As a stylist, you’re the expert when it comes to knowing what tools to use when and whether or not bangs works for your client. However, when it comes to accounting and taxes for small businesses – like hair stylists, barber shops and salons – we’ve got the expert status covered.
To make things simple, we’ve pulled together some of our best advice for keeping things organized and keeping your accounting on point. Here are our top 5 tips for setting up the record-keeping side of your biz:
- Get your books set up before you open up shop. There’s no need to worry if you’ve already booked a slew of clients or have a thriving business – just start now if you haven’t already. You can always take care of past tracking at a later point, but for now, just start. Our best advice is to keep it simple, and have it be something that’s fairly easy to complete on a routine basis.
- Create a ledger. It doesn’t have to be expensive accounting software, or even a fancy spreadsheet. It could be as simple as a small notebook where you jot down all the financial stuff for your business. Pick whatever works best for you. Just remember that some kind of record keeping is better than none at all.
- Keep track of receipts. Especially when you pay cash! Purchase a expandable file folder, grab an envelope or go digital (some clients scan receipts, or snap pictures of them with their phone and store them in a digital folder). If you have a credit card/bank account for your business (you should!) you can even annotate the monthly bank statements and keep them in the same place as your receipts. Just make sure to keep that paper trail!
- Keep your business & personal accounts separate. We mentioned this briefly in #3, but it goes without saying that keeping things separate, keeps things simple. By having your personal and business assets (and expenditures) in different places you make paying taxes, paying yourself, and putting money back into the business so much easier.
- Set a plan and stick to it. There’s a reason that we’ve mentioned making things simple from the start. That’s because running the business-side of any business takes consistent effort and when it’s confusing or technical, it’s all the less appealing to sit down and stay on top of it. We suggest keeping track of things monthly or even bi-monthly if your client base is fairly large. When things are kept up to date, it takes a lot less time to manage the money.
TIP: Wondering what all goes into that ledger we mentioned in #2? We thought you might ask, so here’s what we tell our clients:
- Start with recording the current balance of your business account (make sure to add a date to this line and every line you insert into your ledger)
- Keep track of the revenue ($$ coming in) – cash or card payments for services or products. Don’t forget tips, especially those paid in cash!
- Make a list of expenses ($$ going out) – purchasing products for your clients, rental fees for your booth or building, tools of the trade, etc.
- Put a star next to any expenses that are recurring – rent, utilities, insurance and product purchases. This way you’ll be able to keep tabs on the average you spend each month and get a better idea of what it takes to run your business.
Have more questions? Want the nitty gritty details from a professional? Looking to find a great accounting service that can take care of the bookkeeping side of your salon so you can get back to what you do best? Drop us a line at email@example.com. We’d love to chat!