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Hairdressers - chair renting

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  • # 122185

Does anyone have any experience with this, my hairdresser has an accountant who said he cannot rent a chair from his own salon.    He owns the salon with another hairdresser and this is under a limited company, they are directors 50/50.    

Currently they draw a fixed salary per month, but due to differing workloads and time spent in the salon, they feel its unfair to take the same salary every month if they're not putting the hours in, so to speak.  

He thought that if him and his partner continue with the limited company as normal, then instead of taking a salary out of the company, they also set up as sole traders and rent chairs off their own company, that way they will only be paid for the work they are doing etc. through their sole trader earnings.  Obviously at the year end if there are reasonable profits which are surplus in the limited company they could take dividends.

Does anyone know if this is possible, I can't see any issue with it?

I said I'd ask if anyone could help.

thanks

Sam

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  • # 122191

Swarmedax said:

Does anyone have any experience with this, my hairdresser has an accountant who said he cannot rent a chair from his own salon.    He owns the salon with another hairdresser and this is under a limited company, they are directors 50/50.    

Currently they draw a fixed salary per month, but due to differing workloads and time spent in the salon, they feel its unfair to take the same salary every month if they're not putting the hours in, so to speak.  

He thought that if him and his partner continue with the limited company as normal, then instead of taking a salary out of the company, they also set up as sole traders and rent chairs off their own company, that way they will only be paid for the work they are doing etc. through their sole trader earnings.  Obviously at the year end if there are reasonable profits which are surplus in the limited company they could take dividends.

Does anyone know if this is possible, I can't see any issue with it?

I said I'd ask if anyone could help.

thanks

Sam

Hi Sam
I thought this was a really interesting topic so I did a bit of "Googling" as I have no experience of this myself!
I found this almost identical scenerio on accounting web from many years ago which may/may not be useful ? 
https://www.accountingweb.co.uk/any-answers/director-and-sole-trader-in-same-business

Karen

 

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  • # 122192

Thanks Karen, I had googled it myself but unfortunately didn't get this pop up.

I've forwarded to him so he can speak to his accountant, he's no longer VAT registered so it seems like it would be easier for him to do anyway.

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