This Business and Moment...

[LiE]

Our business has just tipped over the VAT threshold so we are now on the hook for that. It's taken 18 months to get there from opening and I knew it was coming. It's going to hurt in the short term because it's a hair salon, meaning it's majority services and little buying products. We've opted for the flat rate for a hairdressers which is 13% vs 20% non-flat rate, but we cannot claim back any VAT (there are certain things you can claim for but we don't have any of these realistically).

What this mean is that every sale we now do we take a 13% hit, we cannot bump the prices either since our prices are where they need to be. We just need to grow past the additional VAT hit.

We are growing quickly now, last month we hit the £85,000 VAT threshold due to our strong growth in the last few months. Hopefully we should see closer to £120,000 in the next 12 months. We have a healthy bank balance because I've been very conservative with taking out money, so even if we make some small looses each month we are good.

Still, can't help feel a little nerves going into this uncharted water.

 

[Maccy]

@LiE it's tough but you might just have to put your prices up to cater for it.

And surely as a hair salon you go through products which have VAT on, so could claim back all VAT on purchases? I'd consider discussing it with the accountant unless you def think the flat rate is going to outweigh non-flat?

 

[LiE]

@LiE it's tough but you might just have to put your prices up to cater for it.

That's the thing, a particular service in the area is a known price. Other salons are able to offer a cut and finish for £42 while paying VAT so must we.

And surely as a hair salon you go through products which have VAT on, so could claim back all VAT on purchases? I'd consider discussing it with the accountant unless you def think the flat rate is going to outweigh non-flat?

We do have things that have VAT but not nearly enough to justify the additional 7%. Very little VAT on energy (5%), there's no VAT on our rent and we spend at most £1000 on materials per month.

I've done the maths and it doesn't make sense to take a 20% hit.

 

[Freefaller]

I love pet friendly offices. Most of the places I've worked have been. After a while it becomes normal, and it's good to take a break from the office to go for a walk etc..

 

[dowie]

Our business has just tipped over the VAT threshold so we are now on the hook for that. It's taken 18 months to get there from opening and I knew it was coming. It's going to hurt in the short term because it's a hair salon, meaning it's majority services and little buying products. We've opted for the flat rate for a hairdressers which is 13% vs 20% non-flat rate, but we cannot claim back any VAT (there are certain things you can claim for but we don't have any of these realistically).

Is there any way of splitting this up a bit, like don't some hairdressers work on a self-employed basis and rent a chair from a salon? In theory, perhaps you could do this for yourself?

So if say you (and/or a partner?) are hairdressers working at the business can you have the salon (and maybe some other employees) under one ltd company and then your hairdressing services (and partners if applicable) as separate ltd companies or sole traders whereby you pay rent to the salon ltd and report your pnl of sales minus that rent?

That way you can basically split your turnover two or three ways and perhaps stay under the threshold for a bit?

 

[ivrytwr3]

Our business has just tipped over the VAT threshold so we are now on the hook for that. It's taken 18 months to get there from opening and I knew it was coming. It's going to hurt in the short term because it's a hair salon, meaning it's majority services and little buying products. We've opted for the flat rate for a hairdressers which is 13% vs 20% non-flat rate, but we cannot claim back any VAT (there are certain things you can claim for but we don't have any of these realistically).

What this mean is that every sale we now do we take a 13% hit, we cannot bump the prices either since our prices are where they need to be. We just need to grow past the additional VAT hit.

We are growing quickly now, last month we hit the £85,000 VAT threshold due to our strong growth in the last few months. Hopefully we should see closer to £120,000 in the next 12 months. We have a healthy bank balance because I've been very conservative with taking out money, so even if we make some small looses each month we are good.

Still, can't help feel a little nerves going into this uncharted water.

With those figures, you do have a good accountant don't you? A good accountant will guide you and although initially costly, will no doubt save you £££'s in the long run.

 

[LiE]

Is there any way of splitting this up a bit, like don't some hairdressers work on a self-employed basis and rent a chair from a salon? In theory, perhaps you could do this for yourself?

So if say you (and/or a partner?) are hairdressers working at the business can you have the salon (and maybe some other employees) under one ltd company and then your hairdressing services (and partners if applicable) as separate ltd companies or sole traders whereby you pay rent to the salon ltd and report your pnl of sales minus that rent?

That way you can basically split your turnover two or three ways and perhaps stay under the threshold for a bit?

Government closed the self-employed/rent a chair loop hole for salons many years ago. You cannot create multiple companies from the same company to stay under the threshold unfortunately, that's also checked by the government.

Statement of Practice 4 (1983)

www.gov.uk

With those figures, you do have a good accountant don't you? A good accountant will guide you and although initially costly, will no doubt save you £££'s in the long run.

Yea I have an accountant, but me being me, I like to know the numbers.

 

[HangTime]

So for example HangTime your hypothetical situation should never have been possible unless you a) entered into that situation knowing what you were letting yourself in for or b) the company suddenly one day said "DOGS R OK FROM 2DAY".

b) nearly did happen in my last workplace, they were planning an office move and dogs were on the agenda for the new office (not in old office which had a communal shared space with another company). I quit before the move so it became a moot point, I'd probably only go in the office a couple of times a month and I'd probably just deal with it now anyway,

 

[MichaelAwkward]

Our business has just tipped over the VAT threshold so we are now on the hook for that. It's taken 18 months to get there from opening and I knew it was coming. It's going to hurt in the short term because it's a hair salon, meaning it's majority services and little buying products. We've opted for the flat rate for a hairdressers which is 13% vs 20% non-flat rate, but we cannot claim back any VAT (there are certain things you can claim for but we don't have any of these realistically).

What this mean is that every sale we now do we take a 13% hit, we cannot bump the prices either since our prices are where they need to be. We just need to grow past the additional VAT hit.

We are growing quickly now, last month we hit the £85,000 VAT threshold due to our strong growth in the last few months. Hopefully we should see closer to £120,000 in the next 12 months. We have a healthy bank balance because I've been very conservative with taking out money, so even if we make some small looses each month we are good.

Still, can't help feel a little nerves going into this uncharted water.

Definitely worth getting professional advice on this. The ideal situation for using the flat rate scheme is to charge your customers as if you're not on it (i.e. 20%) as you then keep the difference. The benefit is to you vs standard VAT administration is it's far simpler.

Depending on your longer term plans it may be better to structure your pricing as if you're fully VAT registered now rather than having to hike your prices again in a couple years time, as the threshold for leaving the scheme is £230k turnover.

 

[Orangeade]

So talk has been had. And yes I'm seizing this with both hands. Even chatting to them I got a really good vibe. The package is substantial, always a little bit distasteful to talk about, salary, but let's just say I'll be paying 206k+ tax where I live in the centre of a well known swiss german speaking city. Moving to a nearby Catholic Kanton it drops down to 123k tax.... But the range of benefits is very luxurious and really gives the sense of retention. Talking to the CPO they were quite open about their expectations of long tenure which I was happy to agree with him on.

They would preferably (Subject to the usual) like to start by December so I can get involved with Christmas party to help get to know people quickly (I'm guessing they've heard of my penchant for partying haha). This is going to be difficult as would have to get old company to let me go early. **** it the bridge can go burn.




Good advice it's a cut throat industry I've had to let people go before when times are tough so I would expect my own company to do the same if it came to it ....



I think that's a fair shout shouldn't be the norm but life does happen.

I would expect them to volunteer an extra day without prompt though....unless they are very easy going and your time is usually your own anyway.



I cant see that going well to be honest, the modern world doesn't support it anymore.

Well it's done! As usual a bit of drama as several things were not ready by the end of the month and I know it was important they got me signed on without losing another month (notice only valid from end of month).

So I decided to be flexible for them and take the risk of quitting as I would have got the contract til Friday. They were very appreciative of it as I know 99% of people would have done so. Contract is now all signed sealed and delivered.

Current work hasn't taken it well. I was as gentle as possible but they didn't just accept and want to engage in counter negotiation this week which is frustrating as they're just going to get frustrated with the same answer.....

And man did they push to know the name of the company. Thankfully my poker face as strong enough.

So yeah going to be an interesting week and notice period....

But worth it, I'm pretty content and it's been a while since I said that.

 

[jon86]

Contract is now all signed sealed and delivered.

Congratulations!

Current work hasn't taken it well. I was as gentle as possible but they didn't just accept and want to engage in counter negotiation this week which is frustrating as they're just going to get frustrated with the same answer.....

And man did they push to know the name of the company. Thankfully my poker face as strong enough.

Good job on not cracking. It's none of their business quite frankly.

If they call you into a meaningless counteroffer situation during the notice period, I'd just say something like, "I appreciate the desire to have this conversation but my mind is made up on this. I have greatly appreciated the opportunity to work here and it's now time for me to move on." If they ask you to name a number to stay and you want to not burn any bridges, stay diplomatic and repeat what I said above. If they insist on you giving a number, I'd give them a number that's 3x your new total compensation. If your new TC is 500K CHF per year, say, 1.5 million CHF per year, all cash. It'd be a large enough number that will normally shutdown the conversation, but if they're crazy enough to offer it, well, maybe it would be enough to stay.

 

[Orangeade]

Thanks for the advice, I'm going to say I see the clear route to c-suite in this new role with total comp unmatchable and with different lifestyle. My current shop is hard edged and they won't (can't) compromise that for anything and I think that will sway them. Not that they need to be swayed but it's a small world out there..

 

[jon86]

Thanks for the advice, I'm going to say I see the clear route to c-suite in this new role with total comp unmatchable and with different lifestyle. My current shop is hard edged and they won't (can't) compromise that for anything and I think that will sway them. Not that they need to be swayed but it's a small world out there..

Your approach sounds much better than mine! It's always much easier to have that conversation if you have a reason that they simply can't or won't match/achieve.

 

[NickK]

So I've been talking around the organisation. Seems I'm not the only one that has issues with the executive leadership and the fact that business, finance and technology have three completely divergent directions without a strategy, without finance aligned to the strategic picture and without tactical steps to get there. Couple the lack of culture, malaise that exists (just like public sector).. With the reshuffle expected later this month, I've started looking elsewhere because I have a feeling that not being privy to the structure is a warning sign.

I know my out going boss apologised for hiring me into the organisation due to the absolute **** show, now I can see the true horror. It is an abhorrent organisation in it's current guise.

 

[jon86]

I know my out going boss apologised for hiring me into the organisation due to the absolute **** show,

I can just imagine the conversation that you had with your boss:

"Hey NickK, I know that I hired you with these grand promises and visionary stories... it turns out that that was all just one big lie. I'm actually leaving myself because this company is [expletive]. Thanks for all the fish and good luck."

 

[NickK]

I can just imagine the conversation that you had with your boss:

"Hey NickK, I know that I hired you with these grand promises and visionary stories... it turns out that that was all just one big lie. I'm actually leaving myself because this company is [expletive]. Thanks for all the fish and good luck."

That was pretty much it.. followed by his invoices arriving on my desk.

 

[Freefaller]

Holy ****... I've come back from hols, and the leadership team have gone bat **** crazy. The micromanagement has gone through the roof!! Fortunately I've told my team to seek forgiveness not permission as they're professional enough to know what to do.

But they're clamping down on EVERYTHING - and clipped a lot of delegated authority, even at HoD level! Even for industry events now, that free, they want it to be run past someone from the SLT... what a waste of time!

 

[Azza]

GHoly ****... I've come back from hols, and the leadership team have gone bat **** crazy. The micromanagement has gone through the roof!! Fortunately I've told my team to seek forgiveness not permission as they're professional enough to know what to do.

But they're clamping down on EVERYTHING - and clipped a lot of delegated authority, even at HoD level! Even for industry events now, that free, they want it to be run past someone from the SLT... what a waste of time!

That's the CEO taking revenge after your not so bursty outburst.

 

[Freefaller]

That's the CEO taking revenge after your not so bursty outburst.

You know what? Quite possibly!

That said it's not just my team/department, everyone. I did actually say "it's probably my fault...."

 

[Lopéz]

Holy ****... I've come back from hols, and the leadership team have gone bat **** crazy. The micromanagement has gone through the roof!! Fortunately I've told my team to seek forgiveness not permission as they're professional enough to know what to do.

But they're clamping down on EVERYTHING - and clipped a lot of delegated authority, even at HoD level! Even for industry events now, that free, they want it to be run past someone from the SLT... what a waste of time!

I really dislike sudden knee-jerk changes like this where it's like everyone loses the plot in some weird groupthink manner and suddenly shift their behaviour. When you have been away for a week or two and come back to that it must be really jarring.