Accounting for hair salons

VAT for hairdressers: 25 per cent on haircuts and products

Haircuts, colouring and other treatments are sold at the standard VAT rate of 25 per cent, and so are the hair care products in the display. We reconcile the till's daily reports and card settlements against the bookkeeping, so that the VAT return is based on the same figures the till shows.

Gift cards

Under the VAT Act (mervärdesskattelagen), a gift card is a voucher. If it is already known when the card is sold what VAT is payable and where the service will be supplied, for example a card that is only valid in the salon and where everything carries 25 per cent VAT, it is a single-purpose voucher. The VAT is then reported when the card is sold. If the card can be used for something with a different VAT rate or with someone else, it is a multi-purpose voucher, and the VAT is only reported when the customer redeems it.

Rented chairs: chair rental, VAT and the till

Many salons rent out chairs to hairdressers who run their own business. The chair renter then has a business of their own, with their own bookkeeping, their own VAT reporting and their own tax. Whether it really is a separate business depends on the circumstances. In one court case, a hairdresser who rented a workspace in a salon was considered to be running a business; in another, the hairdresser was considered to be an employee (RÅ 1987 ref. 164).

• VAT on the chair rental. Renting out premises is normally exempt from VAT, but according to the Tax Agency, access to the equipment can be the main element, and the Tax Agency gives renting out hairdressing chairs in a salon as an example of when the entire arrangement becomes subject to VAT. The chair rental is then invoiced with 25 per cent VAT. The assessment is made case by case.
• Cash register. If the chair renter takes cash or card payments from their customers, the sales must be recorded in a certified cash register. Several businesses can use the same cash register if the Tax Agency's conditions are met, including that each business's registrations and payments are kept separate.
• The rental income in the salon. The chair rental is recorded as a separate income, kept apart from haircut sales, so that the VAT is correct on both.

Staff register in the hair salon

Hairdressers count as body and beauty care, and the Tax Agency gives hair care as an example. The salon must therefore keep a staff register (personalliggare). The register records each day who is working on the premises and when, not just employees. If the salon sells a lot of hair care products, the requirement still applies, as long as the products make up less than 75 per cent of turnover.

You do not need to keep a register if you run a sole trader business (enskild firma) where only you, your spouse and children under 16 work, or a close company (fåmansföretag) where only the person running the company and the same family members work. The Tax Agency does not say explicitly how chair renters should be recorded in the register, so ask the Tax Agency if you are unsure. Read more about staff registers for body and beauty care.

Penalty fees (kontrollavgifter)

• SEK 12 500 per inspection, plus SEK 2 500 for each working person who is not recorded
• SEK 25 000 instead of SEK 12 500 if a new shortcoming is found within a year of an earlier decision
• SEK 12 500 per inspection if the salon does not have a cash register

Bookkeeping for hair salons and hairdressers

Cash, card, Swish, gift cards and online bookings all need to come together in the same bookkeeping. We set up the chart of accounts so that treatments, products and chair rental are kept separate, and reconcile the cash register against the bank and card settlements every month. The hair care products in stock are included in the year-end accounts, under the main rule at the lower of cost and net realisable value. Under the standard rule (schablonregeln), stock may be valued at 97 per cent of cost. We go through a stocktake with you ahead of the year-end closing and choose the rule that suits the salon. If you offer skincare, nails or lashes, there is a separate page for beauty salons.

How we help hair salons

• Ongoing bookkeeping with reconciliation against the cash register and card settlements
• VAT returns with the correct VAT on haircuts, products, gift cards and chair rental
• Payroll and employer declarations, see payroll
• Routines for the staff register and cash register
• Year-end closing, annual report and tax return
• Advice on the salon's finances

Fixed monthly price based on the number of vouchers and employees, no lock-in period, three months' notice. See prices.