A salon chart of accounts that matches how the money moves

How this template is organised

This chart of accounts uses the standard five types: income, cost of sales, expenses, assets, liabilities, and equity. Every accounting system, including QuickBooks Online and Xero, is built around them. The salon-specific work is in what sits under each type.

The reason a generic template fails for salons is the payout. When Fresha (or any booking platform) pays you, that one bank deposit mixes several different kinds of money: revenue you earned, sales tax you owe onward, tips you owe your staff, deposits you're holding for future appointments, and fees Fresha already took out. If your chart of accounts doesn't have a separate place for each piece, the payout can't be recorded cleanly, and your books drift away from your bank.

The accounts below fix that. Most of them are ordinary. A handful are the ones that make Fresha reconciliation possible, and those get extra explanation.

Income

Income is money you earned by doing the work or selling the product. Not everything that arrives in your bank is income, which matters more for salons than for most businesses.

• Service revenue — hair — cuts, styling, blow-dries. Split service revenue by category only if you'll actually use the breakdown.
• Service revenue — colour — colour and chemical services. Worth separating because the product cost behind it is much higher.
• Service revenue — nails — manicures, pedicures, extensions.
• Service revenue — skin and spa — facials, esthetics, massage, other treatments.
• Retail sales — products sold over the counter. Keep this separate from services so you can see retail margin on its own.
• Membership income — recurring memberships or packages, recognised as clients use them.
• Gift card breakage — the value of gift cards that will never be redeemed, recognised as income when you write them off.

One rule to hold onto: selling a gift card is not income. You've taken money for a service you haven't delivered yet, so the sale goes to a liability account (covered below). It only becomes income when the card is redeemed, or when it expires unredeemed and you recognise breakage. Booking deposits work the same way.

Cost of sales

Cost of sales (COGS) is what it directly costs you to deliver a service or sell a product. Keeping these out of general expenses lets you see your real margin per pound or dollar of revenue.

• Back-bar supplies — colour tubes, developer, treatment products, foils. The professional stock you use up delivering services.
• Retail product cost — the wholesale cost of products you resell. Pairs with the retail sales income account.
• Merchant processing fees — card processing fees, including Fresha's payment processing. These are deducted before the payout reaches your bank, so you never see them as a separate charge. That's exactly why they need their own account: without it, the fee silently disappears and your recorded revenue won't match what clients actually paid.
• Fresha marketplace commission — the new-client fee Fresha charges when a booking comes through its marketplace. Some bookkeepers put this in COGS as a direct cost of the sale; others treat it as a marketing expense, since it's effectively a client-acquisition cost. Both are defensible. Pick one and stay consistent.

The two fee accounts are the first place a Fresha payout differs from the sales total. A £500 day might land as £487 in the bank. The £13 gap is real cost, and it belongs in these accounts, not lost in a rounding adjustment.

Operating expenses

These are the running costs of the business. Nothing exotic here, but two salon-specific notes are worth making.

• Rent — your premises. If you pay booth or chair rent to another salon, it goes here too.
• Wages and salaries — gross pay for employed staff. Payments to self-employed stylists are contractor costs, not wages; keep them separate.
• Payroll taxes — employer's share of payroll taxes and contributions.
• Software and subscriptions — your Fresha subscription, accounting software, and other tools.
• Marketing — advertising and promotion. If you decided to treat Fresha's marketplace commission as marketing rather than COGS, it lands here.
• Insurance — public liability, contents, treatment cover.
• Utilities — power, water, internet. Salons run hot on all three.
• Bank fees — account charges from your bank, separate from card processing fees.

The booth rent note cuts both ways. If you rent chairs out to independent stylists, that rent received is income, not a negative expense — give it its own income account, something like "Booth rent income". If you pay rent for a chair, it's an expense here. Some salons do both at once.

Assets

Assets are what the business owns, including money that's yours but hasn't reached your bank yet. That second part is where the most important account in this whole template lives.

• Business bank account — your main current account, connected to your bank feed.
• Fresha clearing account — money sitting in your Fresha wallet that hasn't been paid out yet. Also called "Fresha undeposited funds". Sales get recorded here on the day they happen; when the payout arrives, you move the money from this account to the bank.
• Equipment — chairs, basins, dryers, and other kit above your capitalisation threshold.
• Inventory — retail stock on hand, if you track it formally rather than expensing purchases.

The clearing account exists because money earned and money received are different events on different days. Tuesday's sales might pay out Thursday, batched with Wednesday's, minus fees. Without a clearing account, you either record revenue on the wrong date or invent a deposit that never happened. With one, each day's takings land in clearing at full value, and each payout simply drains it — the balance at any moment should equal what Fresha owes you. If it doesn't, something is misrecorded, and you know exactly where to look.

Liabilities

Liabilities are money in your possession that belongs to someone else. Salons hold more of other people's money than most small businesses, which is why this section does the heaviest lifting.

• Sales tax / VAT payable — tax collected from clients that you owe the tax authority. It passes through you; it was never yours.
• Tips payable — tips collected through card payments that you owe your staff. A card tip arrives in your Fresha payout mixed in with everything else. It's staff money from the moment it's paid, so it goes straight to this account, then clears when you pay it out. Booking tips as revenue overstates your income and creates a tax problem.
• Customer deposits — booking deposits and prepayments for appointments that haven't happened. The deposit becomes revenue on the day of the appointment, or gets applied against a no-show fee.
• Gift card liability — the outstanding value of unredeemed gift cards. Selling a card increases this balance; a redemption decreases it and books the revenue. The balance should always equal the total value of live cards in circulation.
• Payroll liabilities — deductions and taxes withheld from wages but not yet paid over.

Here is the payoff for all this structure. A single Fresha payout might contain service revenue, VAT you owe onward, a card tip owed to a stylist, a deposit for next week's colour, and a gift card sale, with processing fees already subtracted. Five different accounts, one bank line. If every one of those pieces has its own account, the payout splits cleanly and your books balance to the penny. If they don't, the whole deposit gets dumped into "Sales" and every one of those numbers is wrong. The Fresha payout decomposer shows this concretely: paste in a payout and it maps each component to the account in this template it should hit.

Equity

Equity tracks the owner's stake. For most salon owners three accounts cover it.

• Owner's equity — money you've put into the business, plus accumulated profit left in it.
• Owner's drawings — money you've taken out for yourself. Drawings are not wages and not an expense; they don't reduce profit.
• Retained earnings — profit carried forward from previous years. QuickBooks and Xero manage this account automatically at year end.

If you operate as a limited company or corporation, the names change (share capital, dividends, director's loan account), but the shape is the same.

Setting it up in QuickBooks or Xero

Both systems let you add accounts one at a time or import a list. In QuickBooks Online, go to Transactions, then Chart of accounts, then New; the account type dropdown maps directly to the five categories above. In Xero, it's Accounting, then Chart of accounts; you can import a CSV with account codes if you want numbered accounts. Create the clearing account as a bank-type or current-asset account so you can transfer in and out of it easily.

Two tips from painful experience. First, resist creating an account for every tiny thing; a chart of accounts you can read at a glance beats one with sixty rows of near-duplicates. Second, set up the liability accounts before your first payout lands, not after — retrofitting tips payable and gift card liability across months of merged transactions is slow, tedious work. Once the accounts exist, the actual recording routine is covered step by step in our guides to reconciling Fresha payouts in QuickBooks and reconciling Fresha payouts in Xero.

The exact structure that's right for you depends on your business, your country's tax rules, and your entity type. Treat this template as a strong starting point and confirm the details with your accountant.

Start with the two accounts that unblock everything else: the Fresha clearing account and tips payable. Those two alone turn an unrecordable payout into three or four clean lines.