Monday, November 26, 2007


Larry, We've been doing a little restructuring lately and it has brought up a question I'm sure you can answer. Is it acceptable and/or legal for our salon to charge a service charge? We appreciate your input. Kim

Kim, I hope finds you well. You had asked whether or not it was legal for a salon to use a service charge. When you say service charge, I presume you are meaning that the commission stylist is paid a percentage, such as 50%, and then there is a 5% commission that is subtracted out as a service charge.

Although employment law can be somewhat complicated and there are some variances from state to state, service charges are a legal method of calculating the compensation, as long as the individual is paid at least a minimum wage.

It's a pleasure serving you!

Larry Kopsa CPA

Wednesday, November 21, 2007


IRS Warns about California Wildfire Email Scam: The IRS warned taxpayers of a new email scam purporting to come from the IRS and the U.S. government for charitable contributions to victims of the California wildfires. The email urges recipients to click a link on a fake version of that opens a donation form requesting personal and financial information. Taxpayers can forward suspicious emails to an electronic mailbox,, using instructions found in "How to Protect Yourself from Suspicious E-Mails or Phishing Schemes" on the genuine IRS website. News Release IR-2007-183.

Wednesday, November 7, 2007


I know that most salon owners and their stylists don't want to hear this, but NOW IS THE TIME TO INCREASE YOUR PRICES. Wouldn't you agree with me that the price of everything is going up? Why shouldn't it be any different with your business? It just makes good sense to increase prices on an annual basis.

My rule of thumb for price increases is to increase annually and to do it right now before we get into the busy holiday season. Right now... the first part of November. Get those price increases in and take advantage of the increase now, when you are busy. The second time I recommend raising prices is when a stylist increases by a level or is 60% booked.

I have never ever heard of a salon that did a 3% to 10% increase in prices and in the end felt that it was a mistake. Never! If you have a different conclusion, I would like to hear it. Sure, you may lose a few clients but think about it. If you increased prices by 5% and lost 5% of your clients, you would still be making the same money but working less. What is wrong with that?

I know that when we owned our salon and increased prices, we would have a few clients go elsewhere but for some reason we always got busier. Maybe people thought that since we were at a higher price we were better. I don't know, but that is my experience.

Most salons are working on a small profit margin to start with. It's time for you to get paid what you are worth.
So... Just Do It!!!

Tuesday, November 6, 2007


Okay, I know that this is supposed to be a somewhat serious business blog covering items of interest for persons in the salon and spa industry, but I could not help but forward this on to you. My head secretary (the person that really runs the office) sent me this and I thought it was pretty cool. I forwarded it to my wife... I'm not sure if she will get the hint.

Anyway, I know that this is a busy time for you but just in case you are looking to bake Christmas cookies, all you have to do is click on a link and the recipe will come up.


Larry Kopsa CPA

1-2-3 Cookies 7 Layer Cookies Allie Nelson's Famous Snickerdoodle Cookies Almond Crescent Shortbread Amish Sugar Cookies Andies Candies Cookies Angel Crisps Angenets Applesauce Cookies Apricot Fold-Overs Aunt Edy's Molasses Crinkles Auntie Linda's Ginger Gems Bakeless Dream Cookies Banana Drop Cookies Best Chocolate Chip Cookies in the World Biscotti Biscotti Blueberry Cookies Boiled Chocolate Oatmeal Drop Cookies Bronwnies Brown Sugar Shortbread Brownie Cookies Brownie Delight Brownies Buccaneer Snowballs Buried Cherry Cookies Butter Cookies Butter Nut Balls Butterballs Butterscotch Haystacks C.O.P. Cookies Candy Cane Cookies Candy Cookies Caramel Shortbread Cheesecake Brownies Cherry Buns Cherry Crowns Cherry Winks Chewies Chewy Noels Chinese Chews/Haystacks Chocolate Chip Cookie Bars Chocolate Chip Cookies Chocolate Chip Meltaways Chocolate Chip Peanut Butter Cookies Chocolate Christmas Trees Chocolate Cream Cheese Squares Chocolate Crinkles Chocolate Mint Snow-Top Cookies Chocolate Oatmeal Cookies (no bake) Chocolate Snowball Cookies Chocolate Streusel Bars Chocolate Sundae Cookies Chocolate Walnut Crumb Bars Choco-Scotch Crunchies Choose A Cookie Dough Recipe Christmas Crackers Christmas Crunch Bars Christmas Ginger Snaps Christmas Macaroons Christmas Mice Cookies Christmas Shaped Cookies Church Window Cookies Coconut Cookies Congo Squares Cookie in a Jar Corn Flakes Cookies Cornflake Christmas Wreaths Cowboy Cookies (oatmeal) Cream Cheese Cookies with Apricot Filling Crème De Menthe Chocolate Squares Crème Wafers Crescent Cookies Crispy Crunchies Date Nut Balls Date-nut Pinwheel Cookies Diabetic Peanut Butter Cookies Disgustingly Rich Brownies Doodles Double chocolate chip cookies Double-Chocolate Crinkles Eatmore Cookies Eggnog Cookies Elizabeth's Sugar Cookies Elves Quick Fudge Brownies Emily Dickinson's Gingerbread Cookie Recipe Emily's Best Brownies Famous Oatmeal Cookies Firemen Cookies Fluffy Shortbread Cookies Forgotten Cookies Frosted Peanut Butter Brownies Fruit Cake Cookies Fruitcake Squares Fry Pan Cookies Gems Ginger Cookies Ginger Crinkles Gingerbread Baby Gingerbread Cookies with Butter Cream Icing Gingerbread Men Gingerbread Men Ginny's Gluten Free Chocolate Chip Cookies Glory's Golden Graham Squares Glory's Sugar Cookies Gramma Chapman's chocolate coconut drops Grandma Elsie's Zimt (cinnamon) Cookies Grandma J's Butter Cookies Grandma Olson's Parkay Cookies Great Grandmothers Sugar Cookies Gum Drop Cookies Gumdrop Gems Haystack Cookies Ho-Ho Bars Holiday Cereal Snaps Holiday Chocolate Butter Cookies Holiday Raisin Walnut Bars Holly Cookies Hungarian Cookies (Little Nut Rolls) Ice Box Cookies Irresistible Peanut Butter Cookies Italian Cookies Jacob's Peppermint Snowballs Jam Bars Jessica's Famous Brownies Jessie's Chocolate Chip Cookies Jubilee Jumbles Juliet's Peanut Butter Blossoms Jumbo Chocolate Chip Cookies Kentucky Colonels Kiefle (cream cheese cookies with jam filling) Kifflings Kiss Cookies Lacy Swedish Almond Wafers Lemon Angel Bar Cookies Lemon Bars Lemon Cake Cookies Lemon Cream Cheese Cookies Lemon Squares Linzer Tarts Log Cabin Cookies Luscious Lemon Squares M&M Cookies Magic Cookie Bars Melt in Your Mouth Cutout Sugar Cookies Melting Shortbread Meme's Cream Cheese Cookies Milk Chocolate Florentine Cookies Mincemeat Cookies Mincemeat Goodies Molasses Cookies Molasses Forest Cookies Molasses Sugar Cookies Mom Mom's Crescent Cookies Mom-Mom's Ginger Cookies Mom's Nutmeg Sugar Cookies Mom's Old Fashion "Puffy" Sugar Cookies Monster Cookies Moravian Christmas Cookies Nana's Famous Soft Southern Cookies Nitey Nite Cookies No Bake Chocolate Cookies No Bake Chocolate Oatmeal Cookies No Bake Cookies No Bake Cookies No Bake Peanut Butter Cookies No-Bake Chocolate Oatmeal Cookies No-Bake Cookies Norwegian Sugar Cookies Nut Balls Oatmeal Bars Oatmeal Chocolate Chip Nut Cookies Oatmeal Coconut Crisps Oatmeal Cookies Oatmeal Scotchies Old Fashioned Sugar Cookies Ooey Gooey Caramel Chocolate Dunk Ooey Gooey Squares Orange Slice Cookies Parking Lot Cookies Peanut Blossoms Peanut Butter Bars Peanut Butter Blossoms Peanut Butter Cereal Cookies Peanut Butter Chewies Peanut Butter Chocolate Bars Peanut Butter Cookies Peanut Butter Cookies Peanut butter fingers Peanut Butter Reindeer Peanut Butter Surprises Peanut Marshmallow Cookies Pecan Puff Cookies Peppermint Snowballs Peppernuts Persimmon Cookies Persimmon Cookies Petey's Yummy Spicy Almond Thins Pfeffernuesse Pffefferneuse Cookies Pineapple Filled Cookies Pizzelles Potato Chip Cookies Potato Flake Cookies Praline Cookies Praline Strips Pterodactyl Nests Pumpkin Bars Pumpkin Bars Pumpkin Chip Cookies Pumpkin Chocolate Chip Cookies Pumpkin Cookies Queen Biscuits Quick Cookies Raised Sugar Cookies Raisin Filled Oatmeal Bars Raspberry Meringue Bars Really Peanutty Butter Cookies Reese`s Brownies Reese's Peanut Butter Bars Rich Flavor Christmas Cookies Rich Lemon Bars Ricotta Cheese Cookies Royal Almond Christmas Bars Rudolph Cinnamon Cookies Russian Tea Cookies Russian Teacakes Samantha & Kelsey's Chocolate Chip Cookies Sand Art Brownies Santa Claus Cookie Pops Santa Claus Cookies Santa's Butterscotch Melts Santa's Shorts Santa's Special Squares Scotch Cakes Scotch Shortbread Scotcharoos Scotcheroos Seven Layer Cookies Short Bread Cookies Shortbread Skor Squares Snicker Doodle Cookies Snickerdoodles Snickerdoodles Snow Balls Sour Cream Apple Squares Sour Cream Christmas Cookies Special K Cookies Spice Cookies Spicy Oatmeal Raisin Cookie Spritz Cookies Stained Glass Window Cookies Stir & Drop Sugar Cookies Sugar Cookies Sugar Cookies Sugar Cookies Swedish Pepparkakor (Pepper Cake) Cookies Swedish Sugar Cookies Sweet Marie's Swiss Treats Taralle (Italian Cookies) Tea Time Tassies Texas Brownies The Best Shortbread in The World Thumbprint Cookies Thumbprint Cookies Toffee Squares Traditional Christmas Sugar Cookies Traditional Gingerbread Men Cookies Triple-Chocolate Chip Cookies Ultimate Chocolate Chip Cookies Vanilla Waffer Balls Walnut Butter Cookies Walnut Crumb Bars White Chip Chocolate Cookies Wild Oatmeal Cookies Will's Famous Apple Jack Cookies Yummy Yummy Peanut Butter Blossoms


I just returned from the Marshalls Fall Show at Lake Geneva, Wisconsin. During the show I gave two different seminars, one For Booth Renters Only and the second program was on Taxes for Salons and Spas. I was probably asked the following question at least 10 times during the weekend.

"How long do I need to keep my records?"

I thought that you might be interested in my answer.


First, for your convenience, we have prepared a free handout that shows in detail how long you have to keep specific items. You will find this handout by visiting our website at

The following is an overview of the rules.

When determining how long to keep most of your income tax records, we look at the time frame over which the IRS can audit a return and assess a tax deficiency, or the time frame that you can file an amended return. For most taxpayers, this period is three years from the original due date of the return or the date the return is filed, if later. For example, if you file your 2005 Form 1040 on or before April 15, 2006, the IRS has until April 15, 2009 to audit the return and assess a deficiency. However, if a return includes a substantial understatement of income, which is defined as omitting income exceeding 25 percent of the amount reported on the return, the statute of limitations is extended to six years.

A good rule of thumb for keeping tax records is to add a year to the IRS statute of limitations period. Using this approach, you should keep your income tax records for a minimum of four years, but it may be more prudent to retain them for seven years, which is what the IRS informally recommends. State tax rules must also be considered, but holding records long enough for IRS purposes will normally suffice for federal and state tax purposes, assuming the federal and state returns were filed at the same time.

Certain tax records, however, should be kept much longer than described above and some should be kept indefinitely. Records substantiating the cost basis of property that could eventually be sold, such as investment property and business fixed assets, should be retained based on the record retention period for the year in which the property is sold. Tax returns, IRS and state audit reports, and business ledgers and financial statements are examples of the types of records you should normally retain indefinitely.

Keep in mind that there may be non-tax reasons to keep certain tax records beyond the time needed for tax purposes. This might include documents such as insurance policies, leases, real estate closing statements, employment records, and other legal documents.

It is also important to know that the IRS permits taxpayers to store certain tax documents electronically. Although the rules are aimed primarily at businesses and sole proprietors, they presumably apply to other individuals as well. The rules permit taxpayers to convert paper documents to electronic images and maintain only the electronic files. The paper documents can then be destroyed. Certain requirements must be met to take advantage of an electronic storage system, so contact us if you want more details.

The timetables listed above are the requirements for tax purposes. You should contact your attorney for additional guidance on record retention for legal purposes.

Larry Kopsa CPA

Friday, November 2, 2007


The Democrats just introduced legislation in Congress that will not pass, but does give us an indication of what's to come in 2009 if the Democrats retake the White House and retain control of both houses of Congress. There will be debate over the estate tax, and all of the tax cuts that we have had over the last 8 years will be out the window.

There will be some tax cuts, especially in the area of the alternative minimum tax and standard deductions. In addition, those low income people not paying income tax and still getting a refund through the earned income credit will be getting even more money back. To fund this there are a number of tax hikes that will impact us.
  • They are proposing a surtax of around 5% once your income gets above a certain level.
  • Tighter limits on itemized deductions for persons doing the long form.
  • Tighter limits on who can claim the normal personal exemption amount.
  • Less miscellaneous itemized deductions.
  • Self employment tax on all S Corporations and Partnerships.

It is going to be a mess, but trust that we will keep you posted.

Larry Kopsa CPA

Thursday, November 1, 2007


I read your explanation about cash contributions. Thanks for the information. I bet the Salvation Army guys aren't too happy about this. Could you answer this question? My church is doing a building fund drive and I was thinking I saw that I could use my IRA money. Is that correct?


BR, This all depends on your age. When the rules on charities changed, Congress did throw one bone to the charity lobby. Taxpayers age 70 1/2 or older can now contribute up to $100,000 directly from an IRA to a charity without paying tax on the money. This helps taxpayers who don't itemize or who have to exceed a percentage of their adjusted gross income (7.5% for medical expenses, 2% for miscellaneous itemized deductions) in order to claim a deduction. But Congress wasn't all that generous -- this provision is only good through 2007.

So, unless you are over age 70 1/2 this won't work for you. As with all of my answers, make sure you discuss with your tax adviser before you finalize your decisions.

It is a pleasure serving you!

Larry Kopsa CPA