Award-Winning Hairstylist, Educator and Business Mentor, Cally Borg, AKA The Lifestyle Salon Boss Babe, is on a mission to inspire hairstylists to create their very own dream lifestyle business and striving to get rid of the ‘old fashioned’ stigma around home salons. In this blog, Cally looks at the block around knowing your numbers and the financial ABC of running a business.
As a freelance hair stylist, you’re not just an artist—you’re a business owner. Understanding the financial side of your craft isn’t just about survival; it’s about creating a sustainable career that allows your creativity to flourish without financial overwhelm holding you back. It is simple when you know how!
Firstly, don’t pluck numbers out of the air or compare yourself to other local businesses. Your business is unique to you, and your profit margins will depend on your personal breakeven, so ignore other people’s pricelists.
I personally have many spreadsheets that track everything in my business monthly. Some salon software can help you with this, or you can work with an accountant to put this together or create your own. Being in control is key to feeling financially confident in your business.
To get in control of your numbers, start by creating a detailed spreadsheet tracking your expenses—this becomes crucial for understanding your break-even point and setting realistic pricing structure & income goals.
To calculate your break-even:
- Add up monthly expenses (rent, products, insurance, utilities, etc.)
- Estimate your monthly available working hours
- Divide the expenses total by the hours you work to find your break-even hourly rate
You will also need to factor in your personal wage costs, plus VAT / TAX, and remember to add the profit!
Get a good accountant. I personally recommend Melanie Beach, ‘the salon expert accountant’ who works with various hair and beauty salons and, therefore, understands our industry. Melanie and I have quarterly check-ins to keep my business on track and moving forward. Melanie sends me a breakdown of my profit and loss every month and confirms how much I need to save for tax and VAT.
An accountant can help you with the following:
Profit and loss (P&L) shows your revenue minus expenses. Review it monthly to spot trends and issues before they become problems.
Cash Flow: Tracks the actual money moving in and out of your business. For freelancers, timing matters—especially when clients reschedule or cancel, so get those cancellation policies in place and ensure you are charging for your time.
Tax Planning and Deductions: Self-employment brings tax complexities but also opportunities to claim back. As a freelancer, you must make estimated tax payments throughout the year. Set aside 25-30% of your income each month for tax.
Essential Deductions:
- chair rental
- Professional tools and equipment
- Products used for services
- Continuing education and certification costs
- Business Insurance
- Marketing and advertising expenses
- Professional services (bookkeeper, tax professional)
- Mileage for business travel
- Home office deduction (if applicable)
- Health insurance premiums (potentially deductible)
You only pay tax on the profits after deductions, so remember to keep your purchase receipts.
Software like Quickbooks and Xero often provide a system where you can take a photo of your receipt that saves directly to your accounting profile. If you can get used to doing this as you go, it will save you and your accountant hours of time when it comes to filing your self-assessment and keep you aware of your cash flow each month.
If you don’t have a head for finances these things can seem daunting, but it’s essential that you take the time to familiarize yourself with them, and like anything, once you start to understand it then it isn’t so scary –definitely not as scary as finding you don’t have money in the bank for a tax bill! Remember you don’t have to do it all yourself, but the more you understand, the easier you will find it to run your business. As a Salon Gold Superstar, you can reach out if you have any questions.
