Katie Godfrey is the beauty entrepreneur behind numerous successful businesses, including her own beauty salon, so knows first-hand what it’s like to be running a salon on the high street. As one of our go-to Salon Gold business mentors and an in-demand beauty boss coach, she’s the perfect person to tackle your VAT fears…
I hear from salon owners daily about VAT, mostly because of the panic they feel when they get near the threshold. The good news is, if you’re not currently VAT registered, the threshold has now been increased to £90,000. But when you hit this amount, you must go VAT registered.
I remember when I first hit the VAT threshold many years ago and I FREAKED OUT! So, I get it. I thought “I’m going to go under, there is no way we could cope with giving this money away, no one is going to pay my prices.” All these thoughts and worries entered my mind.
As salon owners, we’ve got a ton of expenses to deal with—rent, bills, staff wages, and more. So, when you start getting close to that VAT threshold and realise you might have to give up 20% of your takings to the taxman, it’s easy to freak out.
But here’s the thing, once you start getting close to £90k in a 12-month period, you have to register for VAT. Some people will tell you to avoid hitting that threshold like the plague. But why? Why not see it as a sign that your salon/clinic is doing pretty darn well? And if you’re already close to hitting £90,000, that’s awesome! It means you’re on the right track, so why not aim to grow even more? I personally wouldn’t stunt your growth.
All my companies are VAT registered and I make it my goal to hit this mark within the first year of getting a business up and running. Ask yourself – do you want to stand still, or do you want to keep growing?
My biggest advice so it’s not as scary is:
Plan Your Finances
Make sure you’ve got a clear picture of your salon’s finances. Budgeting is key to ensure you can cover your expenses even with VAT. You will need to put your current prices up.
Get Marketing Savvy
Have a solid marketing plan in place to attract more clients and increase your revenue. More clients mean more income to offset the VAT.
Check Your Numbers
Keep an eye on your sales figures throughout the year. Once you start approaching the VAT threshold (£90,000), it’s time to consider registration.
Don’t Panic
VAT registration might seem scary, but it’s a sign that your business is growing. Take it as a positive step forward.
Seek Advice
If you’re unsure about VAT or need help with the process, don’t hesitate to reach out to your accountant. They are there to help you with this. Make sure you have a great accountant and build a relationship with them.
Remember, VAT registration can be a game-changer for your salon, so embrace it with confidence!
If anyone has questions or worries, feel free to drop me a message!
www.instagram.com/kg_katiegodfrey
Listen to my podcast “The Life Of KG” On any podcast station for free advice.
