A salon or spa mixes two businesses: services delivered by stylists or therapists, and retail products sold at the front desk. Add tips, gift cards, packages and booth rent, and a single day's takings can touch half a dozen accounts. Bookkeeping keeps each stream visible.
Services, retail and tips
Booking and point-of-sale systems report services, retail and tips together, while the card processor deposits one net amount. We split each day's sales into service revenue, retail revenue, sales tax collected and tips payable, then reconcile to the deposit after processing fees.
Booth rent versus commission
Some salons employ stylists on commission or hourly pay; others rent chairs or suites to independent professionals. The two models have very different bookkeeping and payroll consequences. Booth rent is income to the salon; commissioned staff are usually on payroll. The IRS explains how to tell an employee from a contractor on its independent contractor or employee page.
Gift cards and packages
Gift cards and prepaid service packages are money received for services not yet performed. We track the outstanding balance as a liability and recognize revenue when services are redeemed.
Tip reporting
Employees must report tips to their employer, as the IRS explains in Publication 531. Card tips pass through the salon's books before reaching staff, so they belong in a liability account, not income.
What our salon support covers
- Daily sales split into service, retail, tax and tips
- Booth rent tracking and commission reports
- Product inventory and cost of goods sold
- Monthly financial statements
See our payroll services and bookkeeping services, or book a consultation.
Key terms
Terms that come up often in salons & spas bookkeeping:
- Cost of Goods Sold: Cost of goods sold is the direct cost of the products a business sold during a period.
