You must follow the rules of proper bookkeeping for hair stylists if you want your business to succeed. Your salon POS system will record many financial transactions that must be accurately recorded for you to keep track of your progress and make wise decisions. The recording of all financial transactions that take place in a business is referred to as bookkeeping. Here is a guide to help you know the best practices that will take your business to the next level.
You are probably already aware as a business owner that certain parties might be curious to learn about your financial situation. Lenders, investors, and possibly clients are among them. If you don’t give them these details, you risk losing the rapport you’ve built with them. When the need arises, being able to present the numbers to interested parties is made easier by having well-organized financial records.
The salon and spa business sector needs more fiscal responsibility. The business directors must be able to measure, monitor, and manage their spa’s performance precisely and consistently, just as asset managers, lenders, hotel operators, and others require reliable and realistic information about their business’s economic viability as a business and its contribution to the core business. Additionally, they must be able to contrast it with that of rival chains and the spa industry.”
Are you considering starting a salon? It is a reliable and successful business, but if you do decide to open one, you must have a solid strategy and plan in place. Small businesses, such as spas and salons, must keep accurate books, which can be done with ease. When it comes to running a business, you want to start with a pretty safe bet. $532 billion is the estimated annual value of the beauty sector. Despite this, the industry remained steady compared to others during the recession in recent times.
In a Salon and Spa Business, Bookkeeping is Essential Because:
1. Keep a sales ledger: You should maintain a record of all funds entering your business, including payments from clients, sales of cosmetics and other beauty products, payments from trade shows, and rent from salon space rentals.
2. Ledger for recording acquisitions of records: Keeping track of your expenses is essential for understanding your business. Make sure to save all your receipts and invoices and keep a record of your spending.
3. Debt: If you have credit cards or loans, you should keep track of your balances, recent purchases, and payments made to your creditors. Keep all of your credit card statements and receipts as evidence. If you borrowed business financing from friends or family, keep a record of your repayments.
4. Excel Spreadsheets: Small businesses with few employees might decide to forego more complex payroll accounting systems in favor of using a spreadsheet. It is possible to categorize expenses.
You might find that using bookkeeping software saves you time. There will be a possibility for more accurate tracking of sales and costs. Assessing how much tax you owe, or the government is owed is done using the tax return, which is the main form. It asks you questions about your sales revenue, savings, investments, and pensions. The law requires you to submit this if you are an independent contractor.
Keep up with the times: If you want your salon to be successful, maintain a strict bookkeeping system. Establishing a weekly habit of recording all of your earnings and outgoings on a particular day will help you maintain it for many years to come. Never let a month pass without keeping a record of your spending.
The focus is shifting away from expanding the variety of spas and toward increasing the number of spas as spas are being examined more closely in terms of construction costs and financial performance. You must evaluate how your spa is doing in relation to others in the area or the spa. This could only be done if your company maintained sufficient accounting booking services for its salon and spa business.
Why is bookkeeping so crucial?
Bookkeeping guarantees a salon’s financial stability. Unfortunately, some business owners choose to ignore it and experience financial instability as a result. Here are some of the factors that make bookkeeping crucial for independent hairdressers.
Every successful company typically has a budget that instructs the accountant on the next course of action. You can make important decisions that won’t harm your finances when you are aware of the business’s expenses and revenue.
- Getting Your Taxes Prepared.
At the end of each tax year, the taxman expects you to file returns. You don’t have to start looking for financial records a few days prior to the due date. By keeping your bookkeeping organized, you can be sure to always have the necessary data on hand.
- Better Financial Analysis:
You can analyze the performance of your business with the aid of bookkeeping. To take the necessary actions, it enables you to understand what is working and what is not.
Bookkeeping Advice for Hair Stylists:
A separate bank account should be opened:
Establishing a different bank account from your personal one keeps things clear-cut and transparent. By doing this, you can prevent yourself from using money intended for business expenses for personal ones. By opening two separate accounts, you can plan your business finances and pay yourself a portion of the money you earn from your small business.
Choose A Bookkeeping Method:
Cash vs accrual:
To keep track of all your earnings and expenses, you unquestionably need a suitable bookkeeping system. There are two options available to you. These are the accrual or cash methods. If you select the cash method, you will record income or expenses after receiving cash payments. Whether payments are made or not, all transactions must be recorded when using the accrual method. The accrual method offers greater financial transparency, despite being simpler and easier than the cash method.
Choosing between a single entry and a double entry:
A single-entry method is suitable if you opt for the cash accounting method. This ledger, which is very easy to use, only affects one account at a time. Since every transaction will have an impact on two accounts when using the accrual accounting method, the double-entry method will be appropriate.
Keep track of all revenue and outgoings from the business.
Spending on business operations is referred to as expenses. Contrarily, income is the sum of money earned through the sale of goods or services. It’s essential to keep track of all earnings and business costs to monitor your progress. Additionally, you must ensure that no fraud of any kind is occurring.
Keeping all receipts is another important consideration. The seller will require you to present a receipt to prove that you bought the item if you purchased it for your business or rental booth and later decide to return it to them for a variety of reasons.
Plan a budget for your taxes:
You have a tax obligation as a hairstylist. Sadly, some salon owners do not save enough money to pay taxes, and as the deadline for filing tax returns draws near, they begin looking for other ways to raise the funds. Such a situation shouldn’t exist.
Always have a strategy in place and set aside some of your income to ensure that you can pay your taxes on time without having to borrow money.
Making and Getting Payments:
Paying your suppliers and employees is required. Additionally, you must accept payments made by credit card from clients. Your employees can receive hourly, monthly, or commission payments.
Choose the easiest and most appropriate methods after considering all the alternatives. Create a payment schedule and inform your clients of it. Provide each customer with a convenient selection of payment options, such as cash payments, money transfers, and debit cards.
To keep a positive working relationship, you must also make your supplier payments on time.
Learn About Your Tax Filing Requirements.
You can prevent potential penalties by being aware of your tax filing obligations. It aids in tax budgeting as well. Usually, you can find this information on easily accessible government websites.
Manage the cash flow in your salon:
By controlling cash flow, you can make sure that you always have enough money to run your hair salon and that cash inflow exceeds cash outflow. A hair stylist income tracker can be used by salon owners to keep track of all expenses and income to effectively manage cash flow.
Do independent hairdressers require a bookkeeper?
It’s likely that you’re debating whether you require the services of a bookkeeper. Many stylists choose to handle their own bookkeeping because they believe they will save money, but this isn’t always the case. Having a bookkeeper allows you to concentrate on offering services to clients while they take care of financial records. They are also helpful if you have no prior accounting experience.
The ability to achieve a work-life balance is another benefit of hiring someone to assist you with your small business because you won’t have to handle multiple tasks in a short period of time. Hire a bookkeeper if you’re not an expert or don’t have enough time to handle finances and take care of clients.
Benefits of Using a Bookkeeping App as a Hair Stylist:
Due to the numerous advantages they enjoy, many salons and hairdressers today have switched from using manual accounting books to digital ones. A bookkeeping app is among the best online resources you can buy. Here are a few advantages of it.
- Security and backup:
Your financial transactions are secure when using a bookkeeping app. You can restrict who can use the app, making it impossible for anyone to tamper with them.
- Saving receipts:
Never undervalue the value of keeping receipts. You can quickly save your receipts for future use with a bookkeeping app. Your receipts will be safe for a longer period than they would if they were kept manually and retrieving them is quicker.
- Simple Information Access:
A small business sees a lot of activity every day, and information can quickly accumulate. Accessing information is simple with a bookkeeping app. In contrast to using a book, you can access information from any location using a variety of devices, including computers, tablets, and smartphones.
Software for Bookkeeping Designed for Your Salon:
Our services are the ideal choice for a busy salon. It is a comprehensive accounting solution that handles all your bookkeeping requirements, including producing expert invoices, controlling cash flow, and keeping track of the time spent by you and your staff. To save time, you can manage your appointment scheduling through your accounting software directly with our seamless integration options. For you, it does everything except style your hair.
We offer straightforward, secure online payments to make getting paid easier than ever. Customers can easily pay you with a credit card by clicking a few buttons on an invoice. Your customers won’t have to be concerned about payment protection thanks to top-notch encryption and security. To take the guesswork out of online payments for salons, we provide a clear, reasonable fee structure. Become the town’s techiest salon by getting ready.
To give you more information about the operation of your salon and insights into your potential for growth, we support double-entry bookkeeping. It can help you make future plans for your company and save you time and money during tax season. For no additional charge, you can even invite your accountant to collaborate on your account so they can access reports and examine your company’s data. With the help of cutting-edge bookkeeping tools from our services, your salon business will expand more quickly than ever.
A key component of hair salons is bookkeeping for hair stylists. When you keep your books properly, you can make better decisions, ensure financial transparency, and fulfill your tax obligations.
Unfortunately, if you don’t have an accounting background, it may be difficult for you to practice proper bookkeeping. Fortunately, you can speed up the process and free up time to focus on your customers and other aspects of your business by using expert bookkeepers and accounting software. Feel free to contact our Bookkeeping Services for any Salon Accounting needs.