Often overlooked or done too hastily, reviewing your salon or spa’s goals, business reports and strategy is the best way to set yourself up for growth. Costs tend to rise – are your stylists still bringing in enough money for the wages they’re on? Will you need to rise your prices this year? Do you need to look for other suppliers for better deals? What about stock and equipment? A whole lot goes into planning for the year ahead, and most times, the best way to go about all of it is to review the past year. Thus, the need for a year-end salon financial checklist (which you can find below if you’re running a bit late on your paperwork) and a good understanding of cash flow projections.
Bookmark This 60-Second Read: Your Year-End Salon Financial Checklist
- Stock: It’s really important that you get your stock figures right. This will affect your profit and can throw off your gross profit percentage when doing year on year comparisons.
- Buy equipment: In the UK, there is an annual investment allowance (currently £200,000). If you are thinking of buying equipment, do it before your year end and you will get the benefit of a reduction in tax. If you’re not based in the UK, ask your accountant if you can benefit from any annual investment allowance in your area.
- Pension contribution: If you’re a higher rate tax payer or you run your business through a limited company, you may be able to reduce your tax by contributing to your pension. You will need to take advice on this.
- Look out lease agreements and loan agreements: Make sure your accountant gets copies of these to prepare your accounts. Otherwise, you might not claim the right amount of interest.
- Donations: Consider giving to a charitable donation, it could save you some tax.
- Talk to your accountant: You should always do this at least 2 months before your year end. If you don’t have regular meetings with your accountant then make sure you schedule a chat before your year end. When you meet in the new year, make sure you chat about suggestions or ways to help you save you tax for the next year.
- Set your goals for the year ahead: Now is a great time to sit down and look at what you want to achieve in 2019. Set some time aside to do this properly and give yourself and your team targets you can break down into monthly chunks, taking into consideration any seasonal fluctuations.
N.B. Since there are different tax regimes depending on whether you are a sole trader or a limited company, this checklist is fairly generic to cater for both. Bear in mind that if you are a sole trader, your business’ year end may differ from the tax year.
Looking for personalised advice? You can always join Gloria’s Facebook group Knowing Your Numbers. It’s a safe place to ask questions and find out more about numbers in a supportive environment. Got general feedback? Let us know either in the comments below or tweet us @ThePhorestWord! (Pssst! We’re on Instagram too!)
Thanks for reading! #LetsGrow
Gloria Murray is a Glasgow-based triple award-winning accountant who has also been awarded the Most Innovative Business Advisor in the UK in the 2020 Annual Innovation Awards 2017. Director of Murray Associates Accountants, she specialises in helping small business owners grow sustainable and ethical companies that not only provide a better service to their customers but also contribute to local employment. If you would like to get more business tips from Gloria, you can get a free copy of her printed business magazine by sending an email to firstname.lastname@example.org