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Tracking Beauty Salon Revenue and Expenses

Posted by Gina on Oct 03, 2022

Did you learn how to track your profit and loss in Beauty School or your technical training? Did you take any business classes that taught you how to effectively keep track of your business? Most will answer no to those questions. No one wants to talk about the business side of being a business owner It is easy to procrastinate, ignore or not even know where to start when it comes to the business. I mean, we just want to create beautiful artwork on our customers and provide an amazing service. This is the side of the business that is a part that no one talks about or wants to talk about. I want to provide you a few easy ways to track your business with out fear.

Hair Stylist Taking Payment

Taking Client Payments

A lot of professionals took payments in various spots thinking they would not have to report all of their income. In January of 2022 a lot changed with Venmo, Cash app, PayPal, Square and the list could go on and on. Prior to 2022 these platforms were only required to send you a 1099 if you had over 200 transactions or above $20,000 in sells. Now, in 2022 if you have more than $600 in transactions, they are now required to send you a 1099. The IRS now has more visibility to all transactions. This means you need to be mindful and know exactly what is coming in and going out with a reliable tracking process. This not only helps when it comes to tax season, but it also helps you know how much you are really making in your business. It is easy to overspend and not know where you are when you do not keep track of every little thing.

This can sound overwhelming but creating the tracking tool and behaviors can assist you in being successful. This is not something that you want to procrastinate with. It is important to know what your profit is, not only for taxes, but for you to be able to know what your income is. It may appear as if you have a high enough revenue, but at the end of the day you don’t have enough to run your business or pay your personal bills. By tracking, this will not only make you aware of your expenses and where you may be overspending, but it will make tax season a whole lot easier.

Beauty Business Expense

It is important to know what makes your business run successful. Everything that is considered ordinary and necessary to run your business is considered to be an expense. You do not need to overpay or not count something because you are concerned about getting audited or getting into trouble. If you can realistically show how it was used for your business, you will be just fine. Here are some of the average things that are included: salaries (if you have employees), rent, marketing, networking, insurance, licenses, utilities, training or continuing educations, products, tools, office supplies, and or events. You can even claim mileage for work errands or any business-related mileage that is outside to going to and from work. There are so many more things that can be added to this list, but you now have a grasp on where to start.

Cosmetologist Tracking Expenses

Tracking Salon Expenses

You can track with an excel spreadsheet or various business tracking programs. I know some that have a notebook and write it all down. Either way works great. You just have to figure what way is the most convenient way for you to consistently track. The main things that need to be tracking are Category or location, date, and details. Have a place to safely store your receipts. It is best practice to take a picture and store to the cloud and place them in a folder with 12 slots, one for each month.

For your revenue you want to track the date, and how the money was paid. Your options may be cash, check, cash app, Venmo, or what ever platform you use to take credit cards. You want all of your revenue to be tracked. I know some that don’t include their cash, but that is still a huge part of your income. It is important to know exactly what you make. It Is easy to spend cash and it is not dispensable, it is your revenue and income. If you go to buy a car or a house or get an investment on a business, you have to be able to show all of your revenue. It could mean not getting the loan amount you may need.

Cosmetologist Taking Payment

Tax Time

When tax season comes around you will be ready and can easily file, because you have tracked all year long. It becomes difficult if you only do it once a month or even quarterly. The more consistent you do it the easier it will be come. If you tracked, it daily it only takes 5 minutes. You can enter the revenue and expenses quickly for the day and it is done. Then monthly add everything up (unless you use a calculated spread sheet or program).

All of this may seem overwhelming, but it really can be simple. If you are just starting out it may be beneficial to find a mentor or work in a commissioned salon so you can focus more on your trade. In a commissioned salon you are typically an employee and will receive a W2 at the end of the year. This takes the necessity of tracking your revenue and expenses. It is still important to have goals to make the income you need, but It is a lot less work and stress on you If someone else is running the business itself. It can be overwhelming if you are getting confident in your trade and trying to figure out how to run a business. It is something that is lacking in the industry.

I hope this information will make tax season a little less stressful for you and provide you with the basic tool to track your business.

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