If there’s one thing the majority of business owners dread, it’s doing their expenses. Not only is the process generally a tedious task, but most entrepreneurs (especially those in hands-on industries such as beauty and wellness) are not fans of the clerical responsibilities that come with running a company.
Some businesspeople will even completely forgo the process because they don’t have time, can’t find their receipts, or just don’t believe it matters as long as they report their income and pay their taxes. Sound familiar? And while the IRS likely doesn’t care whether you track your expenses or not as long as they get paid, you should get in the habit of reporting what you spend on your salon to make the most of your deductions (more on that later).
Still not convinced? Maybe if we told you there’s an easier way to keep track of these transactions that will save your time, money, and sanity, you’d be ready to reap the benefits that tracking your purchases can sow. Read on, because ahead we make the case for diligently doing your expenses and we share a few insider secrets for making the troublesome task a breeze.
If you haven’t yet taken advantage of the perks around tracking your outgoing transactions, you could be missing out on some big-time salon savings. To back up a bit, it’s important to first understand why expenses matter.
When tax time comes around, what you owe is generally calculated based on your gross income (that means every payment you receive for the services you provide including wages, commissions, fees, and tips). When you have business expenses, those are considered deductions. Deductions are any business-related costs incurred during the year that should be subtracted from the gross income, thus lowering your taxable income before calculating how much you actually owe. Long story, short: The less you’ve made, the less you pay. When you report what you’ve spent on your business, you could be eligible for thousands of dollars of savings when it's time to pay Uncle Sam.
Remember though, that to be deemed deductible, a business expense must be both ordinary and necessary, meaning it should be a cost that is common in your industry and/or one that is helpful for your trade. This brings us to the importance of keeping track of your outgoing money.
If you’re just starting out or are taking the time to reevaluate your business costs, take a step back and look at everything you need to spend money on to ensure your salon is running smoothly, keeping in mind that things outside of your physical space, like childcare or continuing industry education, should be included, too. It’ll help to begin by going through the list of categories on the GlossGenius app to get started.
When we started building our Expense Management features on the GlossGenius app, we worked with industry experts to include the most common categories that are important to your business’ success. We also understand that the needs of every business and its owner are unique, so we included the option to add your own custom categories, too. Having your expenses segmented in such a way will also make knowing your numbers easier when it comes to running reports and checking in on your financial goals.
Remember that some expenses (think rent, utilities, or insurance) will occur for the same amount every week, month, or year. Luckily, you won’t have to worry about entering those time and time again. Just mark an expense as recurring, select when the charge will repeat, and choose how often – GlossGenius automatically handles the rest so you can cross one more thing off your to-do list.
It’s vital to have a system in place that will help you to keep detailed records of your spending. First, don’t let the receipts creep up on you! Set yourself up for success by adding an ongoing reminder in your calendar to check these transactions on a weekly or monthly basis. For those of you who prefer to check this off your to-do list in real time, you can enter them on the go with GlossGenius. As long as you have your smartphone in hand, all you need to do is snap a picture of your receipt and upload it into the app.
Next is where those detailed records we mentioned come into play. Once you add your photo, make sure you key in the date, the amount spent, the vendor, the category, and a quick note about how the purchase relates to the business. This could be a few words as simple as “cleaning supplies for the salon” or “new linens for the massage table,” as long as it justifies why you needed to spend that money on your business. Best of all, whether you decide to do this in the moment or once a month, you can do all of this in a matter of minutes with GlossGenius. In the app, head to More > Expenses > Add New Expense and just fill in the deets.
Once you’ve got the hang of it, you’ll be able to add unlimited entries, each of which will be seamlessly calculated for easy reporting that will come in handy during tax season. You can check on your spending at any time by navigating to More > Expenses > Track and View Expenses. There, every outgoing transaction will be segmented by category and you can toggle between views to see All or only Recurring expenses. Alternatively, you can run a full report by day, quarter, year, or a custom range by tapping More > Expenses > Get An Expense Report. Free yourself of scribbling on spreadsheets or sorting through shoeboxes of receipts and think of all the hours and money you’ll get back when you start tracking your expenses the easy way.