Financial manager Brandi Fulton has worked exclusively with beauty industry professionals since she opened her boutique accounting firm, Fulton’s Accounting Services, in 2017.
Fulton has not only helped clients in all 50 states to weather financial peaks and valleys, but has added an educational component to her practice that she says is necessary, in an industry where many business owners have inadequate knowledge about their finances.
Fulton recently passed along to American Salon some of the insights she’s gained over the years about finances in the beauty industry.
Here are her top 5 things that salon and barbershop professionals should know.
Financial Education is Lacking in the Beauty Industry
In 2016, my husband and I were trying to buy a house. He’s a barber and full-time entrepreneur; I’m working in corporate finance, and they’re asking us for financial statements. He didn’t have any of that for his business. He said, “They didn’t teach me about finances in barber school.”
Just helping him to get it all organized opened my eyes that my husband — someone close to me — was going through this, so how many others like him were out there? That made me dive deep.
I quickly realized that the industry is full of people like him, who didn’t get a core foundation of financial knowledge before they launched their business. And I wanted to help out other people in this industry in that same position.
Now, my client base is a mixture of all types of beauty professionals — salon owners, barbershop owners, solopreneurs in suites, W2 employees, commission workers.
Most Beauty Business Owners Need a Bookkeeping System
About 85 or 90 percent of the people who come to me don’t do bookkeeping. They think they have proper bookkeeping in place, but they don’t.
They’re like OK, open up a business, make some money, spend money on supplies and file your taxes. “I’ve got Square, I’ve got bank statements” … but a lot of them don’t do the bookkeeping part.
They’re not taught how to do bookkeeping. They’re not even taught that they need to do it.
Most Owners Don’t Fully Understand How Their Beauty Business is Taxed
A lot of my clients come to me not understanding how they are taxed as business owners, especially those who come from W2 jobs to being a full-time entrepreneur.
Every business is different depending on its filing status and its entity status. There are questions every beauty business owner needs to be asking their accountant: What is my tax rate? Why am I getting a refund? How am I being taxed? Why am I being taxed?
Even though you have somebody preparing your taxes for you, have that conversation. Ultimately that responsibility falls on the business owner.
Clients will come to me during tax season and say, how can I reduce my taxes? And at that point, the year is over. We can’t rewind a year. But I can tell you what to do for next year.
For this reason, my clients don’t just see me during tax season. If they’re not working with me on a monthly basis, then we do a check-in every quarter or twice a year.
I make sure they understand what’s going on this year and what the tax implications will be. Are you going to be hiring someone? Are you thinking about moving to a new commercial space? Are you downsizing? Then we need to be doing x, y, and z. With the current economic state, I’m seeing a lot of downsizing at the moment.
Big Tax Changes Are Likely Around the Corner
Personally, I feel like a lot of change is going to happen with the new administration tax-wise. Good or bad? I don’t know. But I do feel like there’s going to be a good amount of change.
For this specific tax year, there aren’t any definite new items. The FICA Tax Tip Credit might be added to the federal tax bill, but if does become official I don’t think it’s going to take place for this tax year. They try not to release any big adjustments the year of.
Social media can be helpful to keep business owners up to date in certain instances, but I have seen a little bit of untruthfulness surrounding taxes, so I would just say: with this new administration, this is the perfect time for you to meet with your accountant. Because we will be the first ones to update everybody on new tax laws and tax bills.
Free Beauty Business Tax Resources are Available
I do have an email marketing list where I send out resources and updates, both to my clients and to those who are unable to become a client just yet.
That’s how I update everyone on industry-specific tax laws, tax strategies, free guides, spending and budgeting tips … just different things like that. Everyone is welcome to it.
Brandi Fulton will be teaching "Beauty and the Books: A Guide to Financial Statements" and "Beauty and the Tax Code: Understanding Taxes" at the International Beauty Show-New York from March 23-25, 2025. Register here.