Hair salons have a lot of moving parts. That’s why many small salon owners still act as hair stylists, even though that’s not the best use of their time. You know what else isn’t a great use of their time? Doing their own accounting.
How much time spent on accounting each month is too much before it makes more sense to outsource it? Let’s get into it!
At CSI Accounting & Payroll, we’ve provided monthly accounting services for nearly 60 years. That means we’ve talked to hundreds of salon and spa owners about their in-house accounting experiences. Let’s discuss:
- How much time hair salon accounting takes (on average)
- What the value of your time is
- When it makes more sense to outsource your accounting
How Much Time Hair Salon Accounting Takes
We’ve stated that small businesses that suit our client base take an average of 10-15 hours of bookkeeping each month. This is also typical for small hair salons, although they can easily spend several more hours if the bookkeeping is complex or there are errors to correct.
Small hair salons typically won’t have as much billing as other small businesses, so they may spend about an additional five hours of in-house billing each month. However, with some salons adopting a membership-based structure and renting out more chairs, this number is gradually increasing.
These estimates also don’t include the time it takes to prepare and file your taxes, which can take a minimum of 20 hours. The less organized your financial data is throughout the year, the longer it will take you.
Besides helping you regain this time, there are lots of other ways that a monthly accountant can help your salon!
The Value of Hair Salon Owners’ Time
As a business owner, your time is worth a lot.
You want personal time outside of work, which small business owners tend not to prioritize. Plus, you can add a lot of value to your business if you spend your time in the right areas instead of accounting (like improving internal processes and developing customer acquisition techniques).
To put a number to it, do you ever think about how much you get paid for each hour of work? If you make $500k in annual revenue, take a $100k-$150k salary, and work the 50-hour week that many owners do, you’d average about $40-$60 per hour.
When Outsourcing Accounting Is Better
If you factor in your hourly pay rate and the number of hours that accounting takes you, is the number that comes out reasonable? Would you pay an accounting service that much?
It’s time to outsource your accounting when this formula is true:
(Hourly value of your time * Monthly hours spent on accounting) + (Hourly value of your time * Hours spent on annual taxes) > The cost of an accounting service
Now, let’s plug in the numbers mentioned earlier in the article. If we’re specifically using CSI in this equation, be sure to use our monthly accounting fee. It varies based on several factors, but it ranges from $500 to $1,000+ per month and averages $675 per month. Annual business taxes are included!
(Want the accounting service fee to be more specific? Estimate what yours might be! Check out our free pricing calculator and plug in your result.)
($40-$60 per hour * 10-20 hours of bookkeeping and billing each month) + ($40-$60 per hour * 20+ hours of annual tax work) > $500-$1000+ per month
You’ll notice that since this is an example of an ideal client, the formula shows that they’ll get more value from outsourcing with us. However, your result may indicate that you’re not ready to work with us – and that’s okay!
Outsource Accounting and Reclaim Your Valuable Time
Now that you know how long hair salon accounting takes per month, what your time is worth, and how much time is too much time to spend on your accounting, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with us by clicking the image below:
