Accounting for hairdressing and beauty – which special rules apply?

The industry has its own bookkeeping requirements: turnover and purchases have to be broken down by product group, Z-reports produced under section 8-3-2, prices and appointments documented, and the staff register kept as you go. Treatments and product sales normally carry 25% VAT. Chair rental requires a genuine assessment of whether the stylist is self-employed or in reality an employee.

Cash sales and the daily settlement

Where the customer pays at the point of sale in cash, by card or through a relevant payment solution, the sale has to be registered as it happens in a till system meeting the cash register rules. At the end of the day the Z-report and terminal reports are produced, the cash counted and everything reconciled against the reports – see Cash sales and cash registers

Its own specification requirements

Hairdressing and beauty care have their own sub-chapter in the Bookkeeping Regulations. Under section 8-3-1, turnover and withdrawals, purchases and inventory have to be broken down by product group. Booking everything as «sales» is not enough. Section 8-3-2 requires Z-reports, and section 8-3-3 requires documentation of prices and appointments. That is stricter than for most other industries, and it applies regardless of the size of the business.

Price and booking documentation

The price list has to be documentable, and appointments have to be producible. Where the salon uses a digital booking system, that system documents the appointments – but the data has to be retrievable afterwards, and it has to match the registered sales. Discrepancies between bookings and registered turnover are among the first things an inspection looks at.

The staff register

Hairdressing and beauty are covered by the staff register requirement. The register has to be kept as you go and show who is working and when the working day begins and ends. That applies to people working under a chair rental arrangement too, where they in reality work in the business. Leaving chair renters off the register because they «are self-employed» is a common and risky assumption.

Tips and commission

Tips that go to employees are taxable employment income, and the employer has to report them and handle the advance deduction and employer's contributions. Commission pay goes into the ordinary payroll basis, and it counts towards the holiday pay basis where it reflects the person's own work – see Holiday pay

Retail products and treatment products

Separate goods sold to the customer from goods used in the treatment. The two sit differently in the accounts: retail goods produce turnover, treatment goods are a cost of delivering the service. The product group requirement means this has to be separated in the system, not just in your head. Goods still owned at the year end have to be documented as inventory – see Inventory at the year-end close

VAT on beauty treatments

Ordinary hairdressing, skin care, manicures, pedicures as beauty treatment, spa services, permanent make-up, cosmetic tooth whitening and product sales normally carry 25% VAT. Note the line against the health exception: a treatment does not become exempt because it is carried out by authorised health personnel. For cosmetic treatment the general rule is that the procedure has to be medically justified and wholly or partly publicly funded – see VAT exemptions for health, education and culture

Chair rental – self-employed or employee?

This is the industry's largest risk area. A chair rental agreement does not automatically make the stylist self-employed. The assessment follows the ordinary criteria: who directs the work, who is responsible for the result, who bears the costs and the risk, who owns the equipment, and is the person integrated into the salon's operation? Under the presumption rule from 1 January 2024, an employment relationship is presumed unless the engager makes it clearly more likely than not that it is not – see Freelancer, contractor or employee? Misclassification can produce claims for salary, holiday pay, employer's contributions, advance deductions and permanent employment – together and backdated.

VAT on chair rental

Pure letting of real property is outside the scope of VAT, but a chair rental agreement is rarely pure letting of space. Where the agreement also covers equipment, reception, booking, laundry, products, marketing or administration, what is supplied can in reality be a VAT-liable service. Settle this in the agreement and the invoice set-up – not at the bookkeeping stage. See also Voluntary VAT registration for letting property

Common mistakes

Turnover is booked without a product group breakdown. Z-reports are not produced daily. Appointments cannot be produced afterwards. Chair renters are missing from the staff register. Chair rental is invoiced without VAT because it is called «rent». Retail and treatment products are mixed. Tips are left out of the payroll reporting. We help salons and clinics with product groups, till routines, the staff register and the VAT treatment.

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

Is it urgent?

We can work out what actually has to be done, what documentation exists and how quickly it can be sorted. You can also reach us in the evenings and at weekends.

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