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, and you need to ask yourself: are your stylists still bringing in enough money for the wages they’re on? Will you need to raise 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.
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Bookmark this 60-second read: your year-end salon financial checklist
- Stock: Since stock figures affect your profit and can throw off your year-on-year gross profit percentage comparisons, you must get them right.
- 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 tax reduction. If you don’t operate out of the UK, ask your accountant if you can benefit from an annual investment allowance in your area.
- Pension contribution: If you’re a higher rate taxpayer or you run your business through a limited company, you may be able to reduce your tax by contributing to your pension. Make sure you take professional advice on this.
- Lease and loan agreements: Make sure your accountant gets copies of these to get your accounts in order. Otherwise, you might not claim the right amount of interest.
- Donations: Consider giving to a charitable donation; it could save you some tax.
- Accounting: 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 going forward.
- Goal setting: Take the time to sit down and look at what you want to achieve in the coming year. Then, give yourself and your team targets you can break down into monthly chunks, taking into consideration any seasonal fluctuations.
Since tax regimes depend on whether you are a sole trader or a limited company, this checklist is reasonably generic. Bear in mind that if you are a sole trader, your business’ year-end may differ from the tax year.
If you have questions about finance, business numbers or are looking for other business advice you can join my Facebook group Knowing Your Numbers. It’s a safe place to ask questions and find out more about numbers in a supportive environment.
Gloria Murray is also on the Salon Mentorship Hub! If you’d like to discuss a specific topic, you can click here and book a free 15 to 30 minute consultation with her. Got feedback? Let us know either in the comments below or tweet us @ThePhorestWord! (Pssst! We’re on Instagram too!)
Thanks for reading! #LetsGrow