re doing something you love. If you think the time is right to work for yourself and set up a salon business in your home, there might be a few thing you haven’t considered.
Below is some advice on what you should be looking into before you launch.
Register a Business
When you start working for yourself it, important to let HMRC know you are operating as a business. Most people who run a salon at home tend to register as self employed, but there is also the option to start a limited company. Only you will know what you’re happiest doing.
A sole trader doesn’t need an accountant or business banking, so all the money you earn can go into your regular bank account and you just have to pay your taxes and national insurance from there.
A limited company does need to use an accountant, you’ll need help with how to pay yourself and you’ll need to pay for business banking.
Some people like the security of a limited company because it limited the liability on them as an individual (when you are a sole trader, you are not considered a separate entity from your company). On the other hand, if you’re only earning a little bit of pocket money and don’t want the extra expenses and admin that come with a limited company, you might prefer to work as a sole trader.
Look into both options and decide before you start trading to help keep things simple.
Plan Waste Management
Whether your salon business will be dealing with hair, makeup, or nails – it’s bound to create its own waste. Not only that, the waste will also be made up of chemicals in some instances.
There will be more to throw away than just regular household rubbish, so it’s important to look into waste collection for business to ensure you’re covered. The last thing you want is to get into trouble with the council for using a domestic bin for business waste, and you don’t need the headache of disposing of it yourself.
Using a professional waste management service will make life much easier, right from the start.
Where Will You Work?
Obviously if you’re running a home salon, you plan on working from home, but whereabouts in your home?
I know a lot of hair dressers and nail techs who work from home have a dedicated workspace. This can be really handy for separating your work and home life, and it keeps your chemicals out of areas your children use.
Some people even set up a garden room with a full salon kit, so it’s like having your own little shop on your property.
While having a dedicated workspace can be great from a professional standpoint, it might be worth discussing the financial implications with an accountant. A dedicated place for work can mean you have to pay capital gains tax when you sell. If this isn’t going to be worthwhile, it might make sense to work all around your house to avoid any extra charges.
Take Care of Marketing
How will people find you?
With a lot of home businesses, the early clients come from word of mouth. I followed my hairdresser after she went self employed and left the salon where I originally met her. She’s so good I recommend her to everyone and would never go elsewhere. This is a great way to build a client base, but you only have as much reach as your loudest client when you rely on word of mouth marketing.
It’s a good idea to set up social media pages and start showcasing your work. If you have capacity to take on new clients as well as your faves, you could also share your Facebook page into a local community group to get the word out.
Keep Financial Accounts
This is a big one, especially if you’ve never kept accounts before. My advice would be to meticulously save every receipt, invoice and payment from the start and keep records daily.
The last thing you want to deal with is a year’s worth of unkept books right before it’s time to file a tax return. If you need a helping hand, you could always use accounting software. It’s usually about £10 a month for a sole trader and it’s designed to help you stay organised throughout the year.
Something no one warns you about is a “payment on account”. This is an extra tax payment you make the first year you pay tax. Everyone has a tax threshold, so if you earn less that the threshold you don’t have to pay tax. As soon as you hit the threshold, the first year you pay tax, the government likes to take the full year’s tax owed, plus 6 months of the predicted tax up front. Then in July, you have to pay another 6 months of tax up front. It’s best to budget for this from day one, because it can be a bit of a shock to pay extra tax if you weren’t expecting it.