UNLOCKING FINANCIAL SUCCESS: ESSENTIAL TIPS FOR SALON BUSINESSES with RIA-JAINE LINCOLN, THE BEAUTY ACCOUNTANT

s, Host & The Salon Inspector: 00:00:03

Please note that this transcription is created using AI and so errors & omissions may occur. Please check the spelling of any names against the show notes if you are using sections from the transcription.

Welcome to Inspiring Salon Professionals, the podcast that allows every therapist, now tech and stylist, to level up, build their career and reach for their dreams.

Each episode will be looking at a different area of the industry and along the way I'll be chatting with salon owners, industry leaders and experts who will be sharing their stories on how they achieved their goals, made their successes, all to inspire you in your business and career. I'm Sue Davies, your host, award winning salon owner and industry professional. Welcome to Inspiring Salon Professionals.

Hello and welcome back to Inspiring Salon Professionals. This morning I'm really thrilled to have a very special guest with me.

I've got Rhea Jane Lincoln, an award winning accountant who's become one of the go to, probably the go to financial expert for the beauty industry. There are a few accountants out there, but I don't think many of them come with the experience of the industry that that Rhea does.

Having been a lash technician and a now technician previously, she then turned her skills to accountancy, which we'll be talking to her all about and how that happened.

So not only does she specialize in business strategy, tax and payroll, but she does really, really understand the unique challenges of running a salon business which we I'm sure if you own your salon business and you're not just an employee in the salon business, you will understand that there's a lot of nuances that come with our street.

So Rhea is a mum of four and a successful business owner and she offers strategic workshops and high level advisory services to help beauty professionals thrive in this amazing industry that we're all in. So in this episode, we are going to be talking about cash flow and why that's important.

We're going to be also having a few updates from Rhea on the Chancellor's budget that was announced a couple of weeks ago now, but we're going to go through some of the impacts that may have on the industry and we're also going to as we're heading into self assessment season, I'm sure we'll be covering a little bit of that as well and I'm hoping that we can just sort of COVID some very basic accounting protocols that are going to help you if you're setting up your salon business. So whether you're looking to streamline your finances, accelerate your growth, this episode is going to be packed with insights just for you.

So let's jump in and I'll see you on the other side.

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Find the link in the show notes and see how Jenna can transform the way you work. So welcome Rhea. And actually one first thing I want to ask you is, are you Rhea Jane or are you Rhea?

Because wherever I see you professionally, you're always Rhea Jane. But then we all call you Rhea. So what, what do you prefer?

incoln, The Beauty Accountant: 00:03:23

Rhea's fine. But then I feel like professionally that's just lately that's all I hear is Rhea Jane. Rhea Jane.

So I know it's kind of like a beauty business thing if I hear Rhea Jane.

s, Host & The Salon Inspector: 00:03:34

Yeah.

incoln, The Beauty Accountant: 00:03:35

nobody called me that before: 2018

s, Host & The Salon Inspector: 00:03:38

Yeah. And I just wondered because it's something I always see and I never hear anyone call you Rhea Jane.

And I try, but I know it's your brand kind of thing and it's your personal brand is like Ria Jane. So I've just been doing an intro about you. So firstly I just want to ask you if you can.

You've had a bit of a journey that's gone from like lash and nail tech to being an award winning accountant for the beauty industry.

So what, how and why and what inspired you kind of thing to make the move from being part of our service based industry to being something that helps us all run our businesses.

incoln, The Beauty Accountant: 00:04:12

Okay. So it's a bit of a full circle journey for me.

I actually started as an accountant around 16 years ago and I was working in corporate for a company of, well a business top four accountancy firm called Deloitte. And it was quite difficult to juggle the whole work life balance.

My son was poorly in and out of hospital and that's when I was going to step away from corporate and then do something either from home or flexibly what I thought was flexible. So now I know and I've worked in the industry, it's flexible as what I thought.

And so I started to train in beauty and so I started with biosculture nail course first and then I went into lashes and it was, I think I've done that for about a Year or two.

And then it was during my training and building my network in the industry, I started to notice all the gaps on the accounting and financial literacy side of it. So then I came full circle and started to offer the accountancy services.

And then I became too busy with that and I had to stop working in the salon and offering the beauty treatments.

s, Host & The Salon Inspector: 00:05:20

Ah. That's how I know, because I sort of. I know I've had little snippets of it, so it's interesting to know the full. The full background.

So what I want to do, I do, I'm going to go jump straight into. Because I know this is going to be one of the key things that people are probably going to jump into this podcast.

Listen to the lovely Chancellor's budget. So obviously it brings some changes if you have employees.

So what are the key aspects that salad owners need to consider and how this may impact on them?

And is there, like we were sort of talking before, weren't we, about the benefits of different systems of model, but what, what kind of thing should selling owners be looking at and how can they make this work for them, really?

incoln, The Beauty Accountant: 00:06:05

Yeah. So I think the biggest thing that's knocking the industry at the moment is the changes to the employers national insurance.

So if you are an employer, you're going to be paying national insurance at a higher rate and a lot sooner because the threshold that you need to start paying these insurance, national insurances are going to be reduced. However, they did offer an increase in employment allowance. So if you have staff members, I think the magic number is going to be about 4.

You shouldn't really be affected by these changes because you'll be covered by the employment allowance. So we're still kind of doing the maths on that.

I'm still waiting for the kind of like small print to come out and I'm going to do some scenario modeling. So if you are an employer, the first thing you need to be doing is thinking about your cash flow.

So especially with the minimum wage increases as well. So it just depends what you're paying your staff at the moment. So there's a few things that are going to affect the industry.

So it is going to be difficult to hire because obviously it's going to be more expensive in every angle.

Now, it is also going to be quite difficult to give team members bonuses or, you know, like regular annual increases because everyone's keeping up with the changes as it is. So that's something to be thinking about as well, because we need to be keeping everyone's spirits up. As well.

You want the salon environment to be buzzing and happy and you don't want staff starting to get resentful because they're not having, you know, getting that pay package that other salon owners won't be able to provide or they might have their eye on going self employed as well. So it might just be that last thing that kind of, they might have gone for out the door already.

So really thinking about your package for your employees and how you can I guess, give them some kind of value and reward that isn't just monetary as well.

So there's things called trivial benefits as well and there's other ways that you can kind of, I guess you can't reward a staff member with a trivial benefit but you can't boost them around.

So if you want to maybe give them a voucher for a meal, their favorite restaurant, as long as it's under £50 and it's not linked to a reward, then you're able to do that. That's tax deductible. You don't pay national insurance on that. Increase their wage by £50.

Yeah, you know that is going to start impacting the, the rates of tax to pay. So there are rules around it though. So you can't do it every month. So you can't replace.

s, Host & The Salon Inspector: 00:08:33

Yeah, that's it. Just keep going out to the cinema or whatever on me.

incoln, The Beauty Accountant: 00:08:36

Yeah.

s, Host & The Salon Inspector: 00:08:36

But one of the things, because that's what I was just thinking as well is especially if you have a commission based structure for your staff is that, you know, even if you keep their, their base level at a place where you could you, when you've worked with somebody like Rhea and you've worked out how to, how to make this work for you so the costs aren't too restrictive then if they're on commission then obviously that's then going to push them through. So if you're on a commission based system then you're going to need to consider how that works as well, aren't you?

incoln, The Beauty Accountant: 00:09:07

Yeah, I think if you've got your data or if you can look back at how much it's cost commission, you can work out an average. So you can still plan ahead. So you should know how much commission your staff members can make.

Like how many hours can they actually physically do, how much sales, you know, income can they really generate and then that will help you to forward plan. So it's going to all be about cash flow planning and really knowing you've got to know how your sales turnover is coming in.

Knowing those patterns, those peaks and falls, the seasonal trends.

You've got to know how your staff members are working their time as well, how long they're taking to do their treatments, what your average kind of treatment cost is and what you're getting in. And so it's all about knowing your numbers. And I feel like I've been saying this for like six years now.

s, Host & The Salon Inspector: 00:09:55

Yeah, but I've heard you saying it a lot, but I think there's an awful lot of us that have been. Sorry, the dogs just. I have the dogs with me today. So if you're listening, if you're listening, you won't be able to see it, but let me.

My older dog is like sitting on my lap and just been annoying. So.

incoln, The Beauty Accountant: 00:10:10

Yeah.

s, Host & The Salon Inspector: 00:10:11

But I do think that whole thing about knowing your numbers is so vital and I think, you know, when you, if you've got a good booking system, and this is a time when having a booking system is amazing because if you have the right ones, then, you know, the reporting elements of them is really, really both dogs. Now, this was never going to be good. So.

Yeah, then having both, having a booking system that does what you want it to do and gives you the proper reporting is going to help you with all that cash flow projection.

And I know I used to use mine and I'd say, and there's always this point in the year, everyone's always going, it's gone really quiet and what's happened. But.

But if you use your booking system and you look at it retrospectively, you're going to see that for the last three years, it's gone quiet at this time of the year. So, you know, if you've, if you've worked it out through the summer, when you've had a busy time, keep some money aside, isn't it?

incoln, The Beauty Accountant: 00:11:00

That's.

s, Host & The Salon Inspector: 00:11:01

Yeah, you know, that's how category works, isn't it? It's just like, you know, is ironing out those, those little, little dips when you have lower income.

incoln, The Beauty Accountant: 00:11:08

Yeah. And it's also about taking action in real time.

So a lot of people will do their figures at the end of the year or, you know, ahead of a deadline, and it's just to get their tax amount ready for hmrc. So working with historical data, the only benefit is to hmrc. You can't do anything as a business owner, you can't take action.

But if you're looking at your cash flow and you're looking at your white space, even if you know that this month is, you know, it was quiet last year and the year before, if you're checking your figures every single month or even weekly, you've got that opportunity to fill that white space. And this is how I use cash flow as well.

So what, what I tend to do is we'll look at the month ahead, we'll have our targets and then we look at the gap. So if you are £500 away from your target, you've got two weeks left and a load of white space, maybe 10 spaces or whatever it is.

You can then use what you know from your cash flow to target your marketing and work on those top services, you know, those treatments, your higher paid treatments that you only need to get 5 or 6 in to fill that gap. And then you just focus everything that week on filling that gap is going.

s, Host & The Salon Inspector: 00:12:21

Back over clients, isn't it?

And just getting back in touch with clients that have booked like previously booked those treatments and stuff that you know that are going to bring you in that revenue. It's so important, isn't it? And I think, do you think people miss that opportunity, don't they, to look and it isn't.

Using the part, you know, using the past as a regret is not a good thing. Using the past as something that can inspire you for the future is a much better way of doing things, isn't it really?

incoln, The Beauty Accountant: 00:12:46

Yeah, definitely. And then just always working in real time as well. So even if you've got a plan going forward, things are going to change.

You know, the week might slow down, it might be too busy, you might have to shuffle things around, you might have an unexpected bill coming up. So there's all these things that are happening. So you have to be proactive when it's coming to the money side of the business as well.

s, Host & The Salon Inspector: 00:13:07

Absolutely. And so you mentioned self assessment and having your tax bill ready. Obviously we're heading into that season, aren't we?

So yeah, we're lucky to get you really, because you're going to start getting very busy again soon, aren't you?

incoln, The Beauty Accountant: 00:13:19

I really get all the tax returns started as soon as the tax year ends. So we actually start working on tax returns from of like May, June, depends on when we get information in.

So realistically it's like August, September and that we get everything in from our clients. But yeah, tax season, if you're working on your tax return now, like two months before the deadline, you have to do better. You have to do better.

s, Host & The Salon Inspector: 00:13:48

I'm not saying anything, although, you know, it's terrible. My husband's is done, his is, his was in, in May. But I always, I'M just, I've. I've always left mine to the last minute. I'm dreadful. Yeah.

I don't have the salon. When I had the salad, I used to kind of do it monthly, but I'd just leave it all to the last minute to send to the accountant.

incoln, The Beauty Accountant: 00:14:05

Yeah. But now I don't because I laugh because it's. It's that typical story, isn't it?

Like my husband's a tradesman and, you know, we'll have a floor half done for a little while or, you know, we'll start the bathroom. And it's the same with accountants as well. It takes every bit of my will to do my own tax return because I'm so busy doing everyone else's.

So I know it's not the most fun task when you're doing it for yourself, but it just sets you up so much better if you know what your tax bill is going to be before the deadline.

So even whereby sometimes we might not get all of our information in from clients, but as long as they've got QuickBooks and they've got a bank feed connection, we'll do the bookkeeping throughout the year. And on QuickBooks there's a tab called Taxes and you can actually see what your tax bill is going to be.

So, you know, there's ways to track it or just if, if you're not doing the tax return, just at least think about it. Just think about how much you might have to pay in January. And don't forget your payment on account.

If it's your first tax return and your tax bill is over £1,000, just make sure you do a bit of reading up on payment on account. It's where you have to pay half of next year's tax bill.

s, Host & The Salon Inspector: 00:15:17

Yeah, I know because I know when my husband had his, when the self assessment first started and we had that first payment on account and we did. It kind of blew us away. We. I can't.

I have a feeling his payment on account was about two grand and we were not expecting it and yeah, because it was all new and we hadn't. You hadn't done my due diligence. It was a long, long time ago, but. But I do think, you know, we have a responsibility.

Don't mean it's something that also like when people start up that whole thing about having to register. When do you register and what happens when I register? They like, you know, the tax collector is going to turn up on my doorstep.

So is there an easy, like, you know, a very quick guide as to how people can do that, because I think it's a big worry, isn't it?

And I think if you're doing this part time and even if you've got another job, I think there's a, there's a potential pitfall that people fall into of, well, I don't really need to because I'm only earning, you know, £100 a week or whatever and it's not really that much money. Do I need to register? So what's, what's the guidelines on that, rhea?

incoln, The Beauty Accountant: 00:16:23

Yeah, so HMRC do say if your income is over £1,000 for the tax year, you have to submit a tax return. So then, you know, you have to get registered, you have to get your UTR number and you need to register by the 5th of October in the second year.

So if your first tax year was April 23rd to April 24th, you need to have been registered by now, especially if your income was over £1,000. If your income is under £1,000 for the tax year, then you can use the traders allowance and you don't have to submit a tax return.

However, if you use that, you can't claim tax relief for the business purchases. So if your expenses for the year are over £1,000, it may be beneficial just to do the tax return.

So you get that little bit of tax relief, especially if you're paying tax through PAYE as well.

s, Host & The Salon Inspector: 00:17:17

Yeah, I think, because I do think it's a really, it's a. And we know from COVID that there were so many people that weren't registered that then really regretted not being registered.

And I think, you know, let's hope that we don't get another Covid. But you don't know, do you know, we didn't know that was coming really.

And then all of a sudden, you know, a lot of people were on the back foot because they hadn't registered and they, they thought, you know, they were earning a small income so they didn't think they needed to because there was no tax payable on it or no NIC payable. But all of a sudden they needed to be registered to get their. Whatever it was called now se.

I can't remember what it's called now, but that, that wonderful grant.

incoln, The Beauty Accountant: 00:17:59

Yeah, Self employed income support scheme.

s, Host & The Salon Inspector: 00:18:02

Yeah, that was it sace, wasn't it? Yeah. And to get those. And I think, you know, it's, it's just doing the right thing, isn't it? Sometimes people just need to kind of do it.

So that, and even, you know, if you if you need to claim, like, benefits of any kind, I would imagine that it would be helpful so that you can evidence what you're actually working. So that. Yeah, all of that.

incoln, The Beauty Accountant: 00:18:20

Yeah. And your National Insurance record for pension later on as well. So, yeah, there's a few things to why you should be doing it, but the.

Obviously, the main one is it's tax law and HMRC guidance and I think what we need to do in the industry.

So even when I was doing beauty, I was just doing it here and there, you know, for my family and friends before I then went to work into inside a salon. But it's just to start treating the business like a business, because that's what it is and we can get so passionate about what we're doing.

I love doing nails. Like, I'd sit there and do nails all day. I get it if people don't really see the kind of business side of it, and it's great to have that passion.

But business is business and that is the key thing that you have to remember when you go into this. As soon as you start promoting your services as sales and you are trading, everything else has to be treated like a business on that side of it.

So we call it success day. I don't call it admin day, because that's so boring.

But if everyone has a success day where they can go through their numbers or, you know, it could be just one day a month to see what you need to do.

It could be register for hmrc, make sure you've got bookkeeping software, make sure you've got a booking software, make sure you've got a business bank account, because you don't have to have one as a sole trader. But actually you might not be able to trade through a personal account, so you've got to check those terms as well.

There's other things like making sure.

s, Host & The Salon Inspector: 00:19:49

I have to say, I've always had a separate. When I first started, I didn't. I sort of just had it all go. But then really, then everyone sort of paid in cash. There was. Wasn't people.

You didn't have like summer machines and stuff then. So if you were working from home, you didn't tend to have the facilities to have like merchant sales. So everybody just paid cash, didn't they?

Which I think is another pitfall that we fall into. But now everyone's got a sum up everywhere, you know, or a square machine or whatever.

So like now everyone is tapping or doing bank transfers and stuff. And so that money does come into an account and it is so much easier. My husband uses his business account.

I've spent 20, 29 years asking him not to use his business account for personal purchases. Because it is, it's when I sit down to do his books, it's like, okay, so what was this a bit about?

And when you know, and especially if you're doing everything at the last minute and it's like December and you've got your tax return going in January, can you actually remember what you spent in March from that account?

incoln, The Beauty Accountant: 00:20:44

Yeah.

And then people will end up as well paying more tax if they have spent for something on their personal account and it's not in their business account. So there's so many things that can go missing if you're not tracking all of your receipts as well. So that's the biggest way to lose money.

s, Host & The Salon Inspector: 00:20:59

And I think technology is our biggest friend, isn't it, with this stuff? You know, to have, you know, things. I mean, I know you like, you are a QuickBooks. What are you, an advert? Definitely an advocate.

I think you've partnered with them now.

incoln, The Beauty Accountant: 00:21:11

So we're QuickBooks Advisors. We do use other software, but QuickBooks is the one that I use day to day for everything and I just know it inside out.

And there's some new features on there that I'm really loving at the moment from an accountant's perspective.

But we'll also make it a lot easier if, if you're a beauty business owner and you're looking at your tax return and you're like, what is that in salon expenses for a thousand pounds? Because we have to group some of the categories when we submit tax return.

But with QuickBooks we can, you can quickly just export a report and see exactly what. Yeah, makes up that number. So it's a bit more transparency and things. But that's how all bookkeeping tools work.

QuickBooks is just the one that I know best.

s, Host & The Salon Inspector: 00:21:52

I know because I think I've used QuickBooks. I've also like, we use zero business. I've used quick. I can't even know what it's called now. Some. Another one I used for mine.

But yeah, at the moment I'm back to Excel because I do like Excel.

incoln, The Beauty Accountant: 00:22:05

Yeah.

s, Host & The Salon Inspector: 00:22:06

But I'm not old, I'm really old school. But I do.

But I do love the way that the like, things like Xero and QuickBooks because, you know, you're reporting and seeing where your money's gone and seeing and you know, and you can use that for your projections as well, can't you? I mean, it's just, it's so good.

And I think, you know, the fact that it can link direct to your bank account and really it takes away so much of the work, doesn't it? Because I think, you know, when you have your success days, you don't want to be sitting trying to.

It is just like all that reconciliation and adding this here and adding that there and what all of the stuff that comes with like double, double entry bookkeeping, it's just all of that pressure is kind of taken away, isn't it? Because all of those systems do it for you. And although, yes, they have a monthly fee for most of some of them.

You can get free, can't you, if you're using.

incoln, The Beauty Accountant: 00:22:52

Yeah, I think free agent can be. Is free through some banks.

s, Host & The Salon Inspector: 00:22:55

Yeah.

incoln, The Beauty Accountant: 00:22:56

But there is the thing with using the bookkeeping software is the setup. So if you get it set up correctly and you just spend that time looking at, we call it chart of accounts.

So how are you going to categorize your items on the bank statement? So that's looking at what an item is and saying is that marketing is that, you know, accountancy fee or whatever, then it can really work.

I am seeing something though in bookkeeping tools and that is where people have pots at the minute. So it's very popular.

s, Host & The Salon Inspector: 00:23:27

Doesn't work, does it, when it goes into the account?

incoln, The Beauty Accountant: 00:23:30

Sometimes, yeah. Different banks. So sometimes it doesn't show on the QuickBooks or. No, sorry. Sometimes it will show on the QuickBooks but not on the bank statement.

So it can create extra work.

When you're doing bank reconciliations or if you are doing your own bookkeeping as a hera beauty business owner and you incorrectly put a pot transfer as income or as expense, then it's going to mess up your tax.

s, Host & The Salon Inspector: 00:23:56

I have to say it's something because I've got a bank account that uses pots and I use a lot of pots and I'm forever moving money from one pot to another. And then when I go, when I've been to do stuff on my book on my accounts, it's like, where's that gone? What?

And so you do have to think about that a little bit, don't you?

incoln, The Beauty Accountant: 00:24:13

Yeah, I think if you can have the success day where you do your transfer. So you've got like one or two transfers a month and not like 50 or so. We see so many. Yeah, it's a lot.

s, Host & The Salon Inspector: 00:24:27

But also, you know, there's. I think the pots are fantastic and I think it does make it so easy to move money around.

So and especially if you do things like profit first kind of systems so that you, you are separating all that money out. It may be worth trying to do it with bank accounts rather than banks.

incoln, The Beauty Accountant: 00:24:45

That's what I, I prefer, yeah, I prefer having bank accounts set up because.

s, Host & The Salon Inspector: 00:24:49

Then you can get the live feeds, can't you, from the actual. And I wonder actually if, if at some point, because it's mainly the online banks, isn't it, that do the pots.

And I do wonder if at some point if they will actually make some kind of like sub feed or something for them to make people like yours life easier.

incoln, The Beauty Accountant: 00:25:07

Yeah, I'm not sure it's what we do, you know, it's, it keeps me busy so I can't complain about it.

s, Host & The Salon Inspector: 00:25:13

No, absolutely.

incoln, The Beauty Accountant: 00:25:14

It's just a huge watch out because if people are doing their own bookkeeping, they may incorrectly just be like sales or sales or you know, putting stuff in the wrong area when actually it's important. Sometimes technology is Great, but sometimes QuickBooks or any software may make a suggestion and say this is sales and you as a business owner.

But yeah, tick that sales item. Actually the computer's got it wrong. You need to just.

s, Host & The Salon Inspector: 00:25:38

And I think it's like everything, isn't it?

It's like you've got, you've got to be diligent and you've got, you've got to, you know, the whole point of reconciling is for you to take a moment to think and consider and make sure that you're a lot. You're assigning it to the right place, isn't it? And that's what reconciliation is about anyway?

incoln, The Beauty Accountant: 00:25:53

And then if anyone doesn't know what a reconciliation is, it's just knowing exactly what makes all those numbers.

So if you're putting turnover into your tax return, like your total sales for the period, you need to know that everything in that figure is right for that heading or accountancy fees. You need to make sure that everything's right for that as well.

And I guess the impact of that is you'll pay too much or not enough tax if things aren't in the right places. But we have a simple spreadsheet that we can use. But something to actually, really, really make everyone aware of is making tax digital.

When that comes into play, you, it may, you may have to go on to something like QuickBooks because it's kind.

s, Host & The Salon Inspector: 00:26:32

Of been delayed and delayed, hasn't it, making tax digital. Because I know my husband, like yours, is a tradesman and we had. And he's back Registered. So we had. Making Tax Digital.

incoln, The Beauty Accountant: 00:26:42

Yeah. So it's all ready for. Yeah.

s, Host & The Salon Inspector: 00:26:44

And so. So we're already. We have no choice but to be Tax Digital. But for everybody that's. I think it was below. It was just below the VAT threshold.

Wasn't anyone below the VAT threshold. Doesn't have to do it yet.

incoln, The Beauty Accountant: 00:26:56

Changed it now. So in the budget. So they announced that they're reducing the threshold to 20,000.

s, Host & The Salon Inspector: 00:27:02

Did what for what for VAT for.

incoln, The Beauty Accountant: 00:27:05

No, for making.

s, Host & The Salon Inspector: 00:27:05

Oh, sorry.

incoln, The Beauty Accountant: 00:27:06

Making Tax Digital.

s, Host & The Salon Inspector: 00:27:07

Wow. I didn't see. Yeah.

incoln, The Beauty Accountant: 00:27:10

They're doing it. Well they didn't actually. No one really spoke about. I don't know if it was just in the small print like the.

I looked on the government website and read it all and it was something that just no one had mentioned. Everyone was talking about the employers kind of NI side of it.

s, Host & The Salon Inspector: 00:27:24

Well it's a headline, wouldn't it?

incoln, The Beauty Accountant: 00:27:25

Yeah.

So for me as an accountant there's going to be a lot of people that fall under that 20,000 a year bracket that are actually going to have to get clued up on software. And if they're struggling to do one tax return a year how are they going to do five submissions a year?

So like every three months sending the data, doing the bookkeeping, knowing their figures and then doing a year end.

s, Host & The Salon Inspector: 00:27:49

And when does that. So I'm going to highlight this because on the show notes I think because when does that. So what's the date for that? Is that imminent?

incoln, The Beauty Accountant: 00:27:58

Let me check if they've changed the dates but it's gonna. You're gonna have a few years.

s, Host & The Salon Inspector: 00:28:03

Oh good. But with these things they do normally give you a little bit of leeway. Don't. Or a bit of a bit of a head start to get yourself organized.

incoln, The Beauty Accountant: 00:28:11

ecking the year. I think it's: 2027

th of April: 2026

s, Host & The Salon Inspector: 00:28:25

Yeah.

incoln, The Beauty Accountant: 00:28:26

So that's the first year. And then April 27th it's saying 30,000 but then on the budget there was a mention of it to 20,000 but that date hasn't been. It's not on the website.

s, Host & The Salon Inspector: 00:28:38

So if it's. So if you're 20. Because I think that's the thing, isn't it that that 20,000 will pick up everybody.

That sort of does beauty on a very part time basis and yeah. And just is doing this. Maybe it's like something they do of an evening and weekend.

his is going to impact you in: 2026

So it's time to start getting your head around tech guys.

incoln, The Beauty Accountant: 00:29:17

Yeah, it really is. It's so easy once you know how.

But I would say I've started to write a 12 month roadmap because I think it's going to take about 12 months really to kind of get your head around the software, get into a good routine, pick up any errors in the bookkeeping, maybe if you're doing the bookkeeping yourself or even find someone to work with. And we do the bookkeeping, we do everything on the QuickBooks and the submissions. But it's just, it's about boosting the financial literacy now.

So knowing what the changes are, getting a date to when you're just going to sign up for the software and then getting the dates in for when you're going to start using it. Because it's not going to happen overnight.

s, Host & The Salon Inspector: 00:29:56

No. And I think as well, I think like the, like the term financial literacy is like really, really important.

And like when you were saying about the reconciliation and explaining what that means and I do think one of the things I've, I've done in the last couple of years is I've created a glossary of terms for the industry and it'd be really, I think a really amazing thing, Rhea, would be to have a glossary of financial terms.

Because I think if you don't understand accountancy in any way, you know, if you come at this of someone who isn't great at maths, which a lot of our industry aren't great at maths, you know, let's face it, some of us are, some of us aren't.

But if you've never had that experience and if you find maths and adding up and sums and all that kind of stuff, if you find that challenging in any way at all. Now the thought of accountancy is probably really, really scary and there's always people like Ria.

You know, Rhea is a fantastic person who, you know, yes, you have to pay for her services but she's very good at what she does. She's very dedicated to her industry and, and using, you know, and you can. And I'm sure there's elements that there's. Well, I'm saying this.

You can, you can tell me yes or no, but whether or not people can just sort of like, come to you just for sort of like, ad hoc advice and, and things like that and whether. Yeah, because I think it's like.

And even when you were saying about setting up the chart of accounts, you know, if people want to run their bookkeeping themselves, would you provide services where you can help them do the setup and then they can go and run with it?

incoln, The Beauty Accountant: 00:31:18

Yeah, that's. We do that. So some of our clients to. To make. Well, to stick within their budgets, they actually do the bookkeeping themselves.

And part of our tax return package and we offer like, email support and telephone support throughout the year is the software setup. And we have a recommended chart of accounts and that everyone, more or less, uses. We use that anyway. And so, yeah, that's something that I can do.

It's either power hours or we have a bespoke sort of computer and systems.

s, Host & The Salon Inspector: 00:31:47

Yeah.

incoln, The Beauty Accountant: 00:31:47

Service.

s, Host & The Salon Inspector: 00:31:48

I think that's the thing, isn't it? I think sometimes people just need that little bit of assistance to get started. And then once. Once.

And it is understanding the jargon, understanding the language that's used because, you know, you get things like accruals and reconciliations. I'm just trying rapidly to think of accountancy. They're not coming into my head, but. But there are this. Accountancy is.

Is full of, like, you know, things like journals and. And all that kind of stuff, and you start looking at the reports of, you know, profit and loss accounts, and I can't even think. There's so many.

There's just too many.

But all of those different things, and if you have no idea what they are, if you don't know what a profit and loss account looks like or what a chart of accounts looks like.

incoln, The Beauty Accountant: 00:32:27

Or a balance sheet.

s, Host & The Salon Inspector: 00:32:29

That's one of the ones. That's an important one.

You wouldn't think I've been in this, like, doing my accounts for years, but I think all of those things, if you don't know what they are, it's worth just spending an hour with, with Ria to just get a grip of. Of how all that works and what they mean, just so that you can understand more than anything. Because when you get. If you.

If you get a set of accounts and you look at them and you've got all these pages of the balance sheet and the profit and loss account and Your tax. I can't think of the tax. Oh, God, I'm trying to think.

incoln, The Beauty Accountant: 00:33:02

I get calculations or the.

s, Host & The Salon Inspector: 00:33:04

Yeah, the tax calculations and stuff. And you look at it all and it literally is just a load of numbers if you don't understand what they are.

And so I think, you know, educating yourself in the fundamentals of bookkeeping. Yeah. Is it, you know, spend a couple of hours just getting your head around it.

incoln, The Beauty Accountant: 00:33:20

Yeah. And it doesn't have to be boring and focusing just on the bookkeeping. So when. When I talk about balance sheets as well. So this is mostly limited.

Company directors will always have to approve a balance sheet, obviously, for their accounts. So a lot of sole traders probably never even think about the balance sheet or even know what that is. But it's like assets and liabilities.

So things that you own that have got value or liabilities, like bank loans and things that you kind of owe out. So it's a really important part of understanding your. I guess, your financial wealth as well.

So one of the ways that I think is really good to get used to these things is to apply it to you individually. So I also run personal profit and loss kind of discussions or the personal balance sheet. So what. How much are you actually worth?

Like what assets do you have and how long did you survive and overall had lockdown, but, you know, if you needed to move to the other side of the world or something, like what assets have you got so that you could sell and start over kind of thing. So just to start thinking about it, not just in bookkeeping, accountancy type, it's all relative to everything that we do.

We've all got income coming into our households and we've all got expenses going out and then we've all got that little bit of profit or equity that's left over, which is what we kind of live off or benefit from. So it's definitely. It's definitely worth trying to find a way that it clicks for you. And it doesn't always have to be thinking about business.

It could be planning a holiday, planning a wedding. I use my cash flow to plan my whole wedding in Tuscany and to bring 30 of my family members across and manage all of their budgets as well.

But it's exactly the same thing that I do for businesses. But I just applied it to my wedding.

s, Host & The Salon Inspector: 00:35:04

That sounds very geeky, though.

incoln, The Beauty Accountant: 00:35:08

But it makes it really.

s, Host & The Salon Inspector: 00:35:11

But it makes it easy, doesn't it? But yeah. Only an accountant to do that. Yeah, I was just so good. But I.

But I think it's in trying to understand Things by bringing it into your day to day life makes it so much easier, doesn't it?

Because, you know, you've had experience from, you know, probably the age of like 12, 13 years old of managing some kind of money in a bank account of some kind. Maybe it was a state, like a post office savings account or whatever back when I was a kid.

But, but you know, you've always had that, that understands of what a bank statement looks like or you know, when you go to the cash machine and you get a balance or whatever, whatever kind of old school stuff you used to do. And now I think it's just, you know, trying to apply that into a business mindset is a very, you know, isn't really any different.

It just has, you know, depending on the size and scale of your business, it just has different implications, doesn't it? Yeah.

incoln, The Beauty Accountant: 00:36:02

And I think as well, something that is affecting a lot of people now is back in the day we'd have cash. I used to put sort of like cash in envelopes. I'd have an envelope for my petrol, my shopping things when I moved out the refuge.

And it was really easy to budget because you could see the money, you could fill the money. Whereas now we're living in this digital age.

It's really, I'm noticing that it's really difficult for people to grasp the concept of budgeting or cash flow planning because it all, it's all just a tap away, isn't it? Like tap, tap, tap and your whole plan has gone out the window.

s, Host & The Salon Inspector: 00:36:39

Dangerous.

incoln, The Beauty Accountant: 00:36:40

Yeah. Whereas when you have the cash, you have to think about what you're doing. And I used to have a friend.

s, Host & The Salon Inspector: 00:36:45

That used to, she, she literally used to have jam jars on the windowsill. She used to put the money in. It's. But this is like, it's like. But the whole profit first, I mean, I have to say I've.

I've never read profit first, but I understand the process and I have lived that way quite a lot just because I did. But the profit first thing is so much like that, isn't it?

And it is just making sure all of your overheads are accounted for first and, and then, you know, and you just assign all of your money to where it needs to go, you know, before you need to start spending it on something that you shouldn't be buying. So it kind of helps like quell the shiny object syndrome that we are so prone to in this industry.

incoln, The Beauty Accountant: 00:37:22

And I'm laughing as you say that because we're getting ready for a house move. And I found a load of Magpie glitters.

s, Host & The Salon Inspector: 00:37:27

Ah, quite a few of those.

incoln, The Beauty Accountant: 00:37:29

So all the things I bought when I was doing nails, I'm like, if my clients came to me and they wanted to buy the whole collection, I'd be like, do you need that? Have you got a budget? But I done it. Been there, done it.

s, Host & The Salon Inspector: 00:37:41

We've all been there, haven't we? Because you do. And especially with glitter's easy, isn't it? Because it's like, you know what, five or six pound for a pot of glitter?

And you think, oh, that's okay, let's have, let's have that one. Oh, I'm that one. Or should I just buy the collection all of a sudden?

Like you've only spent like 50 quid or like 75 pounds, which isn't in the scheme of things a lot of money.

It's a couple of now, but all of a sudden you've got a hundred glitters over the, you know, you've been to a couple of trade shows and stood in the queue.

incoln, The Beauty Accountant: 00:38:07

Mine was the Aurora. Do you remember the. Hey, is it the Halo Aurora powder that was going crazy all those years ago?

Yeah, I saved up and I bought that and I only done one set of nails a week at the time.

s, Host & The Salon Inspector: 00:38:17

But yeah, yeah, I've still got. When I was clearing out my salon, I cleared like from.

ught when I qual certified in: 2002

Then there was one Olympia in the May and I went to that and there was a thing called it's so Easy.

s any vintage retro, not like: 2002

And if anyone wants me as both myself and a lot that we can, we can part with because it's like now when I sort of, I decided to stop doing nails last year completely and I.

So I've got to keep for myself that I just use with my favorite colors and stuff and the rest of it's all just sitting in the box waiting to be to sold and got rid of. And. And it's just. It is scary the amount of stuff you accumulate doing nails.

incoln, The Beauty Accountant: 00:39:32

Yeah, it is. And I am. I will be doing a few more nails. I have actually booked on for a refresher, but I am doing it strategically this time.

So I'm not going to go out and buy everything. It's just going to be like my own personal little kit that I need.

s, Host & The Salon Inspector: 00:39:46

Yeah, that's it. Because I think it's hard, isn't it? Because you don't. We do just get swallowed up and I think.

And if we are an Altech, you tend to get swallowed up by things like glitter. If you're, if you're like a level four beauty therapist, you get. Yeah, you kind of go and buy things like lasers that are very expensive.

But actually. And actually, talking of those, is it. So is it a good investment when you're doing those things?

It always amazes me that people just go and say, oh, I'm going to spend £75,000 and put it, put it on a lease or whatever. So is that a good idea? I mean, obviously you've got to work out what you're potentially only with a.

incoln, The Beauty Accountant: 00:40:23

Cash flow plan and a business plan.

s, Host & The Salon Inspector: 00:40:26

Yeah.

incoln, The Beauty Accountant: 00:40:26

So if you know how many bookings you need to get to get that return on investment and when you're going to get the return on investment, or if you're going to get that return on investment, or how long you're prepared to wait to get that return on investment.

So if you, if a client came to me, they wanted to spend, you know, thousands on a machine and when I broke it down, I said, well, you know, it's going to take you 15 years to get a return on this. And they're like, oh, actually we're going to exit in five years.

So, you know, they'll really think about what they're going to do, not necessarily stop making that purchase, but they may have to rethink their whole marketing plan. They may need to look at their ideal clients. Have they even got the enough clientele, you know, to justify making that spend as well?

So, yeah, definitely a place for it. But you have to do it strategically, not just because.

s, Host & The Salon Inspector: 00:41:11

Absolutely. And I just said something in my head I was going to ask you and it's gone. I hate it when that happens. No, gone. No idea. But one of the other.

I think one of the other things we're going to talk. I'm just trying to think of the other things we Were going to talk about brang on Brangon. Sorry, talk amongst yourselves.

t is, what is like going into: 2025

et that's gonna be going into: 2025

Very quickly, what is the way forward for that, do you think? That's a really big question.

incoln, The Beauty Accountant: 00:42:09

It's a massive question and I think if anyone is considering changing their business model you have to get advice, you have to get specialist tax advice and you need to get HR advice if you are even considering waking up tomorrow and making everyone self employed because it's not the way to go about this. There's definitely a place for both, you know, all different types of models. But you have to do things in the right way.

If you are a salon owner and you are building a brand and you are, you know, fully in control and it's all your business and everything from outside inside is all you and your brand, don't even consider, you can't consider the self employed model.

If you are renting space and people have got their independence, they're working in other places, you know, they're not permanently a fixture within your salon, especially not been there for more than two years.

Then consider getting the advice on making sure you've got the contract set up to say that the freelancers, self employed workers are going to be declaring their gross income as well because there's a big gap in the VAT that's being collected. Not just vat, sorry the tax and the VAT that is being collected because people aren't declaring the right amount of sales.

So definitely it's, it's a huge area. I've got a series coming out, whole video series actually my next one and Time to Talk Tax is about this whole structure.

s, Host & The Salon Inspector: 00:43:28

Just get picking up on that because I think as well is one of the things that you need to be careful of is that you know, if you aren't separating out your freelancers money then that's coming. If it comes coming through your till through your bank.

There's a way, there's, you know, you could be a VAT threshold very quickly and if you're trying to, if you're breaking this down, a lot of people break it down so they can avoid the VAT thresholds.

But you've, you know, you've got to seriously understand where that money is coming into and how it's being allocated and what rights people have over that money.

And the only people that are going to get you into a place of safety, from hmrc, who now we were talking when they now are investing in specialized teams to investigators to investigate hidden employment. And it may be worth actually, Maria, to do another one specifically about this because I think it's such a huge subject. I was. I'm gonna.

And maybe what I might do is I might. I might be that I'm going to do one with a HR person as well. But it might be good to see if we can do like a kind of panel.

I'm not sure how that will work on the podcast, but I think it might be quite good because I know I had points when I had hybrid and then I had points where I had all self employed, but I worked very closely with my accountants to make sure that I had everything, all my eyes dotted and my T's crossed.

incoln, The Beauty Accountant: 00:44:45

Yeah.

s, Host & The Salon Inspector: 00:44:45

And that everything was as, as rigidly separated as I could possibly make it whilst trying to have a branded salon. I mean, it was. It's so complicated and that was years ago and now things are moving on and changing.

So, yeah, I think, yeah, maybe we will do another episode all about hidden employment and, and how all of that can impact you because you don't want to, you don't want to be caught.

The problem is just very briefly, isn't it, is that if, you know, firstly, if you get caught doing it, there's going to be fines, but it's also that back ni and all. There's. There is so much that you. Yeah.

incoln, The Beauty Accountant: 00:45:20

And I think once, once HMRC see one thing, they can go back many years and start investigating it even deeper.

s, Host & The Salon Inspector: 00:45:27

And they can actually go back beyond the statutory times, kind of. Because I know my. I know not wishing to scare everybody, but my friends, I had a friend's mum and they went back, I think they went back 20 years.

20 years, something like that. It was a we. I was gobsmacked and I don't think it was.

It was just a very unpleasant situation for her to go through and I don't think it necessarily brought HMRC any extra revenue.

incoln, The Beauty Accountant: 00:45:51

But it's expensive if you're going to have to get an accountant to help you. There are tax, like cover investigation insurance and things like that, but it can cost.

I think it's around five to eight thousand pounds if you get an inquiry.

When you think about hourly rates and accountant having to go through and justify and explain everything and defend you and if it goes to a tribunal as well. Yeah, it's just best not to get.

s, Host & The Salon Inspector: 00:46:15

If you are considering self employed model in any way, make sure you get the appropriate advice because you could be subject to employment law. You could be subject to tax law. Yeah, tax law.

incoln, The Beauty Accountant: 00:46:27

And they're not always the same. So you could go to a HR advisor and they say yeah, this is right. But actually it could be seen as something different in tax law.

So you just have to be really careful with that.

s, Host & The Salon Inspector: 00:46:38

So just quickly one of the things that I, and I've been asking everybody, but I haven't got, I haven't got to talk about it on there yet is your, your favorite quote and your favorite quote that you and I'm asking all of my guests this time. The skills you need to survive will no longer serve you when it's time to thrive.

From Ebony Davies and what is it about that quote that you really like?

incoln, The Beauty Accountant: 00:47:00

And what when I was coming out of the refuge, it was just a quote that really stuck with me because I was trying to rebuild my life. I was using cash flow but I was very much in survival kind of mode. So I wasn't taking opportunities and I guess I was holding back.

And then when I started my own business, I started to recognize that in business as well.

So, you know, if we all look back to lockdown, so we're in survival mode and the way that everyone was kind of, you know, having to navigate that we're many years have passed now and a lot of people are still in that survival mode. And there's, there's other things of money mindset that I do on my coaching side and financial trauma that's at play there.

But there are some people that are still in that survival mode but their profit looks okay.

Their money is coming in, you know, their business has survived and you know, they're growing and they've got more team members and they're getting larger premises. So now you need to get new skills to thrive. It's a completely different skill set that you need to go from survival mode to thrive in.

And I love that quote so much. I just, it's just that reminder like, hey, I know things feel hard right now, but you're doing okay. And this is, you've got permission.

You can go and do this now. Investing that, invest in yourself. And yeah, I love it.

s, Host & The Salon Inspector: 00:48:13

And I, and I think so like you said about the money mindset, things like now, like I qualified recently as a hypnotherapist, so I know I'm like all like properly into like changing people's mindsets.

incoln, The Beauty Accountant: 00:48:21

Yeah.

s, Host & The Salon Inspector: 00:48:21

And I think it is, it's like we have the experience of being scared and having nothing and you know, and Covid put us into a place of, of negativity for so many different things. Whether it's personal, whether it's financial, whether it's relationships, whether it's work.

It changed our outlook on so much and I think a lot of people have got kind of stuck and some of the people I've been working with, like my therapy services has been very much.

They've kind of got stuck and it's created fears and phobias and lack of self belief and there's so many different things it's caused in people that they haven't quite. Their subconscious hasn't recognized that the world's gone back to.

Well, I don't know about normal, but it's gone back to a different, back to a different place. Yeah. And yeah. And I think have. Yeah.

Recognizing that now actually things have changed a little bit and maybe now I need to address how I change things for myself and move forward. And that's a really, really lovely quote that you gave us.

So I know that you have to go and I'm going, I'm being, trying to be good and keeping this podcast more on time. So.

But we, I think we will, we'll come back and do a whole thing all about hidden employment and I don't know if it be this season or maybe next season. But anyway, good luck with your house move because I know that's coming up and, and you can catch Ria.

All of her information will be in the show notes and all of the stuff that she's got coming up. And also Rhea has podcast starting next year. What's it going to be called, Ria?

incoln, The Beauty Accountant: 00:49:44

The Hustle Heart Money podcast.

s, Host & The Salon Inspector: 00:49:47

Wonderful. And is it in. Will it be a like a generic sort of financial podcast or is it going to be tailored towards the salon industry?

Are you branching out a little bit?

incoln, The Beauty Accountant: 00:49:56

It's gonna be.

I haven't thought about the industries but it's going to be very real life money mindset, knowing how to spend your heartbeats well as well as your money and a few life learnings.

So it is going to be business related but just how to start making the most of your money and obviously the heart and hustle that is needed to get there. So maybe some of the things that people aren't really talking about some of those bootstrap stories that I want to hear.

And you know, it's not just about people with those six figure years or whatever. It's like, how are you really affording to show up and what are you sacrificing and how are you making it happen?

s, Host & The Salon Inspector: 00:50:34

And I actually, I saw, I can't think where it was now. I think it, I think it's one of our industry coaches actually.

I saw and he was talking about the amount of debt that he'd been in and, and it really resonated and was just like, oh my God. Because I mean, we've been there.

We at one point, you know, I mean, it's me talking about how, you know, how wonderful I've been with my husband's bookkeeping. But at one point we had revenue on our doorstep looking for 23 grand.

incoln, The Beauty Accountant: 00:50:55

Yeah. And it happens. And so we were on.

s, Host & The Salon Inspector: 00:50:59

It snowballed and we got ourselves into a place that was. We nearly lost our house. It was really, really awful.

And I think when you've had lessons like that and I know you've had challenges in your, your past, we've lot with different things. I think when you've had challenges, whether it's personal, financial, whatever it is, you have to learn from that. And it is.

And that's why that quote so important, isn't it? Is that. That you have to work out what skills you need to not let that happen again.

incoln, The Beauty Accountant: 00:51:22

Yeah.

s, Host & The Salon Inspector: 00:51:23

And to move on and move forward. But anyway, we will leave it for there. Leave it there today and thank you so much for coming on, Ria. It's been lovely chatting to you.

Some of the stuff that Rhea was talking about in there is so, so important. And you know, just the stuff about cash flow, she is the cash flow queen.

And you really, really need to get that in your mind that you need to be looking at how cash flow affects you and your business and your personal life. Because it all, it all kind of flows, doesn't it? Especially when you're like a solopreneur, you know, professional. It really is every.

Everything impacts you so much more when it's just you and the income. When you've got premises and other staff members, it's a completely different ballgame.

But you can detach your personal world from it a little bit more. So just getting your cash flow right is really, really important.

And you know, and also, I mean that little bit that we dropped about the making tax digital that is going to be coming and as we were saying, you know, it's been around for other businesses for a long time and like and higher level businesses that have got a higher income level. But you really, you know, you do need to get your head around the tech and start doing it now.

That's all you need to do is just start preparing and just understanding how it's going to be. And we will.

I am going to come back and I'm just in the process of just trying to find the HR specialist I want to work with on this to go through that hidden employment thing and working with the self employed model because I need to find someone that's used to our industry and how it works. So all that aside, please do catch up with Rhea in the in the show notes. So all of her links and stuff are in there.

So please go over there and have a look. You can book a discovery call with Rhea and just see if she's the accountant for you.

And so she, she does, she understands very much how the industry works and she knows that everyone's budget isn't huge.

So she tries to offer a variety of different ways that you can work with her, whether you have her as a full service accountancy service or whether you use her on an ad hoc basis like she was saying. And you can just book power hours to get some advice and support from her. So don't forget that self assessment is upon us.

It's nearly that time and just make sure you have your eyes dotted and your T's crossed and your money in the right place. So I will see you next time. Bye for now.

The Salon Inspector: 00:53:37

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s, Host & The Salon Inspector: 00:54:28

Great Ones thank you for listening to inspiring salon professionals.

If you've enjoyed the podcast, please do subscribe, leave a review and don't forget, share with your fellow industry professionals and other business owners that you think may enjoy the show. Links and further information can be found on the show Notes or on my website, www.su-davies.com.

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