Self Employed Hairdresser - Help! Accountants?!

KiKi

Hi OP

Apologies, not read all replies in detail but...

For every tax year of working (April 6th to April 5th each year), your OH needs to complete a self assessment form to identify how much tax and National Insurance he owes. He should have done this for every year he's been self employed.

To complete the self assessment, he needs a record of all money in (invoices) and all money out (receipts). He then pays tax on the total profit, and National Insurance category 4 contributions.

What you need to do from the HMRC's point of view is:
a) check which years he has completed a self assessment (hopefully all of them!)
b) pay the amount required by HMRC for those years if not done so already and all the fines - this is your absolute priority
c) start working on the last financial year (2011-2012) by sorting out all receipts and all invoices for this time
d) put together a spreadsheet of all money and all money out for 2011-12 (two separate sheets)
e) complete the tax return for 2011-2012 (deadline is January 2013 for the online assessment)
f) if there are any years missing a self assessment tax return, call HMRC and have a conversation about getting those done

To help him budget for his tax return each year, he needs to put aside 30% of everything earned (20% tax, 9% NI contributions). That will be more than enough (assuming he's in the 20% tax bracket), as he also has a tax-free allowance of what he can earn (£8105) before he owes tax. So 30% will cover the impending tax return, and allow for some left over (to repay debt, perhaps!).

Once HMRC is sorted - or even better, before then - he can then start working on the bank and credit card charges, which will be about his income compared to his outgoings, ie, basic budgeting. Can I suggest you post an SOA (when you get to that) on the DFW board on this site, as this will help deal with those things - there are experts on there who can help get him back on track.

Most importantly - although you're willing to help - he's got to learn to either be organised himself, or pay someone (or ask you very nicely!) to be organised for him.

KiKi

dancingfairy

Has he got any records at all? Even if he kept a list of what he did on each given day ie cut Mrs Smiths hair - 50pounds cash paid, Mrs Jones perm etc etc and totals it up at the end of each day and keeps totals for the month say. This would be quite easy to set up on an Excel spreadsheet. I'd also try and collect all the paperwork together. Get all the payslips organised (I'd think I'd probably group by month). How were these done (on a computer or by hand?).
Get all the receipts in date order.
The more organised you can present things to your bookkeeper the cheaper the bill will be.
I'd probably employ a bookeeeper to keep the books neat and tidy (you're probably looking at a bit of time to get them all uptodate) but hopefully after that it would only be a few hours a week or something. Hopefully the bookeeper can get the accounts to trial balance (or to beyond) and then presumably you'd only need the accountant to check them, and then help you work out how to minimise tax due etc etc.
Best of Luck
df
Edit: Agree with Kiki as soon as possible he should start trying to put 1/3 of his income away as soon as it comes in for the tax bill(s) and Ni etc. He needs to realise that what he is earning is probably 1/3 less than what he thought.

jobbingmusician

Also, get on to the Debt Free Wannabee board to get some advice about the debt .

Nic-nacs

My ex used to be self-employed. I'm really good with paper work, so I had everything in order. We found that going to an accountant saved us money, infact more than we paid them!