Industry Specific Bookkeeping Tips: Hairstylists!

Today, we’re focusing on hairstylists! Let’s be honest… who doesn’t LOVE going to the salon and walking out feeling like a brand new person? We want to celebrate our favorite people who help make us feel beautiful!

Please note, I am not a tax professional, nor can I give you accounting/tax advice. However, I can help you with your bookkeeping! Here are some tips to make your books as beautiful as you make us feel: 

1. Separate Business and Personal Finances:

Open a dedicated business bank account and use a business credit or debit card to track expenses more easily. 

2. Record All Income:

Log every service provided, product sale, and tip received, including dates, client names, and service details. 

3. Track All Expenses:

Keep detailed records of business expenses such as supplies, booth rental, marketing, fuel for mobile services, utilities, and any product used in services. 

4. Maintain a Chart of Accounts:

Create a system to categorize your income and expenses, which makes it easier to analyze your salon's financial performance. ***Check out my crash course on chart of accounts here!

5. Manage Inventory:

Keep track of your product stock to know what items are popular and ensure you have enough on hand to meet demand. 

6. Store Digital & Physical Receipts:

Keep all your receipts and invoices for tax purposes and for reference, using apps for digital storage. 

7. Reconcile Bank Statements:

Regularly compare your bank statements with your bookkeeping records to catch any discrepancies and ensure accuracy. 

8. Generate Financial Statements:

Regularly create an income statement (profit and loss), a balance sheet, and a cash flow statement to monitor your business's financial health. 

Taxes and Compliance **** PLEASE NOTE: I am not a tax professional and am not giving you tax advice!!! Go find a tax professional to help you out! We all need one! 

9. Understand Tax Deductions: Identify all eligible business expenses for tax deductions, such as supplies, booth rentals, and business use of your cell phone.

10. Set Aside Tax Money: Save a portion of your income (e.g., 20-30%) regularly for taxes to avoid last-minute financial stress.

11. Make Quarterly Tax Payments: Hair stylists often need to make estimated tax payments to the IRS four times a year to cover federal, state, social security, and Medicare taxes.

    
    

12. Consider an Accountant: A professional can help you maximize deductions, stay compliant, and manage your tax obligations.