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Bookkeeping for salons and barbershops in Canada

Hair salons have a payroll rule nobody else has. If a barber or hairdresser works in your shop and isn't the owner, their work is insurable for EI even if they're self-employed or rent a chair, and you pay both shares of the premiums. That's payroll, and it shapes how you keep the books.

Where the money goes in your books

What a salons and barbers business usually spends on, and the account in a Canadian chart of accounts it belongs in. The numbers are the account codes in Spark’s starting chart.

Typical costs and the account each goes to
What you pay forAccount
Colour, product and supplies used on clients5000 Purchases and materials
Retail product bought to resell5000 Purchases and materials
Chair rent you collect from renters4200 Other income
Shop rent6700 Rent
Booking software6520 Software and subscriptions
Stylists on payroll6800 Wages and benefitsThrough a payroll service.
Chairs, dryers and sinks1500 Equipment and furnitureAssets, not expenses.
Card processing fees6310 Bank fees

How a chart of accounts works · The whole chart, as a template

The tax rules that are different for you

Each one is from the CRA, checked in October 2026. The link goes to the page it came from.

Self-employed barbers and hairdressers are insurable for EI

If a worker is a barber or hairdresser, provides services normally provided in a barbershop or salon, and isn't the owner or operator, the work is insurable. The owner pays both the employee's and the employer's share of EI premiums. This includes chair renters.

CRA: barbers and hairdressers

They get a T4, not a T4A

Report a self-employed barber or hairdresser on a T4 slip with employment code 13 in box 29, and their insurable earnings in box 24. You don't deduct CPP or income tax: they remit their own, like other self-employed people.

CRA: barbers and hairdressers

Staff stylists are ordinary employees

For barbers and hairdressers you employ, deduct CPP, EI and income tax as for any other employee.

CRA: barbers and hairdressers

Records to keep

  • Chair rental agreements, and each month's rent received.
  • What each self-employed barber or hairdresser earned. If you don't know it, CRA has a formula based on days worked.
  • POS reports splitting services from retail product sales.
  • Product supplier invoices.

Common mistakes

  • Assuming chair renters are nothing to do with your payroll.
  • Booking chair rent as sales of services.
  • Mixing retail product with back-bar supplies, so you can't see the margin on either.

How Spark Books handles it

Fits, with a payroll service

Does the books. The EI and T4s for stylists and chair renters need a payroll service.

What it does

  • Sorts supplies, rent and card fees, and records chair rent received.
  • Splits the GST/HST out of what you buy and sell.
  • A 13-week cash forecast that includes the GST/HST payment.

What it doesn’t

  • No payroll, so no EI premiums or T4s for chair renters. Use a payroll service.
  • No inventory for retail product.
  • No live bank feed: you upload statements. Not available in Quebec yet.

Free, with no card. If you’d rather not do it yourself, a Spark bookkeeper keeps your books for $350 a month. How Spark Books works

Questions

Do I pay EI for a barber who rents a chair in my shop?
Yes, if they're a barber or hairdresser doing barbering or hairdressing work in your shop and aren't the owner or operator. You pay both the employee and employer share of EI premiums.
Do chair renters get a T4 or a T4A?
A T4, with employment code 13 in box 29 and their insurable earnings in box 24. You don't deduct CPP or income tax for them.
Do I deduct CPP for a self-employed hairdresser?
No. They remit their own CPP and income tax. Only EI is your responsibility.
Where does chair rent go in the books?
As income, kept separate from your service sales, so you and your accountant can see each.

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