Are you thinking about going freelance? Does being your own boss sound appealing? However great this might sound, there are certain legal and business arrangements that you will need to take into consideration before choosing to be a self-employed hairstylist.
Here are some things you need to know, before going freelance.
Still not sure about making the leap? Here's everyhing you should ask yourself, before going freelance.
Watertight contract
If you choose to be a chair renter, you must have a legally watertight contract in place between you and the salon owner which describes in detail how your agreement will work.
This should include how much you will pay the salon and exactly what you will get in return. This will help to prevent disputes and expensive legal action in the future. Make sure both you and the salon owner sign the agreement, otherwise it won’t be valid.
Tax and business accounts
You will be responsible for keeping your own business accounts, declaring your earnings and paying your taxes. If you don’t pay on time you will be fined by HMRC. You must also set your own prices and have your own price list.
It’s simple: register yourself as self-employed with HMRC using their online portal. The process is fairly quick, but it will require certain key information. This includes:
- Full name
- Date of birth
- Address
- National Insurance number
- Self-employment start date
- Nature of work
HMRC will then send a confirmation of your registration and will provide you with your Unique Taxpayer Reference (UTR) number. This will come via post, and can take up to 14 days to arrive. Be aware of this timescale, particularly if approaching your Self Assessment tax return filing deadline (if you’re registering later than 20 December, for example). If you do not have your UTR number to hand, it may result in you missing the tax return filing date of 31 January and having to pay a penalty.
In addition, your UTR will now be included on any correspondence you receive from HMRC and will be requested should you seek any telephone or online support. Keep your UTR number safe!
If you’re self-employed and earning more than £1,000, you will need to file a Self Assessment tax return. You won’t pay any Income Tax until you earn over your Personal Allowance, the current standard Personal Allowance is £12,570.
Pension Arrangements
You won’t qualify for a work-based pension and the State Pension will not provide enough for a comfortable retirement. Also – remember that the State Pension age is rising. As a self-employed person you will have to make your own pension arrangements.
Sick Pay
You will not be entitled to Statutory Sick Pay so you may need to take out an income protection policy in case you are ill and unable to work. This type of policy can be expensive. You’ll also need insurance to cover your work equipment and belongings, plus public liability insurance in case one of your clients is injured or has their property damaged.
Here's what you need to know about insurance as a freelance hairdresser.
Annual Leave
Being self-employed means you can take time off whenever you want. But the downside is that you won’t be entitled to paid annual leave. You’ll need to plan your finances carefully to cover periods of time when you won’t have an income from your business.
Buying Your Own Equipment
If you're working in a salon or co-working space, you might have access to supplies – this should be outlined in your contract.
You'll likely need to think about...
- Brushes – A wide range of small and large barrel brushes, a paddle brush, a vent brush and a comb for sectioning and styling. You can check out our first kit guide here.
- Hairdryer – Ensure you're getting a professional hairdryer so that it lives up to the test of being used day in, day out.
- Scissors
- Shampoo – It's good to get enough of a range to cater to differnet hair types and needs. Distributors such as Salon Supplies, Sally Beauty and Chris & Sons all cater to freelancers, but there might be a minimum order requirement.
- Straighteners and Curlers
- Towels – Spend more on the towels to ensure they’re comfortable. Be sure to have a number of them for each appointment as well, as most clients will use two.
Fortunately, the cost of these items can be used to reduce your self-employed tax bill. And did you know that trade magazines are recognised as a legitimate business expense? Hint, hint!