Self employed hairdresser

[iacabu]

My girlfriend has decided to go self employed and rent a chair within a salon.

As my knowledge is limited, I'm struggling to give her the best advice on whether to set up as a sole trader or a limited company. A few friends with minimal experience recommend ltd but without asking for any details of the business.

Estimated revenue will be £50-70k a year with fixed chair costs of £12480 and other costs of approx £5-7k.

Eventually planning on opening her own salon within 5 years.

We own our own home but don't expect the business to have any debt.

[iacabu]

Thanks for the replies so far.

It is a big variation and due to the fact I haven't asked for her takings over the last 12 months to give anything more specific. I just know that on a bad week she'll do about £700 and a good week £1500. Realistically averaging closer to £1000, so the lower end of the estimation I gave, but she's working hard to build her clientele even further and has recently started taking on hair extensions having just completed another qualification.

I think at this stage, given how new we both are to running a business, sole trader might be the way to go. We just don't want to make a rushed and uninformed decision.

[iacabu]

LaurasOtherHalf said:

Countdown said:

I think LOH’s point is that the Salon is deliberately staying below the VAT threshold by only showing the Chair Rental Income in its turnover figures when in reality it should be showing all the income from each hairdresser. It’s basically a form of disaggregation

Exactly.

Please could you explain this a littler further?
The salon owner's only income is from the chair rentals and a few products, why would they need to declare the income of each self employed Stylist who pay taxes on their takings as an independent business?

But thanks for the input everyone, it was helpful and the decision was made to start as a sole trader.