Beauty & Personal Care
Cash tips, booth rentals, and commission pay make salon accounting complicated. We track it all so you know what you're actually making.
The Industry
A salon owner in Macomb County has eight chairs. Three are staffed by employees earning commission. Five are rented to independent stylists paying weekly booth rent. The owner also sells retail products and handles the cash register. At the end of the month, she has no idea whether she made money on services, booth rentals, or product sales. The bank account has money in it, so she assumes things are fine. Then tax time arrives and her accountant asks for records she doesn’t have.
Beauty businesses run on cash, tips, and complicated payment arrangements. A stylist might earn 45% commission on services, 10% on product sales, and keep 100% of tips. Booth renters pay $200 a week but use the salon’s product and card processing. Tips get split between the person who washed hair and the person who cut it. These aren’t problems that generic bookkeeping solves. The accounting has to match how the business actually operates.
Who This Covers
Who This Covers
Hair salons, barber shops, nail salons, estheticians, makeup artists, lash and brow studios, tanning salons, and independent beauty professionals. Any beauty business in Metro Detroit dealing with tips, commissions, or booth rentals.
What Complicates It
What Complicates It
Cash and credit card tips that need daily tracking. Booth renters who need 1099s at year end. Employees on commission with varying rates by service type. Retail product sales mixed with service revenue. Gift cards creating liability until redeemed. Back bar product costs that need allocation to services.
What We Handle
Payroll for beauty businesses isn’t straightforward. Commission structures vary by service and provider level. Tips need to be tracked and reported correctly for both employer and employee tax purposes. We set up payroll that handles these calculations without you spending hours every pay period figuring out what everyone earned. The math is automatic once the structure is configured properly.
Booth renters are a separate matter entirely. They’re independent contractors paying you rent, not employees earning wages. We track those payments separately and make sure you have W-9s on file before the first rent check clears. When January arrives, issuing 1099s is a five-minute task instead of a scramble through a year of bank statements trying to figure out who you paid and how much.
Tips and Payroll Done Right
Tips and Payroll Done Right
Payroll configured for commission-based pay with tip tracking built in. Different commission rates by service type or provider level handled automatically. Credit card tips reconciled to deposits. Proper tax withholdings and reporting so nobody gets a surprise from the IRS. You stop doing payroll by hand on Sunday night.
Revenue Streams Separated
Revenue Streams Separated
Service income tracked separately from retail sales and booth rental income. You see exactly where money comes from and which parts of the business generate actual profit. Booth renter payments tracked with proper 1099 preparation at year end. Gift card sales recorded as liability until redeemed.
What Goes Wrong
The most expensive mistake is treating booth renters like employees or vice versa. A stylist who rents a chair and sets their own hours is a contractor. A stylist who works a schedule you set and earns commission is an employee. Get this wrong and you owe back payroll taxes, penalties, and potentially workers’ comp premiums for years you thought were handled. We’ve seen salon owners hit with five-figure bills because nobody set up the classification correctly from the start.
Cash and tips create a different problem. Money comes in all day from multiple payment methods. Tips get distributed at the end of shifts. Without daily reconciliation, discrepancies creep in that nobody notices until the accountant asks why reported income doesn’t match bank deposits. Unreported tips create tax liability for both you and your staff. The IRS knows what credit card processors report, and they compare it to what you file.
Worker Classification Problems
Worker Classification Problems
Booth renters treated as employees means you’ve been withholding taxes you shouldn’t have. Employees treated as contractors means you owe back payroll taxes and penalties. The IRS looks at the actual relationship, not what you call it. Getting this wrong costs thousands to fix and puts you on their radar for future audits.
Cash and Tips Not Reconciled
Cash and Tips Not Reconciled
Tips distributed without records create unreported income for your staff. Cash deposits that don’t match POS reports suggest problems to anyone reviewing your books. Gift cards sold get recorded as income instead of liability, inflating your taxable revenue. Small daily discrepancies add up to significant gaps by year end.
What Changes
You know which services make money and which barely cover the chair time. Retail margins show whether selling product is worth the shelf space and staff attention. Booth rental income is clear and separate from the revenue you actually work to generate. When you’re deciding whether to add another chair or hire another stylist, you have actual numbers to guide the decision instead of a guess based on how busy it feels.
Tax time becomes predictable. Quarterly estimates keep you from owing a lump sum in April. Proper tip reporting means no surprises for you or your team. Booth renter 1099s are ready to file because we tracked payments all year. Your accountant gets clean records that don’t need hours of cleanup before they can prepare your return. You focus on clients and running the salon while the financial side takes care of itself.
Profitability You Can Actually See
Profitability You Can Actually See
Know which services generate the best margins. Understand whether retail sales justify the inventory cost and staff time. See booth rental income separately from service revenue. Make decisions about pricing, services, and growth based on what the numbers show, not what feels right.
Compliance Without the Stress
Compliance Without the Stress
Worker classifications handled correctly from the start. Tips tracked and reported properly for everyone involved. Quarterly tax estimates prevent April disasters. Year-end 1099s ready to file without a scramble. Clean books that make your accountant’s job easier and your tax bill accurate.
Metro Detroit's Small Business Bookkeeper
The Next Step:
A Short Conversation
Tell us about your business and your current bookkeeping situation. We'll listen, answer your questions, and give you a clear quote.
