The National Cosmetology Association recently posted this article on retail. They are challenging salons to look at retail in a new way. The article states, "The difference between successful salons and those who continue to struggle is, without a doubt, the high profits associated with retail sales."
This summarizes what Kopsa Otte has been saying all along. In case you missed the article, here's the link: http://www.ncacares.org/retail/.
Showing posts with label Retail. Show all posts
Showing posts with label Retail. Show all posts
Friday, July 31, 2009
Monday, November 3, 2008
CONTROLLING YOUR RETAIL INVENTORY
To control your retail inventory, keep an eye on the most popular inventory items and your slow moving items.
· Make sure that as you reorder, you’re reordering your fast moving items not your slow moving items.
· To determine what your hot items are, just look at your last couple of weeks sales. Usually, your last weeks sales are a good indication of what your future sales will be.
· Have your computer run items which have been on the shelf and have not sold for a long time. Consider donating these items or doing a fire sale to get rid of items that are not selling.
· Put yourself on a purchase budget. Assuming that your mark up is 100%, when you make your two week order, take your retail sales from the last two weeks, divide that number by two and that number is the amount that you can reorder. Stay within that reorder point. For example, if in the last two weeks you’ve sold $6,000 worth of retail products, then you would be on a budget to purchase only $3,000 worth of items this year ($6,000 x .5%).
Using these tactics will only keep your inventory at its current level. You are going to have to be careful that you replace those items that you are selling quickly. If you want to reduce your inventory, you need to make sure that you have your shelves full on those items that you need to keep, but at the same time you need to reduce your items to get your inventory down to a reasonable level.
· Make sure that as you reorder, you’re reordering your fast moving items not your slow moving items.
· To determine what your hot items are, just look at your last couple of weeks sales. Usually, your last weeks sales are a good indication of what your future sales will be.
· Have your computer run items which have been on the shelf and have not sold for a long time. Consider donating these items or doing a fire sale to get rid of items that are not selling.
· Put yourself on a purchase budget. Assuming that your mark up is 100%, when you make your two week order, take your retail sales from the last two weeks, divide that number by two and that number is the amount that you can reorder. Stay within that reorder point. For example, if in the last two weeks you’ve sold $6,000 worth of retail products, then you would be on a budget to purchase only $3,000 worth of items this year ($6,000 x .5%).
Using these tactics will only keep your inventory at its current level. You are going to have to be careful that you replace those items that you are selling quickly. If you want to reduce your inventory, you need to make sure that you have your shelves full on those items that you need to keep, but at the same time you need to reduce your items to get your inventory down to a reasonable level.
I hope this is helpful.
Larry Kopsa CPA
Larry Kopsa CPA
Monday, March 31, 2008
QUESTION ON PAYING RETAIL TAXES
Dear Larry,
I have a one chair salon in my home and I sold $3000.00 in retail last year. Last year I paid the taxes on the retail and backbar when I bought the products. My question is- Should I continue to buy my products this way or should I do the tax defered and pay it at the end of the year? I already have an id # I just haven't known which way I should pay it. I'm new at owning a salon so any advice would be greatly appreciated. Thank you for your time.
I have a one chair salon in my home and I sold $3000.00 in retail last year. Last year I paid the taxes on the retail and backbar when I bought the products. My question is- Should I continue to buy my products this way or should I do the tax defered and pay it at the end of the year? I already have an id # I just haven't known which way I should pay it. I'm new at owning a salon so any advice would be greatly appreciated. Thank you for your time.
Janet
Janet, I received your note regarding retail. Although sales tax laws vary from state to state, and I’m not sure what state you are in, let me give you an overview.
The way I understand it, you are paying your distributor sales tax and then you are turning around and reselling those items. The problem you have is that you are paying sales tax on your costs but not on your sales price.
For example:
If your sales tax rate is 5% and you sold $3,000 worth of items, I would assume the cost of those items was $1,500. If that is the case, then you are probably paying $75 worth of sales tax. When you made the sale of those items for $3,000, you should have received and paid sales tax of $150. In my example, you are beating the state out of $75 of sales tax.
What you need to do is to discontinue paying sales tax on purchase of the retail products, and then charge sales tax on those products when you sell them. Based on the number of sales you have, I would presume that in your state you are not required to file sales tax reports monthly, but rather can file a report at the end of the year. This will save you a lot of paperwork.
The sales tax reports aren’t too difficult. If you need some help with the first sales tax report, you can contact Amanda Hansen from our office at ahansen@kopsaotte.com. She will direct you to the right person who will walk you through the first sales tax report. While I am always upfront about fees, there is a fee for this. The fee for us to do this is $50. Once we get you through the first report, you should be able to do them on your own.
On another item, so I don’t confuse you, you do need to pay sales tax on backbar items you purchase from your distributor. Normally, a distributor will give you two bills, one for backbar items, and one for retail items purchased for resale.
If you have any questions, please let me know.
Larry Kopsa CPA
Janet, I received your note regarding retail. Although sales tax laws vary from state to state, and I’m not sure what state you are in, let me give you an overview.
The way I understand it, you are paying your distributor sales tax and then you are turning around and reselling those items. The problem you have is that you are paying sales tax on your costs but not on your sales price.
For example:
If your sales tax rate is 5% and you sold $3,000 worth of items, I would assume the cost of those items was $1,500. If that is the case, then you are probably paying $75 worth of sales tax. When you made the sale of those items for $3,000, you should have received and paid sales tax of $150. In my example, you are beating the state out of $75 of sales tax.
What you need to do is to discontinue paying sales tax on purchase of the retail products, and then charge sales tax on those products when you sell them. Based on the number of sales you have, I would presume that in your state you are not required to file sales tax reports monthly, but rather can file a report at the end of the year. This will save you a lot of paperwork.
The sales tax reports aren’t too difficult. If you need some help with the first sales tax report, you can contact Amanda Hansen from our office at ahansen@kopsaotte.com. She will direct you to the right person who will walk you through the first sales tax report. While I am always upfront about fees, there is a fee for this. The fee for us to do this is $50. Once we get you through the first report, you should be able to do them on your own.
On another item, so I don’t confuse you, you do need to pay sales tax on backbar items you purchase from your distributor. Normally, a distributor will give you two bills, one for backbar items, and one for retail items purchased for resale.
If you have any questions, please let me know.
Larry Kopsa CPA
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