If you’re thinking about opening a salon or already own a small beauty salon, you probably know that feeling: "accounting and taxes" can sound like a secret language that just ruins your mood. Don’t worry! In reality, the world of numbers is much simpler than it appears—especially if you know what to track and how to keep your data organized. Let’s break it down together:
- what financial information you need to collect,
- how to keep daily bookkeeping running smoothly,
- when it’s time to bring in an accountant,
- and which main taxes you should expect.
What financial information should you be collecting?
Just like the best result comes from applying color at the right temperature, the foundation of salon finances comes down to three essentials: income, expenses, and receipts.
Income:
Record all money received from clients—whether in cash, card payments, or invoices. Don’t forget that income also comes from product sales and gift card purchases. Make sure to note those as well!
Expenses:
For every purchase—be it hair color, your electricity bill, salary payments, or even your morning coffee—you should have a receipt or invoice. Snap a photo of each receipt and save it in the cloud or, even better, in your salon management software. Ever spent time digging through drawers searching for a missing receipt? Making it a daily habit ensures all your entries are in one place come month’s end.
Also keep track of:
- Owner contributions and withdrawals
- Loans
- Grants or subsidies
- Gifts or discounted repairs (yes, those count too!)
Even if you're operating solo, having a simple system helps you understand where your money is coming from and where it goes. This is where SalonLife shines—daily income and expenses are instantly logged into a digital catalog, providing you real-time insights and accurate data at your fingertips! If you haven’t chosen your accounting software yet, check out our recommendations for beauty salon accounting software here.
How to organize bookkeeping without feeling overwhelmed?
Keeping up with your finances doesn’t require a degree in accounting. Simple habits go a long way—the key is consistency! Prepare yourself by:
- Recording all income and expenses daily or, at minimum, weekly.
- Separating income and expenses into different “folders” (physical or digital).
- Adding a note to each expense/transaction like “gel manicure,” “payroll,” or “internet bill.” Future you will thank yourself when deciphering what that “04/10 payment” was about.
If you go digital (photograph receipts and upload them), you’ll avoid the hassle of paper clutter. Once a month, when you have more time, review your report and ensure everything matches up. This small but regular effort helps spot discrepancies or unnecessary expenses early on.
When should you call in an accountant? Do I really need to pay one right away?
If you’re just starting out, you’ll probably manage fine on your own. However:
- Make a point to meet with an accountant at least once early on to understand exactly what data and documents you will need later.
- As your business grows—hiring staff, dealing with sales tax, making investments—an accountant’s help becomes invaluable.
- An accountant assists with monthly or quarterly filings, annual reports, and taxes. They also know all the legal “tricks” and opportunities to smartly reduce your tax burden.
Tip: Find a partner familiar with the beauty industry. Don’t start with the most expensive full package; instead, consider flexible hourly services. If your data is already organized in software and your invoices are digital, collaboration will be much smoother!
Top 3 taxes you don’t need to fear, once you’re prepared
These might sound intimidating: sales tax, income tax, and payroll taxes. But they follow clear, logical rules:
1. Sales Tax
Sales tax becomes relevant if your salon’s annual revenue exceeds the state threshold (varies by state, typically around $100,000). Below that, no need to collect or declare sales tax. Once you surpass the threshold, you must register as a sales tax vendor and file returns monthly or quarterly.
P.S. SalonLife can help remind you about these deadlines too.
2. Income Tax
Income tax applies to your business profits and salaries. If you operate as a sole proprietor or LLC owner, you report income taken as salary or distributions yourself. Tax rates vary but generally average around 20-30%, depending on your state and federal laws.
3. Payroll Taxes
If you employ staff, you’ll pay payroll taxes on top of wages—covering Social Security, Medicare, unemployment insurance, and possibly state taxes. These typically add up to around 15-20% of payroll costs.
Deadlines for tax filings vary by jurisdiction, often falling monthly or quarterly. Don’t worry—modern software, including SalonLife, can send helpful reminders and verify that your reports are complete and accurate.
How technology makes dealing with “boring” finances just a few clicks away
What if you could get a quick overview of your daily income and expenses at the end of each day? If a receipt or expense is missing, you get a friendly alert. When it’s time to send data to your accountant, it takes just a couple of clicks.
This is exactly where SalonLife steps in:
- Easily record your daily income and expenses
- Use automated financial reports and manage digital receipts
- Export data (e.g., CSV files) for your accountant
These handy tools save you tons of time and stress—letting you focus on what really matters: making your clients look and feel beautiful.
Once you have these basics down, you’ll gain a strong advantage in managing your salon! But finances are just one part of the bigger picture. Alongside financial savvy, success comes from smart space planning and modern inventory management. For inspiration, check out articles on the best salon layout tips for optimal design and salon inventory best practices.
In the next article, we’ll focus on how to control your daily expenses and where to start cutting costs without sacrificing quality. Did you know some savings can happen almost unnoticed? Stay tuned!
