7 Things To Put On Your Year-End Salon Financial Checklist

As a salon, clinic, or spa owner, it can be difficult to navigate the world of tax, especially at year-end, when financial reporting and planning are paramount. To help you streamline the process and reduce this stress,  I’ve created this bite-sized, year-end financial checklist, designed to help you organise your taxes coherently and identify where you can take advantage of legal tax breaks to reduce costs. 

Why not bookmark this guide as your financial year-end approaches, to help make things easier for you? Having a plan in place can save time, money, and frustration in the long run. 

Your Salon, Clinic, or Spa’s Year-End Financial Checklist

1. Stock: Stock figures can affect your profit and can throw off your year-on-year gross profit percentage comparisons. With this in mind, you must get your numbers right before the end of the tax year. For help streamlining stock management, and ensuring your numbers are correct, use the stock & inventory management features alongside your Phorest reports.
   
2. Equipment: In the UK, the annual investment allowance (currently £1m) could help you buy tools or equipment. If you are thinking of buying equipment, do it before your year-end to ensure you 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, and make the most of it.
    
3. Pension Contributions: If you’re a higher-rate taxpayer, or your business is registered as a limited company, you may be able to reduce your tax by contributing to your pension. This is a great way of saving money while also planning for your retirement; something that’s increasingly more important as the cost of living increases. Talk to your accountant or a pension provider for more information on this.
   
4. Lease and loan agreements: Ensure your accountant has up-to-date copies of any lease and loan agreements related to your business. By reviewing these agreements, your accountant can accurately account for any interest payments and ensure you’re paying the correct amount of interest, and not overpaying. This helps keep your financial records accurate, and can also help prevent overpayments.
   
5. Donations: Did you know that donating to a charitable cause could save you some tax? This works by the donation increasing your lower rate band, and thereby taking the same amount of your higher rate income into the lower tax bracket. Some charities that give back to the industry include: The Hair & Beauty Charity, Beauty Banks, and Look Good Feel Better.
   
6. Accounting: Even if you don’t have regular meetings with your accountant, it’s important to schedule a chat before your year-end. In this meeting, don’t be afraid to ask plenty of questions about your finances, and make sure to ask for suggestions on how to save money on tax going into the new accounting year. This step, though simple, is incredibly important to ensure an organised and transparent financial year ahead.
   
7. Goal-Setting: Take time to sit down and focus on what you want to achieve in the coming year. Following this, set yourself and your team targets that can be broken down into monthly chunks. Make sure to consider any seasonal fluctuations in your goal-setting process, and plan rewards for your team when they hit their goals. You can track your team’s progress and set targets on Phorest’s Staff Goals feature, keeping motivation and reward front and centre.

Note: Since tax regimes depend on whether you are a sole trader or a limited company, this checklist is reasonably generic.

Setting Solid Foundations for Future Growth

Year-end financial planning is not only about fulfilling tax obligations but also about setting a solid foundation for future growth. Whether it’s optimising deductions, planning for retirement, or forecasting for the coming year, taking time now to assess your business’s financial health can have a lasting impact.

Finally, building your financial knowledge is one of the most valuable investments you can make in your business. 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. Alternatively, you can email me on info@murrayassoc.co.uk or contact your Phorest Business Advisor, who will be happy to assist in all things financial planning.

Here’s to prosperous, stress-free finances in the new year! You’ve got this.