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On this episode of The Truth about Massage Therapy Podcast, Krzys interview Louise Herrington 

BHP023 – Accounting and Tax advise for massage therapists. 

Louise obtained a Business Studies & Accounting honours degree and went on to train as a Chartered Accountant with Price Waterhouse – one of the top three Accounting practices in the world. Her passion was always music & singing, so she studied voice privately for a couple of years.The English National Opera started a training course called “The Knack”, and she was one of the first students taking this year long training in 1995/1996.

Performance Accountancy is a combination of both professional worlds. The business offers accounting & taxation services to Musicians, Actors, Singers, Dancers, VoiceOver artists as well as other performers, people in the arts, media & entertainment arena, and also the creative industry that surrounds them all. As Louise still performs, she has in-depth knowledge of the frustrations of trying to be creative & perform, alongside the administration nightmare that people face in deal with finance & tax.

Given the open approach to the performers, Louise then started to attract other sectors most of which being alternative healthcare and has a small brigade of psychotherapists, podiatrists, herbalist, massage therapists along with osteopaths and physiotherapists.

The image of a boring accountant is far from what Performance Accountancy represents.

Louise is a finalist for a Practice Excellence (accounting) award for specialist teams and her understanding of her clients.

Favourite Quote:

Shit happens

Tag a Guest Game:

Damian Mark Smith

Links mentioned in this episode:

www.performanceaccountancy.co.uk/what-we-do/alternative-holistic-therapists/

www.facebook.com/groups/PerformersTax/ 

 

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Transcription 

 

 

 

  • K:  welcome Luise and thank you for joining me here at the busyhive broadcast

 

  • L: thank you for inviting me Kris here at the busy hive we like that start every show with our guest favourite quotes you know it’s our way to get everyone motivated and excited for the rest of the show and find out a bit more about can you tell us what’s your favourite called and why? I hope you don’t mind the language but my favourite quote is s*** happens because in life it does happen things don’t necessarily go according to your plan and you know it’s like get over it live with run with it you never know that poop that just happened may help you in the future

 

  • K: How do you apply this in your life and your work?

 

  • L: Try not to get too stressed when things don’t quite go right you know you may think you have full control think you might have got everything sorted everything you needed for the week’s ahead and then something happens that throw you off balance in this case try not to get rolled by it and try not to let those mind monkeys get to you that’s how you look at it

 

  • K: Thank you for sharing that so here at busyhive we really focus on the beginning of our journey is because we can learn a lot from them so can you tell us how did you get started and how did you get to the point where are you today?

 

  • L: This is a long question had that get started depends on how far back you want to go how do I get started depends on how far back you want to go but I always loved music and wanted to be musician but my parents told me music is not a career get yourself a career so I end up going to university and studying business studies and then I moved into accounting practice and tried as an accountant and then moving forward was a case of trying to combine singing and accounting this wasn’t working big time and in 2009 I was out of contract this time and I thought oh I don’t know what I’m going to do it’s 2009 I will wait till 2010 to get a new job and 2010 came and there was nothing going on 2011 came and there was nothing coming on working as a Singer wasn’t actually paying the bills and I said there with £57 left in my bank account thinking what am I going to do! And in the case of trying such of the account that’s why I went to accounting practice so that’s exactly what I did is in 2012 I set out as an accountant who do I know?? I haven’t done this in years what am I going to do and literally I started from the scratch I’m trying sell myself really that’s really how I started I need to keep the roof of my head I need to pay the mortgage and that’s how I started the business

 

  • K: Thank you you mentioned you wanted combined singing and accounting did you manage?

 

  • L: I am doing it at the moment and years ago I feel going back to the last century before you were born Chris I trained as an opera singer at the English National Opera but you earn much more money as an accountant than you do as opera singer so my current business one of my main features is giving I am a singer I tend to do a lot of accounting work for musicians singers and actors so I have a lot of creative clients so yes I kind of combine my love for the theatre and my clients work but I still want to work as a singer

 

 

  • K: but I think that’s really good to to find a job what you enjoy because you know it you understand it and you know how but you know what people are going through but they were working how they working how get paid and you know how to help them.

 

  • L: can have understand what keeps them frustrated when it comes to accounts creativity and people like that people with creative Minds really don’t necessarily get the grips with admin and tax and accounts and how do I run my life business work where is my money coming from and all the boob I’ve got what am I going to do you tend to think why is my brain actually doesn’t split quite nicely between I can be I can creative and still sing and perform and yet I still can’t get the business side of the business

 

  • K: So do you send the numbers back to them?

 

  • L: No I would like that because I do feel typical singer so taking some notes down the phone line is bubbly not appropriate thing so please don’t ask me to sing

 

  • K: That’s alright we won’t. You started your business ok in 2012 so can you share with us one of the challenges in your business and how did you overcome it

 

  • L: As a new business the first challenge is nobody knows you you have no business relationships out there so years and years in case of what do I do how do I network how do I get car to begin with and if you don’t know if you people who are happy to run the risk on you you’re not going anywhere now I do spend quite a lot of money on networking just trying to get my name out there without necessarily having a proof to show people I can do what I do

 

  • K: What do you mean networking out there?

 

  • L: Well networking things like not necessarily go into accounting meetings but going to business meetings

 

  • K: Networking events

 

  • L: Yes networking events you know things like I don’t know ? Things like that so the case of being there and trying to build a business contacts but if you know business is all about relationship

 

  • K: Of course

 

  • L: So you have to have some kind of relationship before anyone going to do anything with you and you turned out to be a lot checker then else to begin with ( laughing )

 

  • K: And I think there is saying to get actually Close they have to see you hear you and they have to hear about you from someone else there’s a few other things yeah till they actually they are going to you know get to you as client they have to get a few ideas about yourself.

 

  • L : word of mouth and a lot of business and the way it’s built to begin with

 

  • K: and still is after you know I think for you and Even for myself and my business still the best advertisement you know the word of mouth
  • L: yeah it’s like content you know I can put content in my website and it’s freely available for people to look at listen to video blogs is one of the ways they get to me and they get contain to know what they should be doing they always can come back and ask questions maybe make it an appointment to see me etc it’s all about the relationship and what content you should give away

 

  • K: thank you you really shared land with us today I really appreciate that so now we have reached my favourite part of the sure we enter the part where we choose the topic conversation which related close to the work of Our Guest so we are going to start with few questions and get some amazing insights from you how does that sound?

 

  • L: sounds fine if I can help

 

  • K: so we’re going to talk about the word accounts taxes tax returns and other words

 

  • L: you can tell I’m excited

 

  • K: I can see that ha ha ha so Louise loss of therapists as you already mentioned you know we are people who have a holistic view you know we want to help people we want to heal people we are not really good with business accounts and that’s why we always are looking for advice so lots of therapists would like to know how much people can you claim back on hit lights cancelled tax laundry or any other items you know tax relief can you tell us more about that?

 

  • L: so let’s look at laundry to begin with let’s say you’re a massage therapist wears a uniform and it’s uniform with logo but on it so therefore that would be allowable advertising because the logo would be advertising your services so if we said that as a uniform you can claim for laundering that uniform now it might be very strange for therapists to have dry clean uniform but you could claim for that to be dry cleaned or you could claim what your cleaning costs like the top of Aerial just about the cleaning process throw about uniform and washing machines

 

  • K: so in the laundering is it just the washing product how about electricity water?

 

  • L: now going on that I’m going to make an assumption that therapists work from home there is a room at home where that therapists work in that’s what a lot of my therapists clients do they have the set-up Exeter etc do not make it a dedicated room always make sure there is something else in there that could be used as a dining room or could be used as a bedroom there is standard relief ? Allows you to have and that is if you work more than 101 hours a month at home in your business you can claim £26 a month that will cover heat light council tax mortgage etc so that means that it covers running your business from home but £26 a month is pretty poopy you know doesn’t cover anything

 

  • K: I will always say it’s something

 

  • L: yeah it is something you can claim for that £26 a month if you work over 101 hours a month without any questions asked you know but doesn’t an alternative method if you work at home less than 24 hours a month you get nothing there is a sliding scale between 25 hours and 101 so you can do the actual cost method and you have to be a little bit organised the work of accounts in the work accounts and money but you can end up the actual cost of running your home so that will be your mortgage interest or your rent your council tax electricity gas not water your whole insurance if you everclean what comes in and cleaning includes the therapy room the cleaning cost to end up all the cost of running your home and you go I live in an expensive home you then divide by the number of rooms you have in your home so that is your reception rooms and your bedrooms ignore kitchen and bathrooms so let’s say you have 5 rooms you divide the total cost ÷ 5 gives you the cost per room alright from the cost per room you then do ? Of how many hours you work from home using that room after the total available hours and that will give you a push and then you can allocate to be your home and in cost how you work out of hours is dependent on you so you could say you see clients 3 days a week 6 hours so that’s 18 I can do that after the 40 week so 18/40 gives you an allocation for your total cost of running the home so let’s just say my home cost me £12,000 a year divided by 5 rooms is me the cost of £2,400 ÷ 52 that’s 52 weeks a year ÷ 40 hours a week so £276 per week you can allocate the cost of your running your house as your business then you go that’s a really nice short answer

 

  • K: that’s a very short answer definitely I lost you in the first sentence

 

  • L: so if i be a case of you listen to a sentence write it down and listen to the next sentence and write it down you might be pausing this broadcast for a while
  • -K: you know that’s the idea This broadcast is recorded so you can just you know come back to it as many times as you can just because there is really important stuff in here

 

  • L: so you get the easy method which a lot of people do because they really can’t work out what their cost are oh you have the actual cost method running your home

 

  • K:  not everyone have 5 rooms in their homes

 

  • L:  yeah so it might be a case of you have 2 rooms and you get the total cost of your home dividing by 2 and you still got the proportion of hours per month

 

  • K: so ok let’s say if we have couple of rooms and one is for a therapy room and I have office so I do it the same way

 

  • L: yeah exactly the same way so you have a therapy room and an office one thing I would always say you’ll never ever claim 100% offline room dedicated to business the reason is if you have a mortgage on your house then it has implication to get in tax because your house is there for not being used 100% for residential purposes but there has been a proportion of business use and therefore your residential relief when you sell the house is affected if you rent now your landlord may object to it because he doesn’t know the business is being used there but if you definitely have a mortgage never claim 100% of one room being atax allowable room

 

  • -K: that’s a really really good tips so can you tell us what’s the common mistakes therapist make in their tax returns

 

  • -L: a of therapists panic because they’re not sure what to do it’s like origin what you’re feeling in and why you’re feeling it in a lot of therapists get things wrong in the very beginning especially when they are starting out then you get in the box that says did you use the cash basis and what that means is did you write up your accounts or your books based on money you received and money you spent very reasonable way to do it but if you take that box and make loss you can’t carry that loss forward so next year if you make a big profit you got a loss to carry forward to pass that profit a lot of therapists are not really sure what are allowable expenses so they are either not putting enough down or go the other way and try to claim everything then if you come and investigate the return then they are in sort of trouble because they claim stuff they shouldn’t be claiming but a lot of it is?

 

  • K: so what about the other thing you know heat light and saloon and home stuff and Khat other things we can claim

 

  • L: lot of other things like to become materials so if you go to a website you’ve got the couch that people would buy that would be a capital cost that could be claimed you’ve got your oils you’ve got your meditation type of CDs etc equipment and tools and that type of things they are all allowable costs now it should be obvious they are allowable costs because you use that  stuff in your business so those things that people don’t think about you run some adverts see you make Facebook account etc to get some business you put a card in the window of the agency know it still costs any social media you might have done so you get things like running a website assuming you’re running a website to be your shop window photographs people like to have shots they can use you might have client shots that have been in the treatment Argos running advertisement even things like putting a business card and email software you can use antivirus software the ink that goes into the printer I don’t know your appointment cards if you do a manual accounting system you might be issuing receipts and that happens to be what their breasts are really really poor at really sorry but you don’t give anybody receipt for their Works

 

  • K: no please tell us if you know anything which you learnt from your experience which we don’t do you know you can give us a device

 

  • L: yeah a lot of therapists will have a diary system so again a physical diary is an allowable expense I don’t mind diary but you may have also pay for an allowable expense and you just go with cash coming in or bank transfer if you’re lucky but what you don’t have is back up to help those sales effectively so your therapy income ? What you should be having is some kind of invoice to give to a client or receipt you get to the client but you also get a copy of so simple thing is in those days when I was young we used to buy box does that still exist?

 

  • K: can get them in the post office

 

  • L: yep we get them from the Post Office so in the beginning of the day you spent 30 minutes handwriting the receipts for massage so you’re right down your appointments and you put the price etc then you rip it off and say here is your receipt assuming they video cost and then you’ve got the carbon copy that is your copy for your accounting records because what could happen if someone comes and wants to investigate your tax account you have nothing to show them about money coming to your bank So Let’s Pretend someone died you will feel sorry for him and then you get £1,000 in your bank account now the guy will look into this money come and get him and if there is no evidence of any money and why it has arrived to a bank account they will assume that something is going on with your business and will put tax on it but if you have got the consisting record of money coming into the bank or cash you deposit in the bank then you’ve got this actual work flow this train going through coz if you find therapists tend to take cash payments will have nice of cash  tin  the size of the office money goes in but they don’t have any accountability how it got there or what they might have done with that money afterwards

 

  • K: so how about the book ؟ does that work?

 

  • L: well it’s ok but you still got physical invoice about what you get

 

  • K: so what we have to do basically every time because clients you know some of the clients they want invoice they want to receipt and some of them just don’t it’s fine so regardless that we still have to have our own regardless of they want or not

 

  • L: correct so if they don’t want it still get the book and try to give it to them and they can put it in the bin but you have got your copy of what she had in this date and this amount of money and you should be able to trace that through your bank account or to a pretty cash book to see how much cash you received in because you are in a very cash driven business it’s a lot harder to monitor where you got your money from and where it’s going to I know it’s like sometimes when sometimes I still work as a singer they give me cash that goes into my purse and I use my cash and I poop what would I do now! so it’s really is a very strict record

 

  • K: so what would you do? You’re going to Sainsbury’s and all poop there is I spent it so what would you do?

 

  • L: I have to remember that when it comes to my account I have been paid by ? £500 say so I have to put it in my books this £500 thing

 

  • K: so let’s say you have £500 and then you spend your 5 in Sainsbury so you have to include this receipt

 

  • L: is this £500 fee goes to my personal stuff then I still have to register in my books I was paid £500 but then 5 pounds is my personal spend but if I spent on needed A4 paper and went into some paper Chase then I got my receipt for my allowable station rate as I put in my business as allowable cost

 

  • K: so things like you know I need good trainers to work for work which I’m using for work can I aaaa yeah ?

 

  • L: nope clothing unfortunately unless it’s beautiful or unless it is..

 

  • K: well it’s my uniform

 

  • L: so you would have to justify that pair of trainers if it’s special pair of trainers when supported arches and things like that but you would only wear as part of your therapy business and wouldn’t going jogging in the same dress and that would be an allowable cost if you just put a pair of trainers that you happened to use as part of your business then it would not be an allowable cost know if you take years in Colombo I already say I work as a singer I’ve got lots of ball gowns I end up because I have to look nice so I have to look nice on the stage and I have to get fitter ball gown rather for Act 1 and ball gown for the second half they are allowable cost because I will not be working doing my daily shop you know hhhhh I happened to wear a work band in a ball gown so it wouldn’t break

 

  • K: yes after hours of singing I can imagine

 

  • L: I was hungry so you’ve got to look at the purpose of buying
  • K: so you have to be justified

 

  • L: yes and I know this sounds really hard but I always prefer clients to edge on safety rather Bush things and hope to get away with it because what you just remember is the tax return this year as a random review but they might pull up in two years three years time you’ve put things through and then they have to write back seven years so yeah

 

  • K: so let’s go to the next question is some of the people like I at the moment I work as a servant employment I work as full-time massage therapist that’s my only job previously I had part time job and I also worked as a self-employed so how you go about you know your tax when you’re both employed and self employed

 

  • L: so when you are employed you hopefully get paid every month maybe they give you a pay set that shows how much tax and rations they have deducted there is a section in the tax return that asks you to put in have you been employed who employed you and how much did you earn for that employment as well as how much taxes removed so the employed side is very very easy but when it comes to the self-employed side what you have to remember you only but income that you earn from self employment and you can only put through costs that were incurred for self employment so let’s say for example you go to a clinic and you have managed to clinic it back you can’t but that manage down as part of your self employment cost because it’s going to payg cost alright so any cost incurred going to be payg job or an employee job you cannot claim any costs yeah so the self-employed side can’t claim cost it might be a case of you go to payg job 2 days a week but then you have some clients that worked as self employment but you might also go to the same thing ok because you might have got some room hire a day so you have to be very careful in knowing why spending the money are you spending it on employed or you are spending it on self-employed now with the self-employed side you can claim your travel I don’t know what it costs but this question is coming later but you can claim your travel cost to get to self employed appointment however if you go to clinic every week on a self-employed basis you can only claim for the travel for that self-employed basis for after 24 months so if I job goes on somewhere that can last more than 24 months then you cannot claim in a travel cost and that’s the reason for that is if you go to somewhere for two years it’s a permanent place of work not a temporary place of work and self-employed people are are used to temporary place of work so just be aware of that because I know some people might teach in a college and committed to years or teaching years and then they come back in September but it’s still a continuous place to go self-employed wise they teaching another year but if they go to third year they can I claim it anymore there is a caveat to the caveat is if it’s not one of the 40% of your time and an income then you can carry on claiming the travel costs so it has to be over 24 months and over 40% of your income and time

 

  • K: we are going to come back later tomorrow to that because I am mobile massage therapist so good a bit more about travel costs later on but, yeah

 

  • L: Okeydokey

 

  • K: but any other tips for you know self-employment and employment how do you put that on its tax.

 

  • L: well, the tax return itself is very clear between which boxes you are filling in because it asks you to take, have you had employment? Yes. Have you had self-employment? Yes. And then it takes through very clearly the employment page and the self-employment page. so the employment page they don’t need very much they just me who are you employed by the reference code the employees how much income did you receive how much tax did you pay and then it does ask about if you had any benefits etc. very unlikely therapists get any benefits like a company car or private medical insurance [C: No.Yeah] it doesn’t really happen. And that basically what goes to on the employment site and I think that form is pink.

 

  • K: you remember the color as well.

 

  • L: well, no, How sad it that! If you go to Google, I think it’s a print pink page [C: Yeah]. The self-employment is a little bit harder. It does ask what is your self-employed name is. Not quite often, it is your name unless you have something called the mobile massage therapist and that is your business name. [C: yeah]. it will ask what your turnover is, if you have earned more than 83,000 pounds after turnover. if you had already 5 as it will be. If you had then you do need to consider VAT issues but I’m sure that’ll be another question sometime later. So as for what you turnover was and what your total costs were. on the tax return you can split the costs into things like rent, telecoms and that type of stuff but most people do what we call a three line account so they have their own management account which is you are building an Excel file to show what kind of things you are spending on. But when you come to filing your tax return you’ll just be putting in your turnover, your costs and this is my profit. [C: Yeah]. So technically, to fill up a tax return is no more difficult than that. [C: Than just 3 numbers]. Than just 3 numbers when you go onto the next Page it then asks about capital allowances and things like that and that’s another place where people go: I don’t know what. So that is another complication.

 

  • K: so I am just going to jump because things are coming to my mind so things like can we climb like whatsoever about Internet which we use on a mobile phone how’s that works?

 

  • L: The internet on the mobile phone and technically what you should be looking at is how much business you have of it. now if HMRC [Her Majesty’s Revenue and Customs] are going to be hard on you, what they would say is before you started your business you had Internet, before you started your business he had a mobile phone. So if they would be strict with you they would say he only cost you can put through is the increase in the price so what you having to pay between when you weren’t running a business and when you were running a business. Now yes if you’ve got a really hard HMRC inspector that is what they would do. However, what I tend to do is to get people to have a gut feel how much use of your mobile phone, do you use for business, so not just for making and receiving calls but also is that how you do your email, is that how you do your banking and things like that so what I’ve done with some clients, I have actually kept to got them to keep a log of all their phone usage how long they use it for and whether it was business or personal and then they get a proportion to say I shall use the 82% of the time for business and then 82% is what they claim.

 

  • K: yeah yeah yeah yeah, I think we have a better good way to when we get checked by the inspector we can give him a massage before so he’s not so hard on us. So to all massage therapists even if you find the accountants just give them massage before you talk about your accounts.

 

  • L: So how would you like to experience my services first, sir? I will show you what I do. Yeah.

 

  • K: So, Louis, probably the main reason why lots of therapists do they own taxes to oppose the hiring accounting, he’s just cut the costs in you know about this. So can you tell us what should we look when we choose an accountant and what to expect, you know what for we expect to pay for the accountant service.

 

  • L: It really does depend on what you want is the answer to that. It is like hiring a prostitute really what service would you like and this is what you are going to get. I have made you laugh. if you want an accountant to sit there with your shoe box of receipts and go through and create all the account reports for you then create the account on tax return, you’re going to be paying through the nose. [C: okey] so because somebody doing that will cost you around about 45 to 50 pounds an hour to do that. If you are happy keeping your own Excel file [C: so basically, bookkeeping we are talking about]   yeah, so bookkeeping can cost you an arm and a leg, a lot of accountant don’t like doing it which is why the phase is quite high. You could get a bookkeeper involved, which will cost you around about £30 an hour, or you could keep your own Excel file, I like Excel, I know there’s Google sheets, I don’t like Google sheets. I know people have a Mac so I don’t have a Mac. You could keep your own Excel file records and make sure you record everything on there so all your income and all your expenses and you could give that to an accountant to say can you create my accounts from here. Now if they’re quite good records you can probably get away with an account say of around about £250 to do it all. well, you might not like to use a spreadsheet to record things because I know sometimes people can get that frightened of spreadsheets. [C: Excel, yeah, sometimes] There are apps out there, if you have a smartphone there are various apps out there that you can use and you take a picture of your receipt or if you get a PDF invoice through via email you can forward that PDF to an email address and all of that combines itself into the cloud and you can then download at the end of the year at the end of the month the Excel file all your costs and how it has been allocated there are certain ones out there I use one called Datamolino.

 

  • K: Yeah, can you give us some names?

 

  • L: Yeah, Datamolino allows you to do exactly what I said forward email address, forward PDF copies of invoices you might receive so if you think about Amazon so they always send a copy of the invoice if you ask for it. If you use uber then you get an HTML receipt on your email you can forward that to it or if you go shopping in I don’t know, let’s say Sally’s Hair and Beauty because I can’t think of anything at the moment. If you go to Sally’s, you will get a receipt you can physically take a photo of it and send it to that database and it will upload all the data for you extract the data and you can then download it as an Excel file so datamolino is the one I use. There are other apps called one tap so the number 1tap. That will do exactly the same. The analysis is not as good or something called receipt bank is bringing out a new application that will do the same as well so there are three you can have lots of other ones that various apps out there how good they are I can’t tell you because I don’t use every single one of them but they were the three that I would tend to look at.

 

  • K: Okey , Thank you

 

  • L: Some of them cost, datamolino Account can cost you 10 or £15 a month plus VAT, receipt bank might not cost you anything you should have to go through an accountant, 1tap cost £30 a year. It really depends on what your budget and cost are but I always look at use one of those if you can because it saves one hell of a lot of stress.

 

  • K: And a job for an accountant.

 

  • L: You don’t have to an accountant, You know some of those things work really well, sometimes you still need the accountant and go is this correct. It really depends on your stress levels I know people that spent days on putting together their bookkeeping they fuzzle, they don’t want to do it they keep putting it off it’s January the deadlines of 31st of January. They come to me as their accountant afterwards and I tend to say rude words to them like why has it taken 9 months for you to do it. You know, but there’s some other words in the middle of that sentence. So yeah, there are plenty of apps out there and what to look for when choosing an accountant as I said it’s all about relationships. You could go to a local high street accountant you get the job done, do you have a relationship to that personal or are you just another number so they would have to say oh yeah client 654 here we go. Do you want an accountant than that understands your business. Now sometimes it’s ok so we talk about the uniform, proper accountant will see that you’ve gone out, you’ve just bought a pair of trousers and a T-shirt and you’re trying to clean that uniform. He might find out and say no that is just clothing but he hasn’t put two and two together to notice that you have also gone and got them logoed [C: yeah] and that is actually advertising rather than clothing. [C: yeah] so having an accountant that understands your business and knows where you’re coming from rather than any accountant who will just files you through his numbers.

 

  • K: Sure, another thing came to my mind. Things like. We are having you know sorts of treatments, we are having massages as well. Things like we are using to look after our bodies because we work really hard, gyms and us having massages, how that works?

 

  • L: Tough luck really is the answer to that. Anything to do with you and your body is not an allowable expense, you don’t have to go to the gym to keep fit so therefore gym memberships are not allowable. You are having a massage because you overworked yourself, it’s not allowable and it’s all based on your benefits, you’re not just getting a benefit for you and your business you’re actually getting a benefit for you and your life.

 

  • K: My body is my workhorse, [L: yeah] I don’t know what to call it, it’s the tool I use.

 

  • L: Yeah, No it’s not allowable. Anything medical in the majority of time is not an allowable expense. I have that with musicians that get RSI in the elbow if they are violinists unfortunately the pain they get in everyday life because they can’t sleep bowing their elbows. If they go and get treatment, will it help their everyday life because they’re not in pain for every day and it not doesn’t just help the Bowing purposes. [C: okey] unfortunately virtually everything medical or treatments like that is not allowable. [C: Good to know] If you are having to go for a massage as part of your continued professional education then because you’re learning new techniques then that potentially could be allowable under training and development.

 

  • K: Gotcha, so, any training so any other practices after this training which is who be still training that can be, yeah.

 

  • L: Yeah, potentially it’s different when you starting out if you’re starting out as a massage therapist all the training you receive before you start in business is not an allowable expense because that is you learning to build the business, it’s not a business cost. However, if you’ve been running a business and then you go through a training course I don’t know let’s say you want to learn how to do hot stone massages so you’re going off on a training course to learn how to do that what to do with the Stones what not to do with the stone that would be an allowable cost because it’s an enhancement of your current understanding and skills.

 

  • K: So, let’s say I work in Bristol, I live in Marylebone and other courses are in London so obviously I can claim the cost of the course. [L: Yup] how about travel, hotel, stays!

 

  • L: you can claim the cost of the travel and the accommodation if it’s an overnight thing. you can claim all that but the purpose of going to London has to be for that training course if the purpose of going to London was to have a jolly good weekend then go to the training course on the Monday then it would not be allowable because it’s more for pleasure than business.

 

  • K: That is really hard because all massage courses are jolly good time.

 

  • L: Can you not have that for an accounting courses, please? [C: okey] to get away with it the personal element has to be incidental to the business elements. It’s like going to the bank so you can claim your cost of travel to go to the bank to deposit all the cash you have received. [C: okey] but if you’re going to Tesco’s and then say I need to pay in my checks then the purpose of your trip was actually to get a Tesco and not to go to the bank.

 

  • K: Okey, so then I can claim part of this trip?

 

  • L: No, It’s even in or out.

 

  • K: okey, my really good question for favorite so how about the business lunches?

 

  • L: Right, business lunches.

 

  • K: As it’s being in the business, the entrepreneur you just you know meet people for business purposes and how does that work?

 

  • L: This is a hard one, okey, if you’re going to lunch because you are in London and not in Bristol so you’re at work and then you have to nip out between sessions and grab some lunch, that is good subsistence and it is allowable providing it’s similar to what you would normally have at home. okey, so if you would normally have at home a sandwich and bag of crisps, you would not get away we’re going to put Mason afternoon and claim that of subsistence.

 

  • K: So. have to be, yeah

 

  • L: So it has to be fairly consistent with what you would normally have.

 

  • K: Fish and chips not steak

 

  • L: Yeah, yeah, so and if you normally have a pint of beer then have a pint of beer, you know that’s fine. And if he goes to the gym a lot, he probably have a pint of beer.

 

  • K: So, how about I am in Bristol in my hometown and I’m meeting there a new web designer and we go and sit down and we need to talk about you know, stuff to put on the website and then we will have a food with it, how about that?

 

  • L: Right, this is the tricky part, If you’re paying for somebody else’s food that has nothing to do with your business so they’re not employed with your business. It’s called entertaining and entertaining is not an allowable expense so the whole of that would be discounted. [C: okey] There is a small caveat and that is if you went somewhere for the purpose of a business meeting and it overran, you potentially could claim the cost of food because you’re still in that business meeting. [C: okey] now you would then put it down as venue costs and hope they don’t look at it too closely. [C: okey] If you’re working from home you don’t have an office you can go and meet people in. [C: yeah, yeah, of course] but again it has to be incidental to the purpose that you had the meeting in the first place, so technically anything you eat and pay for somebody else’s is entertaining and it’s not allowable.

 

  • K: Sure, Thank you

 

  • L: You don’t like me anymore, do you?

 

  • K: I do, No. There are lots of good tips it’s just because you know exactly like for me myself I never had the accountant. I’ve done things all myself and a lot of things were much harder because I’m foreigner in this country so after I’ve learnt quite a lot and I still don’t understand it and even people live in this country and they still don’t understand and you know things you were talking about I am guilty, I’ve done it. I did put some stuff in taxes which now I find out that I shouldn’t so all the way around. So let’s talk exactly so what receipt we can keep, what receipt we should keep, and how long obviously, paperwork.

 

  • L: The receipt you should keep is anything you’re putting in your business accounts you need to keep that receipt so weather in the coffee from Starbucks whether it’s the couch you’ve just bought everything should have a receipt of some kind of back up to it, alright you have to keep them for 6 years plus the tax year we are in. Just say 7 years and everyone will understand that.

 

  • K: Yeah, 7 years.

 

  • L: So, 7 years you need to keep it. No, you don’t necessarily have to keep the piece of paper. You could scan it in and save it on a computer. You could use one of these are providing you can get at it. You can print it and it’s readable, it doesn’t matter if it’s online or in a box in the corner of the room. [C: okey, yeah] but you do have to keep things for 7 years. The more organized you are, so it’s actually files away enough in a file enabled each month or something then the easier it is to deal with in case there’s any review of your tax return.

 

  • K: Ok, I bought a new couch, I lost the receipt what do I do?

 

  • L: Naughty boy. What you can do is you can potentially go back to the shop [C: just example yeah yeah] and say yes you know I bought this, do you have a copy of it. If you bought it online, you’re about to be able to go in and grab a copy of it online. If you’ve gone to a store it’s a little bit harder. So the only fall back that you’ve got is whether you pay for on a credit card or with a debit card to your bank statement. [C: yes] Credit card bills bank statement are not really correct accounting records to backup your costs but if that is all you have you potentially could use them and then it’ll be down to HMRC inspector if he comes to the preview or the tax return to say yay or nay. The view of HMRC is if you can’t prove it you lose it.

 

  • K:  Oh yeah, Simple. Let’s talk about now quite important things for myself on my business because I am a mobile massage therapists, I use my car, I travel quite a lot, so how can we Claim the fuel in the car and let’s think about the mileage.

 

  • L: Ok, what you need to have is some kind of record of the miles you have driven for business, so I am a sad person and being as old as I am I have these things called exercise books and as soon as I sit in the car and want to drive somewhere I write down the day, the start mileage where I’ve been and why and when I get back end mileage. I then put it on an Excel spreadsheet at the end of each month and work out how much is business miles I’ve actually done. I keep the same log for personal stuff as well [C: okey] and I am a sad person.

 

  • K: Don’t be a sad. That’s how things happen but I can tell you now there’s an app for it.

 

  • L: There is an app called tripcatcher. There are loads of other apps that you can use as soon as you get into your car press the button and it will do a GPS tracking and as soon as you get to your destination press the button and it will be loaded up.

 

  • K: Even better, no, I have it even better. I have been using an app called Milewith basically, you don’t have to do anything, it just the GPS track when you stop and when you start because at the beginning of my work, that’s exactly I did what you did I bought the book mileage book had in my car every time but you know what seeing clients like you say 6 7 clients a day just doing this all the time. No it seriously is quite a lot of Work. you know it’s something you have to do, However. it’s just quite a lot of work so that’s why I found this app and it costs yearly about 40 pounds. However, it just saves so much work. it’s nice and clear. you can set up you know, it records all the journeys and you can then choose it if you go to business or to the personal and have a really beautiful printouts at the end of the year and shows all the details, so.

 

  • L: There are a lot of things out there nowadays you can do. I don’t have any Apple products, the only Apple products I have is what’s in my fruit bowl.

 

  • K: I think this is the healthier one and cheaper one definitely.

 

  • L:  Do I really want to buy an Apple 10 for a 1000 pounds or whatever it is, no I don’t think so. So the first thing is you need to record your mileage somehow. The second thing, there are 2 ways of doing your car cost for your mileage. You can do it on a mileage basis so you will charge your business 45 pounds a mile up to the first 10000 miles and then it’s 25 pounds a mile over 10000 miles. That is the easiest way of doing it. But a bit like the home costs, there is a longer way of doing it and you will add up your complete cost of running your car. So that’ll be your mileage, your DVLA road Fund Licence, insurance, the new tires, any services that you’ve done, the fairy that you got hanging from the windscreen etc. all the cost of running your car divided by the total number of miles you’ve done in the year. So if you had an app that does everything great and then multiply out by the number of business miles and that then covers all your costs of running the car. Now what works out best tends to be the pure mileage basis of 45 pounds a mile unless you have a car that keeps breaking down. Once you pick a method that’s the message you have to stick to unless something changes like you buy a new car. [C: yeah] so that is the two options 45p a mile or work out the actual cost of running the car.

 

  • K: Ok, but how about mileage, how about petrol!

 

  • L: No that’s included. Petrol is included in the mileage rate or you include it in the total cost of running the car.

 

  • K: So, if you don’t run the mileage, can you just work out from the petrol.

 

  • L: No No, you have to still keep in a mileage log. [C: ok] because that petrol going into car can be used for business or pleasure.

 

  • K: Unless you have a just car for your business.

 

  • L: Unless you just have a car for your business and you can hand on heart but you only use it I know you only use it for business use yeah it might be the Old incidental I forgot I was going to Sainsbury’s yeah but no it’s either the mileage rate which covers all the cost of fueling the petrol, all your work out, the actual cost of running the car which obviously petrol is one big part of it.

 

  • K: So, please tell me I don’t have to keep the petrol receipts.

 

  • L: If you are not VAT registered, you don’t have to keep the petrol receipts.

 

  • K: I don’t.

 

  • L: Nope.

 

  • K: YES.

 

  • L:  If you run it by mileage system. [C: yeah, ok] you don’t have to keep it. If you’re running by the actual cost system you do have to keep them.[C: oh, ok, yeah] Most people are quite normal and then just go by 45p a mile because it’s so much easier to do.

 

  • K: Ok, so the things like exactly If I have a car and I need to go to part from my normal work I need to go to the shop to pick up advertisement stuff or I need to go to the shop and buy massage oils and stuff that all can be counted in.

 

  • L: That’s all business because the only reason you’re doing the trip is to go and pick up your massage oils.

 

  • K: Amazing, Louise thank you, you gave us a lot of advice and lots of good tips and definitely, you know they are all really really helpful because as we mentioned we massage therapists we just want to help people and we are not really good with the accounts. So now definitely you gave us a lot of good insights and tips.

 

  • L: There is one thing I want to stress.

 

  • K: Yes, please.

 

  • L: And it affects all self-employed people always when you can have a separate bank account to your normal life bank account because you are running a business I know you might not feel like you’re running a business but because you’re running a business put it into a separate personal bank account and that’s the account the HMRC would then look at. So you’ve got all your income going into there. So people that pay you go into that bank account. Any costs you need to enquire come out of that bank account and it goes nowhere near your personal bank account. So your personal bank account would be for things like your rent, your mortgage, the petrol you’re buying, etc,etc. But it doesn’t come out of. I want to call it a business bank account but it would still be a personal bank account in your name because if you go to a bank and say I want to open a business they will look at you and say we go here we go charge them.

 

  • K: Do we have to have a business account?

 

  • L: No, No you don’t have. You have to have a business account you can run a separate personal accounts. They can all be with the same bank so you really should have a minimum of 2 the ideal would be 3 and the third one is where you put money aside to pay your tax bill.

 

  • K: of course. Ok

 

  • L: you might have to pay the bills at the end of the year.

 

  • K: Definitely, that’s a really really good tip because we don’t tend to do that, that actually take every month take something minimum couple of sight to you know so that it’s not enough as a savings but to pay, how much would you suggest?

 

  • L: I always tell people 20%. Now we know that we get a personal allowance so therefore it might not be 20% in the end it might be something else and you’ve also got class 4 National Insurance which is 9%. So by the time you think that up, you might have nothing there to pay, you might have extra in there and you can go oh where’s my summer holiday so put it aside for the tax bill if you don’t need that year then you’ve actually got a savings account but always always always have separate accounts to tax aside for later. Most of them don’t like people that turn around on the 31st January and say oh I got tax bills and I can’t pay it, oopsy. Yeah, they don’t like people like that.

 

  • K: Yeah, so before we move on, do you have any other tips and tricks for us?

 

  • L: No, I think they are the main ones. Yeah, they are the main tips and tricks. Some applications that may run your accounts or run your run your tax. The more digital people start to get now when things change in 2019 or 2020 and you have to have online account systems then you’re up and running and ready.

 

  • K: Ok. Thank you. So the next question I have for you just because lots of our listeners I am just starting up or maybe they’ve just been in the business for a while but they are still struggling as they work to build up their own business. So the next question is if you woke up tomorrow morning but you still process old experience and knowledge you currently have but your business has disappeared forcing you to start from the scratch what would you do?

 

  • L: Well, if I still had my knowledge and experience I would hopefully have my backup drive. Now my backup Drive contains a CRM system so that’s all online so my customer relationship management system and that is what drives my business because on there are all my contact, all my leads and everything I need to get up and running quickly if a complete disaster happens. [C: yeah] so I would, if there was a fire in my house, the two things I would take, three things I would take, sorry. would be my backup drive, my passport and my purse. And that’s it, don’t care about anything else in the house. Backup drive, passport and purse. well, technically my backup drive is also on the cloud as well. That would be having to start from scratch, I would hope I would have that. [C: ok] Your contacts are your key source of business, obviously at the very beginning of your business you don’t have that. So that’s in case of having to build the business. How to start the journey again if I have that I would make sure I’ve got some pretty stringent admin processes in place because admin can suck time out of everybody including me as an accountant. [C: Oh, yes] Just to keep on top of the paperwork and the emails I would make sure I had pretty slick automated processes. For example I tell if an online booking system where people can book appointments with me send the reminders to say you’ve got an appointment because a lot of wasted time is oh I forgot, I didn’t get there. So even things like that you can automate it’s like woohoo we’re off and running. So that would be what I would do.

 

  • K: Thank you very much. So the next part we call it freestyle, so here it is this time, moments to get the promotion of our guest. Your courses, book practice, your business anything would you like to share, so we will give you a little bit of the freestyle time, here you go.

 

  • L: I don’t really have much to promote a part from me because as I said accounting is all based on relationship with the client, my giveaway if you go to my webpage there is a giveaway about expenses you can claim as part of a therapist gives you a PDF to say these are the things you should look at for trimming your costs. I don’t have any courses coming up, I haven’t invented them yet, I will be writing them if I get enough people interested then I will be running online courses for how to do your tax return or how to set up in business etc from an accountant standpoint rather than necessarily for actually doing your job so I have very little to say in this freestyle.

 

  • K: So what services do you offer?

 

  • L: You are going back for being a prostitute again. We offer a whole range it could be your bookkeeping services so take that shoe box, create your account from scratch, find your tax return. We look at business processes that people have got involved and see how efficient they might be. We have run training courses in the past for people that won’t get on to some form of cloud accounting. They are mainly the services we offer or we stick with the basic accounting services but also with cloud apps as well so that’s why I am fairly coming with some of the cloud apps people might want to use but training will be the big thing that will come in from Next year. So people don’t necessarily have to have an accountant to do their stuff but for the first year it might be a case of turning the training course will be the equivalent part in the accountant and you have got the ability to do it for a year, 2 years, 3 years without spending money on the accountant.

 

  • K: So the next part of our game would you contact a guest game so we’re going to ask you who do you admire and why can you help us get recommendation for upcoming interviews with me here at the Busyhive broadcast.

 

  • L: Ok. Well, the person I’d recommend is a called Damian Mark Smith. He is a business coach, business mentor but he’s actually got a lot more into why we do things mindfulness and all that type of stuff so he did have a severe OCD Complex in that if he didn’t turn his light switch on and off when he was going out for about 10 times a day his family would die and how he actually got over that in order to then help other people for the coaching side but he is very much into mindfulness awareness and the coaching side from the holistic sort of point of view. So he will be the person I would recommend. And if anyone wants to Google him, all the search engines are available. He has done a Ted talk and there is quite a lot of information about him.

 

  • K: Great. Thank you. So Damian, you have been tucked and we will be in touch with you. So Louise this is all great, so thank you thank you for joining me here and giving us lots of inspiration advice so let’s finish the show the last piece of advice for busyhive listeners and then we will say goodbye. So if you had just that one thing for our listeners to take out of this episode what would it be?

 

  • L: Not to be afraid of the admin site and just get organized even if it’s just with an expanding file per year to keep your receipts there. So just keep everything really really organized and don’t be frightened of it.

 

  • K: That’s the best tip ever. Thank you. So how can we connect with you online?

 

  • L: Well, there are various different ways, I do have a website I’m surprised, I think everyone does. So the website being www.performanceaccountancy.co.uk and there’s actually a page specifically for holistic therapists. I’m quite sure you’re probably put a little note on what it is but I can’t remember…..

 

  • K: No no no yeah, we are you going to put all the information on our shared notes and I actually think we’re going to add it to your PDF which is for therapists included in there as well.

 

  • L: Okey-dokey. So that’ll be the way to get a hold of me. By the website, there you go it’s under what we do, we’re talented holistic therapists. There is the PDF that people can download I promise not spam you if you do decide to sign up for it. Or contact us via the page or we also got an online diary booking and even a telephone number up there, woohoo. You can get a hold of me via Twitter, You can get a hold of me via Facebook. If you search for performance accountancy then you will find me definitely.

 

  • K: Perfect. Thank you very much and thank you for joining me here at Busyhive broadcast. [L: Not a problem Chris] as we mentioned all the information about you and what you do and all about what we mentioned today, we’re going to put in our show notes so Louise it’s a pleasure to have you today on the show, It was lots of fun and hopefully we’re going to chat very very soon. Bye Bye.

 

  • L: Bye.