From what grants are still available to advice about how to get on top of your bookkeeping, Becci Vallis, our Vitality Editor, has been seeking advice for anyone managing their own finances.
Figures are rarely fun and they’re likely to be even more vexing after a break in business. Whether you’ve requested a grant, are still wondering if you’re viable to claim one or are trying to work out if you can keep that extra revenue stream open that you set up to support you while your main source of income was out of bounds, we asked industry expert Susan Routledge and Ria-Jaine, a business accountant specialising in beauty to help weave us through the maths. Read on for an easy to follow and practical pathway to managing your finances more effectively and efficiently…
Where does beauty currently stand with government help?
Ria-Jaine: At the moment there is a wide range of support available for businesses and in particular small businesses as they will be crucial to the recovery of the economy. Full details can be found on gov.uk but I have summarised the latest updates and guidance from the government below
Extension to the Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021.
The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021. For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875. Employers must also continue to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.
CJRS eligibility from May
For periods from 1 May 2021 onwards, employers will be able to claim for eligible employees who were on employers’ PAYE payrolls on 2 March 2021. This means they must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.
Self-Employment Income Support Scheme – future grants confirmed
The Self-Employment Income Support Scheme (SEISS) will continue until September with a fourth and fifth grant. The fourth and fifth grants will take into account submitted 2019-20 tax returns. This means you may be able to claim, even if they were not eligible for previous grants but you must have submitted the 2019-20 tax returns by 2 March 2021 to be eligible for the fourth and fifth grants.
It was reported that there are seven steps to making the claim for SEISS for new businesses that started to trade in 19/20 so it is really important to ensure that business owners are keeping a look out for HMRC correspondence with guidance on next steps (emails, letters and calls) to ensure they don’t miss out on the fourth grant.
Restart Grant available now
Businesses that are eligible and within the personal care sector may be entitled to this one-off cash payment of up to £18,000. The grants are being paid by the local councils and eligibility can be checked here https://www.gov.uk/guidance/check-if-youre-eligible-for-a-coronavirus-restart-grant#eligibility
What is the additional restriction grant and who is feasible?
Ria-Jaine: This being distributed by local authorities and the best place to check for information is your local council as details should be included on their website with eligibility and the application process. Local councils can determine the eligibility criteria but HMRC expect the funding to help those that have been affected including businesses that:
- Do not pay business rates
- Have not received wider grant support
- Are from all sectors that are severely impacted
Businesses that are in administration, insolvent or struck off of company’s house cannot receive this funding.
Is there anywhere else businesses can go for financial help?
Susan Routledge: Anyone experiencing financial hardship can go to either The Hair & Beauty Charity or the newly formed Beauty Backed Trust for assistance. There are also business grants available, some from the government and some from Local Enterprise Networks. The below could also provide some financial relief:
Funding and recovery grants
Grant assistance can include funding towards business, financial and HR consultancy, IT and digital products, to adapt or adopt new technology in order to deliver business activity and diversity etc.
Funding pots can range from 35% upwards to 100% and vary depending on regions. Total spend can be from £1000 and up to £40,000 dependant on the grant. A good place to look is your Local Enterprise Agency - http://lepnetwork.net. I would suggest telephoning your region LEP and ask for their advice. Other places to ask for funding advice would be local authorities, banks, local business network groups, Colleges and Universities with business departments, Chamber of Commerce, accountants.
The Kickstart scheme provides 100% funding to employers to create job placements for 16-to 24-year-olds on Universal credit. You cannot replace an existing employee, but you can take someone as additional help and the government pay the full wage for six months. You are not committed to keep the placement after this. You could take someone for any position including salon assistants, social media or admin help, reception or you may even find a therapist. Go to https://www.gov.uk/government/collections/kickstart-scheme for more information.
Apprenticeship & Traineeship Funding
There is assistance for employing an apprentice and also additional funding can be available. This can be £2000 for apprentices and a further £1000 can be added for traineeship funding
Many people have set up online arms of their business to generate alternative revenue streams, why is important to try and keep hold of these now beauty has re-opened?
Ria-Jaine: Whilst it is important to keep hold of all income streams it is equally important to review customer behaviour now beauty has reopened and to have a strategy for all income streams including the technology, resource and processes to keep the online arms of the business ticking over whilst busy on the shop floor.
It would be worth setting time aside each week or month to review all areas of the business to ensure that things are on track and not being left behind. These additional income streams could bring future success to the business, but they will need to be managed appropriately so it is important to ensure that plans are made to secure the resource and time needed to keep each arm of the business running successfully.
Susan Routledge: The pandemic lockdown has brought the beauty industry into the digital age with online zoom consultations, facials and online events. Some savvy salon owners have really embraced this, with some virtually replacing their salon income with increased retail sales and pre booking. I think this will now form an element of how we do business moving forwards. Clients are now used to buying online and online stores attached to salon websites have been very popular and will continue to be so.
Any good advice to keeping on top of your books?
Ria-Jaine: A business plan, strategy and cash flow is crucial to maintain each part of the business. The best way to keep on top of the books is to tap into the technology that is available such as online bookkeeping software, booking systems and receipt capture tools. Most will integrate which is even more useful and helps to automate the bookkeeping so that the income can be tracked in real time.
There are lots of options available to help with bookkeeping and cash flow planning for businesses and I believe that those that have a robust bookkeeping process with regular review will find it easier to manage the various streams of income. It is also worth reviewing the business structure and different streams of income to ensure that tax and VAT planning is carefully considered.
It is good practice to have a separate business bank account for the business, and also a requirement for Limited companies. If not already done so it may be worth setting up a separate business bank account and there are many new challenger banks that offer business bank accounts that can be set up quickly and easily via a mobile app.
Susan Routledge: I love the Profit First Book-Keeping process based on a book by Mike Michalowicz. It embraces breaking down your income into different categories which is perfect if you have different streams of income. The process also encourages you to be paid first and not last from your business. Lots of banks are aware of this process and they will allow you to have separate elements to your accounts so that you can analyse your business breakdown figures. New banks such as Starling allow free banking around this process.
Most beauty businesses will have lost money over the past year, how can they claw back costs in the salon?
Ria-Jaine: This will be unique to every business but essentially cash flow planning and review will be needed to map out the recovery for the business. A strategy for pricing policies, marketing and staff utilisation should also be reviewed and while an evaluation of all the outgoings may have already been completed at the start of the pandemic continuing with this regular review of the business outgoings allows you to spot opportunities to cut costs.
In addition to the above, directors of limited companies may need to review their own pay structure if the business has diminished reserves which will impact the level of dividends that can be paid from the business. This will have a direct impact on future profits and personal income tax levels if directors are relying on salary or the directors loan account for their own income from a limited company.
The government have announced super deductions that will offer some help by way of a new 130% first-year capital allowance for qualifying business spend enabling business owners to cut their tax bill by up to 25p for every £1 they invest.
There is also an extension to carry back trade losses against profits of previous years. For accounting periods ending between 1 April 2020 and 31 March 2022, this will be extended to three years. For more guidance on this it is best to check with a professional accountant that will be able to offer guidance on this.
Susan Routledge: Implementing long term booking frees up time at the till for retailing, introducing payment plans, setting targets, incentives for your team and clients. Being aware that most clients actually have more money to spend as they haven't been out spending on entertaining, clothing, fuel, holidays etc think about introducing clients to new treatments and products. This is the perfect time to improve your business model and to eliminate anything unprofitable in the business and focusing on higher profit treatments.
Would you recommend any good apps or sites that help with money management?
Ria-Jaine: Going digital will save business owners lots of time and allow them to have data in real time to manage the finances and plan for recovery. For bookkeeping you have apps such as Quickbooks, Xero, Freeagent, Wave. For receipt capture there is DEXT, autoentry or the receipt capture tool within bookkeeping apps. For cash flow it is worth checking out apps such as floatapp and fluidly.
There are so many offerings out there and demos available so have a look to see what works best for you and your business. Whatever method you choose be it paper based, spreadsheet or an online app it is important to make bookkeeping a regular admin task for the business to stay in control of the finances.
Susan Routledge: It is a great time to learn as much as possible about your figures on your salon software and to maximise online account software. Receipt bank is amazing as you simply take a photo of an invoice and it stores and uploads it so that you don’t have to keep the paper version. I also get tips from The Financial Growth Academy website where there’s lots of free content.
If you had one tip to help people keep their accounts in order, what would it be?
Ria-Jaine: Streamline the bookkeeping process as soon as possible by using the technology that is available. Gone are the days when you had to sit going through piles of receipts and paperwork. By getting the bookkeeping online, business owners will be able to get their Sunday afternoons and evenings back. There are even apps that will track mileage for mobile therapists which will help them to track the tax relief that is available for the business journeys.
Booking software is also a game changer for beauty businesses allowing customers to book services with ease and this will help to keep an eye on expected sales to further manage cash flow. Getting these processes set out will help business owners manage the finances, plan for tax and help to collate the information needed for quick and easy review or filing to HMRC to stay compliant.
Susan Routledge: Be Consistent. Set a weekly date where you look at and update your figures. Keep your business outgoings lean. Only spend on necessities. Have a financial plan ahead.
For specific advice on your own situation, always speak to a professional. As well as a BABTAC Board Member Susan Routledge is also an Award Winning Salon Owner, and Beauty Business Consultant, www.susanroutledge.com. If you’re interested in a Skype consultation or online workshop with Ria-Jaine MAAT visit riajaineaccounts.co.uk.