Business and Tax Advice for Self Employed Microblading Artists

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Self Employed Microblading Artists

The demand for the perfect eyebrow is huge! Meaning microblading is rapidly becoming one of the most popular ‘can’t live without’ beauty treatments around the world.  

So if you are considering branching out on your own and becoming a self employed Microblading Artist then you are in the right place.

I created this guide just for you so you can take your next steps armed with as much knowledge as possible.  Helping you to understand:

  • How to get your microblading business started and build your client base;
  • How to get paid by your clients and how much you should charge;
  • Your HMRC self employment responsibilities and the taxes your need to pay.

Tax Advice for Microblading Artists

How to Become a Self Employed Microblading Artist

If you are in a job at the moment, no matter how unhappy you are, rushing to hand in your notice may not be the right thing to do.  So before you make the leap from employment to self employment here are some questions to ask yourself:

1. Where is your first client going to come from?

Being in a regular job means you receive a salary at the end of each month.  However when you become self employed it is down to you to find your own clients, deliver the agreed work and then get paid, possibly on completion of work.  

Have you found your first client or what is your plan to find your first client once you quit your job and how long will it take to find them?  Once you have found your first clients will you earn sufficient money to cover your living costs and what is your plan to find more work?

2. How much money do you need to live?

Bills, mortgages and other financial responsibilities need to be paid. When you go self employed your income can be erratic or needs to build up in the early days. So get prepared.

Work out how much money you need to live each month (mortgage, bills, food etc).  Start by listing out all your costs on a simple spreadsheet, maybe add a little contingency in case there are some unexpected costs.  

You’ll be able to see how many clients you’ll need to pay yourself enough to cover your bills.

If you have a deficit then make sure you could:

  • Have cash reserves to cover your costs until you earn the right amount
  • Make a plan to build up your client based
  • Stay in your job and build your business up on the side

3. Do you have all the equipment you need?

Your clients will expect you to hit the ground running, so make sure you are fully set up with everything you need to avoid disappointment! Client recommendations is one of the best ways to win new business, so always provide the best service you can. You’ll need to make sure you have somewhere to service your clients as well as microblading suppliers like ink, needles and machine.

4. Do you have the right training?

Microblading Artists have the right training to give them the skills they need.  There are lots of courses available – like Brand Accreditations or Beauty Academies.  Having the right qualifications and training is crucial to delivering the right result for your clients. And having qualifications will mean you can present yourself as a credible and professional individual, with the right skills to do the job and help you get ahead of the competition.

5. Additional Services

There are many complimentary treatments that an Microblading Artist can offer such as lashes.  By being able to offer your clients a full service you can win their loyalty.

6. Where do you plan to offer your services?

Many Microblading Artists choose to rent a room at a beauty salon or set up at home.  Have you considered where you would like to work and also how your competitors in the area you plan to work in offer their services?

 

7. How will you build a client base?

Finding clients and making sales is what will make your microblading business a success.   Setting up social media and/or a website to showcase your work will demonstrate your skills to potential clients.  Networking online, such as in facebook groups, is another way as well as asking all your existing clients to provide testimonials which you can add onto google or facebook.

Targeted Facebook and Instagram ads are another way to reach out to the right market in the right area to let them know you are in business and taking bookings as well as more traditional methods such as flyer drops and always walk around with business cards.

Signing up to third party apps like Treatwell is another way to get your name out there, but they do take a percentage of all your sales. Despite that the ability to reach out to potential clients may make this cost worthwhile.

8. How Do you Plan to Manage your Bookings?

The diary on your phone may be sufficient, but make sure it is backed up and is reliable – there is nothing worse than ending up with a double booking. If you are mobile, always make you leave enough time to travel between your clients.

If you plan to use a third party appointment app like treatwell, you will need to manage the bookings that come in online, so they automatically schedule out in your own central diary. Treatwell connect is one option, others are salonlite or shedul.

9. Branding

Depending on how much you wish to grow your microblading business, branding may or may not be a key part of your startup plan. It is always possible to just get started and rebrand at a later date, when you have earned sufficient cash to do it properly.

Regardless you probably want to give you business a name and have a logo so you can set up your social media. Websites like people per hour have people waiting to create logos at reasonable prices, as well as simple websites to help promote your business.  

Again these services will attract a cost which you need to cover so you may want to get a list of your start up costs together so you know how much you need to invest up front in your business.

 

10. Insurance

Running your own business means you need insurance cover against loss, equipment damage and public liability so make sure you get this in place.  And don’t be afraid to showcase that you have insurance cover to demonstrate your professionalism.

Useful Reading: Different Types of Insurance and How to Get Cheap Quotes and Discounts Online

11. Licences

If you are planning to work from home you must be aware of the rules and regulations surrounding this.  You can read about the 5 main things to consider in my blog Can Your Run a Business From Home which are:

  1. Your rent or mortgage agreement
  2. Insurance
  3. Licences
  4. Business Rates
  5. Tax

How Much Should You Charge as a Self Employed Microblading Artist

Deciding how much to charge for your services when you are self employed can be the hardest question to answer.  However the amount you charge is fundamental to you running your business and even paying yourself a salary so you can live.  

The amount you charge needs to be competitive, there is no point charging more than all of your competitors to try and make more money because clients will simply choose a cheaper option.  However if you offer a superior service or have more qualifications then a higher price may be justified.

Here are some simple questions to ask yourself when you are trying to decide how much you should charge:

  • How much do my competitors charge?
  • How much do I need to make per day to earn a living and cover all the costs of running your microblading business?
  • Can you offer an introductory offer at a lower price than your competitors to win clients and then increase your pricing?

 


How Do You Get Paid as a Self Employed Microblading Artist

Understanding how you can getting paid by your clients is crucial.

Here’s how you can get paid by your clients:

  • Cash – obviously the simplest method but as we live in an increasingly cashless society only accepting cash may be inconvenient to your clients.
  • Credit/Debit card – less of us are carry cash so being able to accept plastic will make life easier for your clients. Sumup is a really popular cheap card reader that connects to your mobile phone. Your clients can then pay by contactless or by entering their pin number.
  • Bank transfer – give your client your business bank account number and sort code and then they can transfer money straight into your bank account.

Useful Reading: How to Accept Credit Card Payments


Tax Advice for Self Employed Microblading Artists

If self employment is new to you, it can be difficult to know where to start and what it all means.  

What is Self Employment

Self employment means that you work for yourself rather than for someone else. This means you:

  • Are responsible for finding your own work;
  • Decide when you want to accept a job;
  • Need to have your own method of transport, mobile phone and equipment;
  • Will not receive sick pay or holiday pay, so you will go without earnings during these times;
  • Make sure you have the right qualifications to operate;
  • Take out your own insurance;
  • Need to register as self employed, work out your own taxes and send a tax return to HMRC.

You are not restricted to just being self employed either.  You can even hold down a full time job while working as a Self Employed Microblading Artist on the side.

Useful Reading: Being Employed and Self Employed

 


What Taxes Do You Pay as a Self Employed Microblading Artist

You will need to pay Income Tax and 2 types of National Insurance (Class 2 and Class 4) on your earnings.

Earnings mean all the money you are paid as a Microblading Artist less expenses and other allowances you are entitled to.

There is often a misunderstanding amongst Self Employed Microblading Artists that their earnings are somehow tax free so they can work without any tax obligations.  This is not true.

All Self Employed Microblading Artists must register with HMRC and declare their earnings. Earnings may be tax free because you earn below the personal allowance, however you still need to declare everything to HMRC using a self assessment tax return form.

There is one exception however.  

You only need to register and pay tax on your self employment income if you earn more than £1,000 in a tax year (6 April to 5 April).  If you make less than £1,000 as a Microblading Artist then it’s tax free and you don’t need to declare it. Useful if you wanted to just test out life as an Microblading Artist or just earn a small amount on the side.  This perk is called the HMRC Trading Allowance.

Useful Reading: What is a Personal Allowance, Tax and National Insurance When You’re Self Employed


How to Register as a Self Employed Microblading Artist

If you make more than £1,000 as a Self Employed Microblading Artist or you intend to build up a steady self employment income then you should register with HMRC.

Remember a tax year runs from 6 April to 5 April.  And when it comes to taxes get used to thinking of everything in this way.  It is on this you need to work out your earnings and taxes for HMRC.

When to Register as a Self Employed Microblading Artist

Officially you should register by 5th October in the second tax year of being an Microblading Artist.

So if you became a Self Employed Microblading Artist on 1 April 2018 then you would need to register as self employed by 5th October 2018.

How to Register as a Self Employed Microblading Artist

You can register as Self Employed online.  It’s fairly easy to do yourself and I’ve put together a video guide here.

Useful Reading: How to Register as Self Employed Video Tutorial

 


What Are Expenses

One of the perks of being self employed is that you get to set off costs against your income.  This reduces the amount of tax you have to pay.

There are rules set out by HMRC which expenses you can claim for (allowable expenses) and those you can’t (disallowable expenses).

Allowable Expenses for Self Employed Microblading Artists

In the main, anything you need to pay for in relation to working as a Microblading Artist will be allowable or “tax deductible”.  Here are some typical allowable expenses:

  • Beauty equipment like your ink, needles, and rulers;
  • Computer & printer to manage your bookings, manage social media or print out leaflets/brochures;
  • Website;
  • Marketing or paid advertising;
  • Software subscriptions;
  • Phone and Data;
  • Use of home if you choose to work from your house either as a flat rate or a potion of your household bills gas, water, electricity or rent.
  • Branded clothing and protective wear;
  • Travel to shoots when you use a taxi, tube or bus;
  • Mileage claim for using your own car (currently 45p for the first 10,000 miles of driving and 25p thereafter);
  • Insurance;
  • Training to keep your skills up to date, along with incidental travel and food costs or overnight stays;
  • Accounting & bookkeeping;
  • Bank charges for a business bank account.

There may be expenses you pay for that you use personally, like your mobile phone.  In these cases you can only claim a portion as an allowable expense.

So if you use your mobile phone for 60% work and 40% personal, then you take 60% of the total costs to put against your taxes.

Disallowable Expenses for Self Employed Microblading Artists

After years of people pushing the boundaries and claiming for some questionable expenses, HMRC have a growing list of expenses that are disallowable.

Here are some common examples of disallowable expenses for Self Employed Microblading Artists:

  • Parking fines
  • HMRC penalties;
  • Training for new skills;
  • Travel to your base of work;
  • Non branded clothing;
  • Entertaining Clients or Hospitality at Events;
  • Lunch, unless in special circumstances;

Useful Reading: Allowable Expenses, Disallowable Expenses, Claiming Business Travel


What Records Should You Keep

Everything!

Once you are self employed you need receipts to support all the expenses you want to claim You’ll also need to keep reports to document any income you receive from your customers however they pay you – cash, card or bank transfer for example.

The simplest way to do this is to:

  1. Open up a separate bank account for yourself and set this to send/receive any payments. That way when tax time comes you have a record of everything that has happened.  
  2. Save all your receipts and reports in the cloud using google drive or dropbox (both are free up to a certain amount of storage).

If you want to go one step further then you can set up a bookkeeping spreadsheet or use an app like Freeagent.  Whichever you choose, these will help you track your earnings and tax liability (avoiding any nasty surprises at tax time).

What is a Bookkeeping Spreadsheet?

A bookkeeping spreadsheet is a simple summary of your income and expenses.  You can set one up on Google Docs or Excel and it is best to have one for each tax year.  

A bookkeeping spreadsheet is a good idea because:

  • They are free to set up
  • Gives you the figures you need to estimate your taxes
What can a Bookkeeping App Do For You?

Bookkeeping apps are an automated way to record your income and expenses.  There are a few out there now but the best ones should have these features:

  • Connect to your bank account to automatically pull transactions;
  • Store copies of your receipts;
  • Estimate your taxes on an ongoing basis;
  • File your tax return for you.

The downside is choosing an app comes with a cost but this is for most people is outweighed by the time saving and avoiding the need to find an accountant to file your tax return.

I use Freeagent to log all my income and expenses.  It ticks all the boxes in terms of functionality and is reasonably priced.

Read my in depth review of Freeagent HERE and how I use it to manage my business finances.

 


What is a Self Assessment Tax Return Form

A Tax Return is a form you need to complete online once a year by 31 January each year. The penalties for missing this deadline start at £100.

A tax return contains:

  • Your personal details;
  • A summary of all your income not just Microblading Artist (like bank interest, employment income and rental income);
  • Details of allowable expenses you wish to claim against your taxes;
  • A tax calculation;
  • How much tax you need to pay.

One tax return form covers a tax year.  A tax year runs from 6 April to 5 April.  So a tax return for 2017/2018 covers earnings during 6 April 2017 to 5 April 2018 and needs to be filed by 31 January 2019.

You’ll need to pay tax due by this date too, as well making a contribution of 50% towards your next years tax bill.  This is called a Payment on Account.

You’ll need to make a payment on account if:

  • Your tax bill is over £1,000
  • You pay less than 80% of the tax they owe through the payroll system

There are proposed changes to the reporting system called Making Tax Digital.  This will abolish the current system of reporting once a year and replace it with quarterly reporting and tax payments.  This change currently on hold but will be enforced at some point.

Useful Reading: Self Assessment Tax Return Form, Making Tax Digital, Payments on Account.


How to Fill Out Your Tax Return

To get started with filling your tax return you will need any paperwork which reflects your earnings including:

  • Personal Information
    • Your Government Gateway Login and Password
    • National Insurance Number
    • Partners Information if you want to claim Marriage Allowance
  • Income
    • P45 or P60 issued covering employment income and tax deducted
    • P11d Benefit in Kind Forms
    • Dividend, savings and interest certificates
    • Pensions
    • Rental income and expenses
    • Self employment income and expenses

How To Submit Your Self Assessment Tax Return

You need to submit your self assessment tax returns online, except for in really exceptional circumstances.  

The form can be found by logging into your Government Gateway Account to complete your self assessment tax return online. You set this up when you registered for self employment.  Once logged in you can choose the option to “Complete Your Self Assessment Return”.

Complete the Right Sections

You need to complete the first part of the tax return form with your personal details.  This includes a series of questions which help ‘Tailor Your Return’. By doing this the right sections will be provided for you to fill in.  For Self Employed Microblading Artists you’ll need to make sure you fill out the Self Employment section to declare your business income.

If you have a full time job you’ll need to enter your earnings and any tax deducted by your employer in the “Employment Section”.

Useful Reading: How to Prepare to File Your Own Tax Return


Your Key Actions to Become a Self Employed Microblading Artist:

  1. Register as Self Employed
  2. Open a separate bank account (Here’s the Fastest Way to do that)
  3. Set up a bookkeeping system like Freeagent
  4. Set aside money for taxes each month at your highest tax rate.

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