Posted June 24, 2021
While we are all focused on the current EOFY 2021, it is never too early to set yourself up for 2022.
Salon owners, and small business owners in general, are always complaining about tax time. Maybe it’s the small admin details that are required that gets under the skin, or it’s the idea of paying a huge lump of money to the ATO that stresses salon owners out.
There is no need to fear tax time or have it be a completely stress-inducing exercise. By putting a few simple systems in place, you can breeze through tax time and give yourself a break in 2022.
Here’s what you’ve got to do:
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Get a financial planner
The best thing you can do in any money situation is get advice from a licensed professional. Find one who can work with you across both your personal and business finances to ensure that you are looking at the whole picture when it comes to your money. So many salon owners treat these two parts of your money matters as the same thing, and they simply are not the same. Make sure you’ve got your finances in order and the rest comes easy.
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Get your systems in order
The shoebox of receipts doesn’t cut it any more. If you’re not already using a digital accounting software platform like Xero or MYOB, now is the time to make the switch. If you ARE already using online accounting software, now is the time to level up! Consider linking different accounts like your personal spending account to ensure that you track all business or claimable expenses, adding in integrations with your salon software and creating a regular meeting to check in with your finances each month. Set a weekly or monthly reminder to take a photo of any physical receipts you’ve got in your purse, wallet, car or salon and upload them instantly to the cloud with Google Drive or Dropbox. By getting smart with your systems and making sure that you do the work incrementally each month, you can make the tax-time-hustle much easier.
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Get on top of your cashflow
This is part of the conversation we are sure to have with your financial planner, but make sure that you’ve got cashflow in your business and a buffer for those peak periods where you need a bit more flow. Ask yourself before you spend anything on the business, from supplies to colours and programs, whether you NEED it or simply WANT it. This single question, which most of us ask in our personal financial life, can seriously transform your business finances.
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Stay on top of your tax
With PAYG tax changes, it’s more important than ever to stay on top of your tax. You can now pay PAYG in monthly instalments, rather than as a lump sum at the end of the year. That means that you’ve got to set aside money to pay that bill regularly. If you can set it aside weekly, you won’t get a nasty surprise at the end of the month when you’ve got a bill to pay and no cash to allow you to do so.
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Renegotiate your rates
Now is the ideal time to speak to suppliers, from electricity to salon software and consumables, about the rates you’re getting. You’ve had to compile the information on where your money is being spent and so can have a genuine conversation about your spend with them. Consider merchant bank rates, electricity rates and high-volume suppliers and see if you can negotiate a better rate across the year. What looks like a small saving per bill can add up significantly across the year.
We are living in an age where technology is being designed and built to make life easier. Use it to help you get on top of your tax for 2022. Don’t do things the old school way – advance and push your business forward. Get some good advice and implement it immediately and see the change in your business. You can thank us later
Don’t forget that your HABA membership is completely tax deductable!
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