This is probably the least fun part of owning your own salon business, unless you are more left-brained than most of us right-brained salon professionals. I am going to hit on the basics of the business side and what you will need to know.
I want to emphasize first that a business attorney and an account will be one of your most valuable resources. You have to rely on experts to help run your business successfully. Unless you have a friend or family member who will do this work for you for free, it should be factored into your business expenses. You need to be able to reach out to them when a situation arises. Because it will.
We all hate taxes, but you need to be aware of what needs to be taken care of tax-wise. In New Mexico, all businesses need a Combined Reporting System certificate . This is one of the first steps to opening your business for the first time. Go to NM Taxation and Revenue Department website to find out more and apply for your CRS number. You can apply online for your CRS number.
The CRS number allows you to collect gross receipts taxes from your clients (some people call it sales tax, but in NM it is called "gross receipts tax"). Any service or product that you sell must be taxed. Right now, the percentage is 7.875%. That percentage must be added to anything that you charge your clients for. That percentage has to be paid to the state. So in other words, you are collecting it for the state, and they want you to pay it to them.
The state allows you to choose how you want to pay them. For example, you can pay monthly, quarterly, or annually. I always pay monthly because it can really end up being a lot of money at the end of the year. A smaller amount is much more manageable.
However you decide to pay, go to www.tax.newmexico.gov , create an account and you can pay there. It's not completely user-friendly, but it's doable, especially after the first few times. Don't forget to pay it because they don't like it when you don't pay and they will apply penalties and interest if you don't. It's best to keep them happy.
The next thing you need is your city business registration license. It's fairly simple. For our salon, which is in the city limits of Albuquerque, just go to the city website and apply for your city registration license. This website is also not very user-friendly and some of the questions on the form will make you want to pull your hair out. My advice: Persevere. You can do this. Just go into with the mindset that this is your business and answer all of the questions that way.
The form will ask you for your CRS number, so have that handy. Your landlord has nothing to do with any of these questions. Keep that in mind as you fill out the form. The city license in Albuquerque will cost you $70 and must be renewed yearly for $70.
The 3rd thing you need to do before you can open your salon business is apply for your establishment license. Yes, an ESTABLISHMENT license. You are not booth renting--this is your own establishment.
Ok, talk about non-user-friendly websites. The NM State Board site beats them all. I have found that their website does not like MAC computers, so I recommend using a PC to minimize the frustration. And once again, keep in mind while filling out the application that the questions pertain only to you and your business. Your landlord has nothing to do with these answers. And your landlord's signature is not required, only your own is. The Establishment license is $200 and has to be renewed yearly for $50.
You will also need to decide how you will do your credit/debit card processing. There are quite a few companies out there. These companies also offer online booking and lots of other features. I've heard that Gloss Genius is really good right now. I've never tried it myself. I always used Square. But I understand Gloss Genius is even better. If you are leasing with us, feel free to ask some of the others leasing from us what they use.
So with having those 3 things in place you can now start your business.
You will need a business checking account. You need to keep track of all your business expenses for paying your business income taxes. Quick Books is a great resource for keeping track of everything, but there are some fee platforms available. It can be tedious, but if you keep up with it monthly, it won't be too bad at the end of the year.
This is where an accountant can be invaluable in helping you get your system set up. This will save you tons of time at tax time. So as a business owner, you now have business taxes to file along with your personal taxes.
You also need business insurance. Very important. Any insurance company can help you with that. And they can help you decide exactly what you need. For people leasing salon studio/suite space, it's actually very affordable.
I know that this all probably seems overwhelming to you. And it is a lot to think about and to do, but trust me, it is all doable. And the satisfaction of owning your own business and doing it Your Way will make all the hoop-jumping worth it.