I'm opening a Barber shop and am new to business. I am having a problem getting staff so was thinking of renting out the chairs in the shop, which might make the record keeping simpler.
If I do rent out chairs, what records are required from me? Do I need to record who I rented the chairs to and what paperwork will I need? The barber shop industry can be pretty informal and most transactions are done in cash.
Also I've read that I should keep records for 6 years. How realistic is that HMRC will do a check on such small businesses?
It might be an idea to keep a log in a book of who + when you rented the chair to. Give each chair a name/number etc.. so that you can accurately track it. Next to each rental note in your book write down what the service was and the fee charged to back it all up.
Keep the records for the whole time just to be on the safe side. Store them in a box and put them in the atic where you know where they are but won't be in your way. Some more info on record keeping is here http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm
Congratulations on the new venture and wishing you every success for the future.
I'm afraid that I've not dealt with any shops of this type so will just offer some general advice.
There are going to be all sorts of complications here. Hiring out the chairs may seem to simplify matters but I'm assuming that purchases will still be done on bulk centrally so you will need to sort out some division of variable costs including consumables as well as fixed overheads such as rent. rates, etc.
I'm sure that you have industry standard models for that sort of thing so I'll leave that side of thing to others to clarify the situation over chair rentals.
Back onto my turf.
You already have a small misconception in your statement about six years.
The actual time is six plus one which is six years plus the current year.
If anything is found to be amiss during an investigation then the revenue can quite legitimately go right back to company inception so personally I think that records should never be disposed of.
For cash businesses I think that an inspection is pretty much guaranteed at some stage even in these days when the tax office is particularly stretched. My local hot dog van owner was complaining to me just before Christmas about having a visit and his main source of annoyance is why are they going after the little guys for pennies when they could make far more from bigger fish.
The issue as I pointed out to him is that bigger fish have accounts departments and getting a result takes more resources and a longer time frame.
My one piece of advice to you would be to get yourself a good accountant on side from the outset of your enterprise... Not necessarily the most expensive accountant but one who genuinely cares about their clients businesses rather than just their own bottom line.
As mentioned above. Good luck with your venture.
Kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
renting chairs out is quite common in your line of work. i think it would be wise for you to look into joining the National Hairdressers Federation, I know they have proforma contracts for their members who wish to rent out chairs, ie a contract between you and the self employed barbers. this helps to protects you from hmrc deeming that you employ these people, I also think there is a clause that has been agreed with hmrc to say that they cannot count all income from all the chairs as one and therefore cannot use this to make you vat registered.
