Maintaining accurate and useful accounting records for a beauty salon is very important and worth the effort. The information captured will help to plan for staffing during the day, week and month, including approaching holidays. You will also be able to track the products you sell and which technician sells them. If done properly, all of this information helps manage a beauty salon business efficiently.
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Understand the employment classification of the technicians. This means knowing if they are considered an employee or a contractor by the IRS. Most likely technicians are employees which means more expense incurred by the salon as payroll taxes need to be withheld, reported and paid. Even though having true employees is more effort, it is better to be safe and not deal with IRS auditors. To learn more about employee classification visit the IRS website on the matter.
Maintain detailed records for service revenue. This will help you better manage the salon. Every sale should include the customer, the technician, the time of day and the payment method. This information will show you which technicians are the busiest, your busiest time of day and month, repeat or new customers and various other pieces of information you deem important to make business decisions. A strong Point-of-Sale (POS) system will capture the information you need.
Capture expenses at a detailed level. This means costs for payroll by technician, rent, utilities, insurance, various products needed by technicians and other items specific to your beauty salon. Make certain you also keep record of items such as refunds, gift tokens and returns as well. These accounting items make for better financial statements and more informed business decisions.
Utilise accounting software to maintain information. Just about any simple software will meet your accounting needs, but it is best to use software designed specifically for beauty salons. If you do not already have accounting software, consider software offerings by Clever Salon and Spa Tools or the Free Downloads Center. These software packages are not expensive and will offer all the accounting functionality you need for the salon.
Reconcile accounting records on a monthly basis. This means, among other things, insuring sales receipts or employee payroll for the month equal what is recorded in your accounting system. This is a critical step to ensure your financial reports are valid.
Run daily, weekly, monthly and annual reports from accounting software with all the information you have captured. You should have a variety of reports to choose from with the software you are using to record your accounting information. Once you have captured and entered your accounting information, the reports you choose to run will greatly benefit you in making management decisions as well as fulfilling tax reporting obligations.
Tips and warnings
- For general accounting information regarding salons visit the Favazza & Associates, LLC website.
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