Complete Guide to Salon Accounting

As a salon owner, it can be difficult to handle salon accounting and attending to your clients. Remember, as your business grows, the need for proper accounting comes in; else, you'll get into financial and management issues.

Why is it crucial to practice proper accounting? You’ll have control over your finances and be able to make solid plans on what you want to achieve in the coming days. To achieve that, make use of salon accounting apps to record all the transactions made in your salon POS system. It’ll automate the process and help you free ample time to see each client.

What You Will Learn In This Article?

The article gives detailed information on salon accounting. It explains various accounting terms and tips on how to practice proper accounting.

Jump To The Section You Like

  1. What Is Salon Accounting?
  2. How To Do Salon Accounting?
  3. How To Keep Books For Your Salon?
  4. Conclusion

What is Salon Accounting?


Salon accounting refers to tracking the total income that gets into the business and using it to extract crucial information about the business's profitability. It’s one aspect of a business that hair salons and hair stylists can’t ignore, as doing so might lead to financial problems over time.

Salon Accounting Tips
Salon Accounting Tips

Key Accounting Terms to Know

Accounting Vs. Bookkeeping Vs. Management Accounting

Accounting, bookkeeping, and management accounting are all related but mean different things. Salon bookkeeping forms the foundation of accounting. It involves tracking and recording financial transactions daily.

Accounting, on the other hand, relies on the information collected through salon bookkeeping.

The information is used to analyze the business's financial state and in the preparation of financial statements.

Management accounting refers to the communication of the business's financial state to its managers so that they can come up with strategies and make informed decisions regarding the business.

Basically, it aims to make the operations of the business better and work towards achieving its set goals.

Revenue or Income

Revenue refers to the total income generated from the provision of salon services or the sale of salon products.

Expenses or Expenditures

Expenses refer to the total cost a business incurs to generate revenue.

Assets, Liabilities, And Equity

Assets refer to resources that a business owns. Liabilities refer to what a business owes, usually in the form of money. Equity refers to what the company's shareholders would receive in case of liquidation of assets and payment of liabilities by a business.

Accounts Payable

Accounts payable refers to what a business owes its suppliers, usually in cash, and is part of liabilities.

Accounts Receivable

Accounts receivable is the total amount of money owed to a business by its customers who have purchased goods or services on credit.

Cash Vs. Accrual Accounting

In cash accounting, expenses and revenue are only recorded after payment has occurred. In accrual accounting, recording of revenue and expenses is done when transactions occur, even when payments have not been made.

Chart of Accounts

A hair salon chart of accounts refers to the list of business accounts that gives information on the financial transactions that have taken place within a specified time.

Most Common Salon Accounting Reports

Balance Sheet

A salon balance sheet refers to the financial statement of a salon, including its assets, liabilities and equity.

Income Statement

Income statement (also referred to as salon profit and loss statement) shows the total revenue and expenses accrued within a particular period. It’s a crucial salon accounting spreadsheet used to measure a salon's performance over a specified period.

Cash Flow

Cash flow refers to the movement of money in a salon, whether physically or virtually, in a specified period.

Sales Tax

Sales tax is the money that goes to the governing bodies after the sale of a product. It’s usually included in the cost of the product.

Payroll Tax

Payroll tax is the money withheld by an employer, usually a percentage of the employee's salary, and is paid to the governing body.

Do not miss our post on Hairstylist Tax Write Offs.

How To Do Salon Accounting?


Tips How To Do Salon Accounting
Tips How To Do Salon Accounting

Register Your Business

Registration requirements differ from state to state.

A hair stylist will be required to give a location address and state their business's structure, whether it’s a sole proprietorship or partnership.

Open a Salon Bank Account

Open a salon bank account; don't use your personal account.

It’ll get easy when paying taxes since your income and expenses will be separate from your personal cash.

On top of that, it shows professionalism in your hair salon.

Decide on a Bookkeeping Method

The next step is deciding which bookkeeping for hairstylist or salon method you should use.

It’ll also guide you on how to keep track of salon expenses.

You can either choose cash or accrual accounting.

Cash Method

In this method, you record incomes and expenses only after cash expenses are made.

This method is simple and preferred by many hair stylists and salon owners.

Accrual Accounting

Choosing this method means that you’ll record expenses and income any time a transaction is carried out, whether you’ve received cash for it or not.

It’s not the simplest method, but it provides more accurate information since you can calculate transactions that took place within a given period and record them in a salon ledger.

Record All Income and Business Expenses

Make sure you record all the money that comes in and gets out in a salon.

Use accounting software for salons to make the process smooth.

There are several salon accounting apps available that’ll let you record every transaction.

Back the system using receipts, invoices, checks, pay slips and any other document that has financial information.

The documents might be useful in case you’re required to prove your tax returns.

Setup Payroll

Every successful salon will need to hire employees at some point.

Ensure you follow all the set guidelines for employing.

The first thing will be to check the minimum wages to give to them to avoid getting into problems.

Track Inventory

Tracking inventory simply means you have a record of what is in stock.

Having a proper record ensures that you never run out of stock and also helps identify fast-moving goods.

You may choose to record your inventory manually, which is tiresome and inconvenient.

Using inventory tracking software is the way to go since it’s flexible, and makes identifying errors much easier.

Make and Receive Payments

When it comes to making and receiving payments in your salon, you can choose cash or virtual methods.

Virtual payments offer several benefits, as you can track transactions for future reference, and are safe.

Virtual payment methods include the use of credit cards, bank transfers, eWallets, among others.

Learn Your Tax Filing Obligations

Every business is required to pay taxes to the authority.

To prove that you’ve indeed paid them, you have to file returns.

The returns show how much you’ve earned in terms of business revenue, how much you were supposed to pay, and the actual payments you made.

Manage Your Salon Cash Flow

Managing the cash that gets in and out of your salon may seem an easy task, but do you know it has a great impact on your salon?

It makes it much easier for salon owners to predict their businesses’ future.

Using a salon accounting app to keep track of your cash flow will be more effective, and will make sure that you see a positive cash flow all the time.

How To Keep Books For Your Salon


Benefits Of Using Salon Accounting Software

Accounting software is essential and greatly helps as you manage your salon’s finances.

Using paper and pen makes it easy to make mistakes and doesn’t give crucial reports of your finances.

Here are other reasons why salon accounting offers important features for your salon.

Security and Back Up

When using a software, no unauthorized parties will access your accounts.

You’ve the option of choosing a strong password for your system and share it with trusted parties only.

In case some information has been deleted accidentally, this software provides backup making sure that your information is safe.

Receipts Saving

Keeping a receipt of everything you’ve purchased for your hair salon business is important.

Nowadays, self-employed hairdresser bookkeeping software like QuickBooks and Sage allows you to take a photo of a receipt and save it in the software.

Easy Access to Information

You know how hard it is trying to look for records in a book.

When using bookkeeping software like Xero, you’ll find it much easier to search for information fed into the system years ago.

Do I Need an Accountant for My Salon?

Hiring an accountant lets you focus on running your salon while a specialist watches over your financial matters.

Unless you’re an expert, have an accountant to streamline your salon finances and increase your salon’s performance.

If you’re a startup, an accountant helps you obtain the necessary documents such as licenses to operate your salon.

You’ll also not have to deal with complex tax issues; that’ll be the accountant's responsibility.

How Much Does an Accountant Cost for a Salon?

How much it costs to hire an accountant depends on several factors.

These include the size of your salon, its location and the complexities of the transactions.

Why is salon bookkeeping important?

Salon bookkeeping ensures that you don't spend more than you earn. It also ensures that all transactions are recorded for future reference. On top of that, bookkeeping provides crucial day to day information about the business, which can be used to make major decisions to maximize profitability and enhance performance.



Salon accounting is a crucial aspect that will determine whether your business will succeed or not, whether it’s a small business or medium-sized.

Salons that use the best accounting principles are unlikely to experience financial problems when compared to the ones that don't.

If you’re not very good in this field, leave it to the experts.

You can never experience financial problems with a good accountant around.

And if you love these ideas or have some other ideas that you've used in the past to promote your salon business, why not share it with the Zolmi community in the comment section below. We would also be delighted to answer your questions, as well.


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