As a self-employed hairdresser, staying on top of your tax responsibilities is crucial to ensure you’re not only compliant but also saving money where possible. However, navigating the world of taxes can be tricky, and many self-employed professionals fall into some common traps. In this post, we’ll cover the most frequent tax mistakes hairdressers make and how to avoid them.

1. 1. Not Keeping Accurate Records

      One of the biggest mistakes hairdressers make is failing to keep detailed and accurate records of income and expenses. Not tracking every penny can lead to costly errors during tax time. Make it a habit to record all your earnings, whether in cash or through card payments, and keep receipts for every expense related to your business. This can include tools, products, marketing, and even travel costs. The more accurate your records, the easier it will be to file your tax return and claim allowable expenses.

      Tip: Use accounting software or a simple spreadsheet to keep track of everything.

   2. Failing to Set Aside Money for Taxes

      Many self-employed hairdressers make the mistake of spending all of their earnings without setting aside money for taxes. It's important to remember that, as a self-employed individual, you're responsible for paying both income tax and National Insurance contributions. If you don’t set aside money throughout the year, you could be hit with a large tax bill that’s difficult to pay.

      Tip: Aim to set aside 20-30% of your income for taxes. Consider opening a separate savings account to keep this money out of reach until you’re ready to pay.

   3. Not Understanding What Expenses You Can Claim

      It’s easy to miss out on tax savings by not claiming all the expenses you're entitled to. Hairdressers can claim for a wide range of business expenses such as:

      • Salon products and supplies
      • Equipment and tools (scissors, blow dryers, etc.)
      • Travel expenses for client visits
      • Insurance and advertising costs
      • Continuing education (courses, seminars, etc.)

      Tip: Keep detailed receipts and records of all business-related purchases, and always check with a tax professional if you’re unsure whether something qualifies as an expense.

   4. Missing Tax Deadlines

      The UK tax system has strict deadlines, and failing to meet them can result in fines and interest charges. Many hairdressers miss the deadline for submitting their tax returns or paying their tax bills. This can lead to unnecessary penalties and stress.

      Tip: Mark key tax deadlines in your calendar (like 31st January for online self-assessment) and aim to file early to avoid last-minute pressure.

   5. Not Registering for Self-Assessment on Time

      Another common mistake is not registering for self-assessment with HMRC early enough. You must register by 5th October of your business's second tax year in the UK. If you delay, you risk penalties and complications when it comes to filing your tax return.

      Tip: If you're unsure about your registration status, check with HMRC as soon as possible to avoid missing the deadline.

   6. Underestimating the Importance of a Separate Business Bank Account

      Many hairdressers make the mistake of mixing their business and personal finances. This can make it difficult to track income and expenses, leading to confusion when filing your tax return.

      Tip: Open a separate business bank account to keep your personal and business finances separate. This will make your financial records much cleaner and simplify tax reporting.

   7. Not Seeking Professional Help

      Tax matters can be complex, especially when you’re self-employed. If you’re unsure about what you’re entitled to claim or how to file your return correctly, it’s worth seeking professional advice from an accountant.

      Tip: If your tax situation is complicated or you’re just getting started, consider hiring an accountant who specialises in self-employed tax returns.

Avoiding these common tax mistakes can help you stay on top of your finances, keep your business running smoothly, and save money in the long run. By keeping accurate records, setting aside money for taxes, and seeking professional advice when necessary, you’ll be in a much better position to file your taxes correctly and avoid unnecessary stress.