I went to see a potential client on Saturday who has a hair & beauty salon. She has been running it for about a year and, I know this sounds incredible, but she did not realise you have to keep any records of income/expenditure. She did tell HMRC and has been paying class 2 nics, but some one told her she needed to register her company. So she went on line and mistakenly set herself up as a Limited Company! She has no record of any of her earnings and no appointment book I could work from (she has started one now with customer names and price). She did not have a bank account till about September and says she just paid everthing with cash she had taken from clients and says she has taken nothing for herself yet. She is going to the bank to get copies of statements as she has binned them all. She has managed to find quite a few receipts for her expenses. It really seems as though she did not have a clue, but genuinely seems to want to sort it all out and run the business properly.
Has anyone got any tips or should I just head for the hills!!
No don't run for the hills but you are going to have to get her to do some good estimates. Does she employ staff? If so, how were they paid, if by cash then thats presumably come out of takings. Can you get statement copies from her suppliers, again if paid by cash we can assume takings. What margin does she add to her sales of products, again takings. How has she lived (from takings?). What is her average value of sale, how many customers does she have on averag. As it was a new business it may not be so very high. As incomplete records go there isn't alot to go on! Hairdressers are one of hmrc's favourites for taking a closer look as there is usually a lot of cash involved, so just make sure you cover your back. In future she needs to keep a daily sales record and if she has a till, she should print off the 'z' reading to substantiate it.
Oh, are you going anywhere nice for your holidays?
Oh forgot about the Ltd company side of things. I would suggest she trades as self employed and gets company struck off, far more compliance involved with the company and the fining regime is particularly onerous at the moment.
Hi Rob, thanks for your reply. She does not employ anyone at the moment but says it is picking up now and she will need help soon. She has not taken any money for herself yet and her husband is the breadwinner. She has said that everything she has bought has come out of the takings. I will sit down with her and try and work out her takings from the methods you have suggested, thanks.
With regard to the Limited Company, do you just leave it to be dormant., how do you get it struck off? Sorry if thats a daft question.
Holidays? You've got me hankering for one now,lol. Somewhere hot!!
here's a link for the DS01 form that needs filing with Companies House (along with a tenner) http://www.companieshouse.gov.uk/forms/generalForms/DS01_striking_off_application_by_a_company.pdf I think it is worth writing a letter th HMRC explaining that you are voluntarily striking off the company and the company has never traded and that no debts are owed as sometimes hmrc will object to striking off. I am of course making the assumption that the company never traded, no company bank account was opened etc Has your client registered as self employed? If she hasn't then she may be liable for a £100 fine for late registration if it is more than 3 months since she traded.
I think it is perfectly feasible taht if she has no employees then her takings/trade has been quite low but of course the lack of records never look good, but at least you are getting her on the right road now.
No self employed bookkeeper ever has time for a holiday!
Cheers Rob, thanks for the link, very helpful. She has registered as self employed and has not traded as Ltd. Her bank account is in, her name T/A her salon name, so hopefully it should be ok to strike it off.
She has no record of any of her earnings and no appointment book I could work from (she has started one now with customer names and price). She did not have a bank account till about September and says she just paid everthing with cash she had taken from clients and says she has taken nothing for herself yet. She is going to the bank to get copies of statements as she has binned them all
. She has managed to find quite a few receipts for her expenses.
