Bookkeeping is really, just a way of counting your business’s money. When it comes to your business it’s essential that you have a close eye on and a good understanding of your books. Without that, you’re making it harder to be successful in business. Because of taxes, it means the government is involved and there are fines and penalties for doing it wrong. This makes it all seem terrifying and intimidating and for many of us, it’s the part of our business that scares us most.
When that feeling comes up, remember how far you’ve come already! Some of the things you do now, that you take in your stride, at one time scared the life out of you, I’ll bet. Spreading hot wax on someone’s delicate parts? Way scarier than bookkeeping. You’ve already learned to do really difficult things or you wouldn’t be embarking on this journey in the first place.
Bookkeeping is just another aspect of owning your own business and facing it head on is the only way to make it less intimidating.
My goal is for you to feel empowered and in control around your finances. Yes, you can get help, I actively encourage it, but before you outsource, spend the time to get an understanding of what you’re handing over. Realise, you can outsource the task, but not the responsibility. What that means: if your accountant or bookkeeper does things badly, the Revenue will come knocking on your door, not theirs.
For today we’ll talk about a few things that you need to be aware of when you’re starting out in business. The big one for the beauty industry is VAT and when to register for it.
When to register for VAT is something that you want to think about because it affects a number of decisions including your pricing.
In Ireland the VAT threshold is very low. What that means is that if you expect your sales to reach 37,500 then you are legally obliged to register for VAT. If you think about it, 37,500 is not a lot of money in business terms. 37,500 is not profit, it’s sales. If you are renting a salon, then, depending where you’re located, your rent and rates alone, could be close to this amount.
If you’re planning to operate from home at first then you may have more time before you have to register for VAT but you should still have it on your radar so that you understand the implications.
Look at the projections you’ve done for your salon, do the projections show that you are hoping to bring in more than 37,500 in your first year?
37,500 annually breaks down as follows:
720 per week or 3,125 per month. If you charge 70 euro or so for a facial, that’s only 10 facials a week, not including any other treatments you are likely to be offering.
What I’m getting at is it won’t take long to reach that threshold, therefore you might be as well off to register from the beginning.
Get a simple system for recording your sales and purchases at least once a week. DO NOT use a spreadsheet for this. Spreadsheets get more and more complicated over time and are prone to errors.
Use an online accounting software like SortMyBooks www.sortmybooks.com. You can access cloud accounting software from any internet connected device and it’s easy to share your data with your accountant or bookkeeper.
Get the training you need to understand how to do your bookkeeping properly.
As your business grows you’ll be able to outsource this task to a good bookkeeper. When the time is right make sure you get recommendations. A good bookkeeper is a bonus to any business, a bad bookkeeper can ruin a business.
Beauty is a solid business and a growing industry. You can set up a beauty business anywhere and make a success of it. You get to do what you love every day. Get a handle on the books and you’ll see your hard work pay off.
You’ll ensure you don’t pay any more tax than you have to, you’ll avoid fines and penalties and you’ll have the satisfaction of watching your business grow and feeling empowered around your finances.
From next year we are going to be rolling out a programme for self-employed beauty professionals to set up their own bookkeeping system.
And remember don’t worry, do take action, ask for help.