Salon Suites are Taking Over the Booth Rental Market

Posted on May 30, 2023May 26, 2023 by Image Studios 360

Salon suites offer a variety of benefits over booth rental for hair stylists and other beauty professionals who are looking to start their own business. Over the past 10 years booth rental has been declining rapidly in popularity, while salon suites have been on the rise and offer so much more than booth rent:

Cost savings: Renting a salon suite is often more affordable than renting retail space, as you only have to pay for your individual space. This is especially appealing for new businesses or those just starting out.

Invest in your success: While salon suites might cost more than booth rental, it’s usually not substantially more. In most cases you can pay an additional 15-25% in rent and get so much more renting a salon suite compared to booth renting.

Flexibility: With shorter lease terms and the option to share a studio with another professional, salon suites offer greater flexibility than traditional leases, making them more appealing.

Control over your brand: As a salon suite entrepreneur, you have complete control over your schedule, pricing, and services offered, allowing you to create a unique brand and identity for your business.

Opportunities to grow your business: By locating your business in a high traffic salon suite, such as IMAGE Studios, you have access to networking with numerous other beauty professionals that can potentially refer clients to your business.

Access to amenities: Many salon suites come equipped with basic amenities such as chairs and mirrors, saving you time and cost in setting up your own workspace. Some may also offer additional amenities like a reception area or private bathroom.

Overall, salon suites offer cost savings, flexibility, control over your brand, opportunities to grow your business, and access to amenities that make your business more efficient and convenient. This is why salon suites are a better option for hair stylists compared to booth rental.

Salon Expense Calculator

Posted on April 23, 2014August 30, 2019 by Image Studios 360

To help you understand what you expenses are we’ve created this nifty expense calculator. Just enter your actual expenses to see what your daily, weekly and monthly break even is.

Estimating Your Taxes

Posted on December 26, 2013August 20, 2019 by Image Studios 360

The end of the year is nearing and as a salon owner you will want to make sure you budget your finances properly so you don’t get stuck with a tax bill on April 15th. Hopefully, you have kept records of your sales for the year, and equally important you’ve kept meticulous records of your expenses in order to write these off as part of the cost of doing business. If you have not, now is the time to start collecting your bank statements for the year so you can total up your revenue for all sales and services you performed as well as categorizing each expense you incurred during the year so they can be properly expensed. Using accounting software will help with this process, I recommend using Wave Accounting, its an online accounting app that works in all major browsers (Firefox, Chrome, Internet Explorer, etc) and best of all, its FREE. This accounting software lets you enter your revenue, enter your expenses into different categories that they have put together already (which you can further customize), and it syncs with your bank accounts online so once you go through the initial setup everything is then sent automatically to Wave and all you have to do is assign categories for your expenses and income. This is an excellent way to do your accounting because most of you don’t have the time to dive into a new software program and spend countless hours trying to learn how it works. Wave Accounting will have you up and running in under an hour. To sign up for their free service go to www.waveaccounting.com.

If you are not comfortable using Wave Accounting and you have your own method of tracking your income and expenses then definitely keep using it. My general rule of thumb is if something is working for you, keep doing it! Everyone has a different style of doing things and that is ok.

WHAT IS MY INCOME?

Believe it or not most business owners don’t know their actual income until the end of the year, sometimes not even until the beginning of the next year. Knowing your income is valuable because you can plan much better for your salon, purchase equipment, advertise and market more, or if need be, cut expenses if your income isn’t what you thought and your expenses are more than you had hoped for.

To start calculating your gross income (before expenses) you will need to go through all your bank statements for the year and total up all your deposits for services & products that you sold. If you have other sources of income through your salon then go ahead and add them to the list. Be sure to add up everything you have taken in as revenue for the year to come up with your total. If you use Square, Paypal, or any other point of sale software you can also run reports within that system and compare to your bank statements to ensure everything matches.

WHAT ARE MY EXPENSES?

This is an area that you definitely want to keep perfect records for because most (if not all) of your business related expenses can be written off at the end of the year as a cost of doing business. Here are some examples of things that can typically be expensed (within the allowed limits by the IRS) at the end of the year for your hair salon that a lot of people forget about:

Education Classes
Rent
Business Cell Phone/Landline
Insurance policies, business licenses, health department licenses, etc.
Bank Charges
Supplies
Color and backbar
Interest on business loans and credit cards
Vehicle mileage to and from your salon (or your vehicle lease, but an accountant can give you the pros and cons of each scenario for this)
Tuition and fees

NOTE: These are not the only things that you can write-off at the end of the year but are someof the most common items you will want to be aware of and keep track of so you can claim these at the end of the year. Consult a professional tax accountant to ensure you get the maximum allowable write-off for your taxes at the end of this year.

WHAT SHOULD I EXPECT TO PAY?

At the very minimum you should expect to pay about 16%-25% of your income in federal income tax to the IRS at the end of the year. Based on your tax bracket/earnings you may be higher or lower than this. A good rule of thumb is to set aside at least 20% of your monthly revenue into a savings account that you can use to pay taxes from, and hopefully be left with some left over cash at the end of the year if you keep track of everything. This will set you up with a fairly good amount of tax money to use to pay Uncle Sam and if you owe more than you set aside you will at least have a head start on what you have to come up with out of pocket.

If you wait to file your taxes at the end of the year you may also be charged a penalty by the IRS for not filing quarterly, so make it a habit to keep track of your expenses monthly so you can file a quarterly tax return throughout the year and avoid additional penalties and interest from the IRS.

*It is important to consult a licensed tax professional to understand your actual tax liability and exposure. This blog is for information purposes only and is not meant to substitute as advice from a professional. All reasonable means were used to compile the information.

Salon Banking – 10 Helpful Tips

Posted on October 17, 2013August 20, 2019 by Image Studios 360

Small business accounting for your salon can seem like a daunting task, especially if cash flow is tight and you don’t think you can afford professional help. Here are 10 simple tips to help you keep track of your money and avoid being caught unprepared at tax time:

Open a separate bank account for your salon. This will help distinguish between personal and business transactions and make tax filing less complicated.
Organization is key. Consider a large binder, divided by months, to keep bank statements, receipts and deposit slips. This makes for easy referencing and will protect you in an audit.
Avoid using cash. Cash is difficult to account for, track, and prove if the IRS wants documentation of what was purchased. My recommendation? Use business checks or your business debit card to make purchases. For example, If your Landlord ever says that you have missed a rent payment, it’s easier to look back through your bank statements than to search through receipts, if you remembered to get one in the first place.
Save Receipts. Make sure you save all receipts! Let’s say you go to Costco and purchase ink, a garbage can and broom for your salon. Unless you have a receipt itemizing the business charges, the IRS may think you are purchasing personal items. It’s not enough to use a debit card or check to pay for purchases, you’ll need an itemized receipt as well.
Record Deposits Correctly. Take a minute to notate on a deposit slip what checks are being deposited and the dollar amounts. Typically there are a myriad of deposits that happen within a business checking account: loans, personal transfers, income from services, income from product sales, etc. If the deposits are accidentally treated as income when they were actually a loan or a transfer from a personal account, you may pay taxes on more money than you made.
Home Deductions. If you work from home, keep records of your personal expenses, you may be able to deduct a percentage of them as business expenses. These may include rent/mortgage payments, utilities, cell phones, paper, ink, etc.
Keep a Mileage Log. If you want to deduct mileage on your tax return the IRS requires documentation. You cannot count miles driven to the primary work location, but miles driven from your first work location to a second work location are tax deductible. Consider a phone app to help keep track of miles.
Don’t Use Credit Cards. Having credit available can be a lifesaver in an emergency, but according to a study by Dunn and Bradstreet (the #1 credit reporting bureau for businesses), credit card users spend 15-‐18% more when using credit instead of cash. Early last decade when McDonald’s began accepting credit cards, they found the average transaction rose from $4.50 to $7.00.
Bottom line? If you are using credit to earn a 1-‐5% reward you are still overspending! If you are using credit to earn airline miles, Consumer Reports stated 75% of airlines miles are never redeemed. In addition, CardTrak reported 60% of people don’t pay off credit cards every month. So not only will you be overspending, you will most likely be paying interest on those charges! My recommendation, avoid using credit cards if at all possible.
Save I recommend setting aside 20% of every dollar earned (gross amount) into your business savings account for taxes and future unforeseen expenses. This helps ensure you have money to pay Uncle Sam and avoid unforgiving government penalties and fees for missed or late tax payments. This money will also help you avoid using debt for future expenses. In addition, keep at least enough cash in your business checking account to cover one months worth of operating expenses (rent, supplies, anything that is a regular expense, etc). This will help you avoid bank overdrafts, insufficient fund fees, and save you in case cash flow slows for any reason.
Easier to remember now. Go over your accounts at least on a monthly basis, making notes on bank statements, attaching corresponding deposit slips and receipts and filing them in your tax binder.

Many small business wait until the end of the tax year to organize their financial documents, and by then, are unable to remember many details. This hurried, generalized accounting can result in errors and lost tax deductions.

If you follow these 10 simple guidelines for small business accounting for your salon, your year end tasks will be less daunting, you will maximize possible tax deductions, and you will be better prepared to meet tax and other financial obligations.

Jennifer Groberg is a graduate from the University of Utah with a bachelors degree in Finance. She owns her own firm, BookSmarts Accounting, and is a certified QuickBooks Pro Advisor. Jenny’s expertise lies in small business accounting, bookkeeping, QuickBooks consulting, QuickBooks training & cleanup and financial advising.

For small business and salon accounting needs contact Jenny Groberg at(801) 979-9676 or email her at jenny@booksmartspro.com.