Understanding Your Profit & Loss Statement
Your P&L is the single most important report in your salon business. Here's what it means — and why you should check it every month.
What Is a Profit & Loss Statement?
A profit and loss statement — sometimes called a P&L or an income statement — is a simple report that shows how much money your salon brought in, how much you spent, and what's left over as profit (or loss).
The formula is dead simple:
Revenue − Expenses = Profit
That's it. No debits and credits, no double-entry bookkeeping, no journal entries. Just money in minus money out. If the number is positive, you made a profit. If it's negative, you had a loss. Salon Accounting builds this report for you automatically.
Profit & Loss Statement
January 2026
Income
Expenses
Three Reasons Every Salon Owner Needs a P&L
It's not just a report — it's your roadmap to making better business decisions.
Tax Prep Clarity
Your P&L tells you exactly how much you earned and what you can deduct. Hand this to your tax preparer and you're already halfway done. No more digging through bank statements in April.
Smarter Business Decisions
Spending too much on supplies? Revenue dropping in January? Your P&L shows you trends month over month so you can adjust your pricing, hours, or expenses before problems snowball.
Audit Readiness
If the IRS ever comes knocking, a clean P&L shows you've been keeping accurate records. It proves your income and expenses are legitimate — and that you're running a real business.
Anatomy of a Salon P&L
Here's what a typical salon P&L includes — and what each line actually means for your business.
Income (Money Coming In)
Service Revenue
Haircuts, color, blowouts, extensions, chemical services — everything you charge for behind the chair.
Tips
Yes, tips are taxable income. Cash tips and card tips both need to be reported on your P&L.
Product Sales
Shampoo, conditioner, styling products — anything you sell to clients at retail.
Cash Income
Cash payments from clients. Track these daily — the IRS takes unreported cash income very seriously.
Expenses (Money Going Out)
Booth Rent / Salon Rent
Your single biggest expense. Whether you rent a chair or lease a full space, it goes here.
Supplies & Products
Color, developer, foils, capes, towels, backbar products — the cost of doing business behind the chair.
Education & Training
Classes, certifications, trade shows, online courses — investing in your skills is a deductible expense.
Tools & Equipment
Shears, clippers, blow dryers, flat irons, styling chairs — the tools of your trade.
Insurance
Liability insurance, property insurance, health insurance premiums — all deductible business expenses.
Marketing & Advertising
Social media ads, business cards, website hosting, salon listing services — everything that helps you find new clients.
Common P&L Mistakes Salon Owners Make
Avoid these pitfalls and your P&L will be accurate, useful, and IRS-proof.
Mixing Personal & Business
Using one bank account for everything makes it nearly impossible to produce an accurate P&L. Open a separate business account — it's the single most impactful thing you can do.
Ignoring Cash Income
Cash tips and payments are real income. If you don't track them, your P&L understates your revenue — and the IRS notices. Log cash daily with Salon Accounting's daily totals feature.
Not Categorizing Expenses
Dumping everything into "Other" defeats the purpose. Use specific categories — supplies, rent, education, insurance — so you can see exactly where your money goes each month.
Only Checking It at Tax Time
Your P&L is most valuable when you look at it regularly. Check it monthly to spot trends, catch problems early, and make data-driven decisions about your business.
Salon Accounting
Salon Accounting Builds Your P&L for You
You don't need to know what a P&L is to benefit from one. Just track your income and categorize your expenses — Salon Accounting does the rest.
Your P&L updates in real time as transactions come in. Check it anytime from your phone, tablet, or computer. When tax season rolls around, just export it and hand it to your tax preparer.
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