Self Employed Hairdresser - Help! Accountants?!

Leesh123

Hiya,
I am new to hear to please be gentle with me!

I am enquiring on behalf of my partner who is a self employed hairdresser. He does not have an accountant, we have piles of receipts for EVERYTHING everywhere, payslips in envelopes, he is racking up HMRC tax return penalties etc all the time and is generally in a bit of a financial mess.

I have the time (but not necessarily the knowledge) to try and help him out and start getting things organised for him so that we can be in a better position financially as he is also bouncing direct debits left right and centre as well as having debts of between £15-£20k that he is hardly managing at all.

He earns a fair bit and should have enough money to manage to live a comfortable-ish lifestyle if he didnt have so many charges and penalties from banks, cards and HMRC if he was a bit more organised. Thing is, WHERE DO WE START!?!

Is getting an accountant a good idea? If so, how much is one and what exactly can they do? What can I do? I am more than happy to give up a few hours a week keeping on top of his finances if I knew it would help but I need to get into some sort of order and i have no idea where to start!

ANY help or advice will be sooooo appreciated. I am getting quite desperate now. He has gotten to the stage now where he is recieving calls all the time chasing money and has stopped opening his post as its all debts. He isnt sleeping well either. I really want to help him and he has said that he would be willing to let me have a go which is a start i suppose!

Many, many thanks in advance x

InsideInsurance

An accountant would be a fairly expensive option at this point - ordering receipts and transposing them into a ledger (electronic, can be an excel spreadsheet) is basic work but accountants charge accountants rates no matter what they are doing.

You could either do it yourself or hire a book keeper to do the grunt work of getting everything into order, copies of statements etc etc.

Generally speaking if your self employed (ie a sole trader) then an accountant is overkill as self assessment is meant to be perfectly doable by yourself but given there is potential negotiations to be had with HMRC then it may be worth getting one involved, once the book keepers done their job, as they'll have more experience in this area.

Generally an accountant wouldnt get involved in any discussions with banks etc about fees for bounced DDs or getting those other issues resolved.

runninglea

You could start by getting together all the HMRC letters and looking at how many self assessment returns are outstanding.

You say he earns a lot so the tax could be a large amount.

Does he have a separate bank account for income and expenditure re the hairdressing business?

Leesh123

Hiya,
Thanks for your replies.
Ok ive taken Insideinsurance's advise and emailed a local Bookkeeper and asked if they can help and then hopefully I can end up taking over once the mess has been sorted :-)

As for runninglea's question- No. He does not have a seperate bank account, he did have at one stage but then he 'got told by someone' that he did not have to have a separate account (is this true?!). What are the implications of this?

Thanks in advance!

InsideInsurance

If he is a sole trader there is no legal requirement for him to have a separate account because he and the business are legally one and the same, it just makes life much easier if you do keep separate accounts as you can see what are business expenses and personal expenses etc more easily. Plus if someone does write a cheque in the name of your company rather than you a sole trader business account can accept it.

Whilst there is no legal requirement most personal lines bank accounts prohibit you using them for business purposes.

If he trades through a limited company then things are different and he does have to have separate accounts because the company and he are two separate legal entities and the companies money isnt his money. That said, if he is operating through a Ltd then I'd expect there are a lot of other late returns in terms of companies house and accountants are much more advisable for Ltds because the laws are more complex and things arent aimed at self completion (not to say you cant.)

Leesh123

Sorry should have mentioned that he is not Ltd and the cheques are always made out to him.
The salon take the payment and he gets paid weekly 50/50 with all cheques being banked by him and then the 50% going back to salon owner each week.
I will have a look tonight and see what I can uncover!

liam8282

How much is a fair bit, for your partners earnings?

How many years does this go back, no doubt their will be tax outstanding.

A bookkeeper may be able to help get your books in order, but they may not be able to help you sort out the penalties with HMRC or calculate your previous years tax returns etc. There are ways to appeal against penalties if you have a good enough reason, and get them written off.

You may end up paying your bookkeeper and then paying an accountant as well.

IMO, you would be best going to a local firm of accountants, sitting down and having a meeting with them to discuss everything with them from start to finish. If you are a potential new client, this shouldn't cost you anything and you might get some very useful advice from them.

InsideInsurance

liam8282 wrote: »

A bookkeeper may be able to help get your books in order, but they may not be able to help you sort out the penalties with HMRC or calculate your previous years tax returns etc.

Which is why I suggested using both if you dont fancy the task of taking years worth of receipts, statements etc and trying to put them in order and log them into a ledger yourself. I certainly wouldnt pay accountants their hourly rate to do what is only a little more than data entry but would take the output of the book keeper to an accountant for their opinion and advice

liam8282

InsideInsurance wrote: »

Which is why I suggested using both if you dont fancy the task of taking years worth of receipts, statements etc and trying to put them in order and log them into a ledger yourself. I certainly wouldnt pay accountants their hourly rate to do what is only a little more than data entry but would take the output of the book keeper to an accountant for their opinion and advice

Depends on the accountant you go to and the bookkeeper you use I suppose.

Just pointing out that a bookkepper will have their limitations and the OP will more than likely end up at an accountant anyway.

Could work out cheaper paying one bill, rather than two. Save repitition of work etc.

Personally I would go straight to a small local firm of accountants and arrange a meeting with them.

Notmyrealname

I have a family friend who is a book-keeper who specialises in tax who would sort out the mess however they charge by the hour and would charge for the full amount of time it took to sort out the mess.

If the OP is interested, PM me.

supermonkey

So he has never submitted a tax return?

If he earns a lot, then on top of the penalties, he's going to have to pay tax on what he has earnt! If he earns over £34k he will owe 40% tax so over £13k + NI!