EXPERT ADvICE FROM
amy martin duarte
a cPa and partner at calvin martin & company, Pllc, Amy Martin Duarte is an expert on
financial management in the wellness and hospitality industries. Pulse asked Amy for her
insight on common problems faced by spas, how recent legislation might affect a spa’s taxes
and where to go when you need help making heads and tails of your business’s financials.
Pulse: What are the three most common products and retail inventory items needed to be managing the finances. visionaries and
financial mistakes made by spa operators? provide services and treatments, and, most entrepreneurs tend to think differently than
how might they avoid making them? importantly, gift cards and the financial and tax someone in accounting or finance; they usually
amy martin duarte: First, not adjusting liability that goes hand-in-hand with selling don’t do well when they’re placed in a box or
menu prices to cover increases in product them. have to follow a certain financial order. It’s
and labor costs. Second, not analyzing your
sales mix to determine the most popular
An operator should find an advisor that is
like “mission control,” who knows where to go
important for entrepreneurs and visionaries to
have a savvy accountant and a manager who
services and treatments and if they are and for whom to refer to in any given scenario, has a hospitality degree. This ensures that they
priced at a greater profit margin to cover be it banking, legal, insurance or human can keep growing the business “their way”
lower-volume or higher-cost services.
The third is not conducting
regular inventories to be able
to see shrinkage and
spoilage.
P: how has the 2017
tax cuts and Jobs act
affected small spas?
d: Small spas that are
taxed as C-Corporations
may have seen their tax rate
increase to a flat 21 percent
resource needs.
“When you
are doing well,
work with your
financial institution
to establish a line of
credit when your
financials are at
P: What do spas need
their best.”
to know about how to
versus a staggered tax rate starting at
15 percent.
S-Corporations, Partnerships, and
Sole Proprietors will benefit from a 20
percent “QBI” deduction. This Qualified
Business Deduction will basically take a 20
percent deduction off the top of the net
income that flows through to the owner’s
Individual Income Tax Return.
without getting themselves into financial
trouble.
P: imagine you can only give one piece
of advice to spa owners. What would
that advice be?
d: When you are doing well, work with
your financial institution to establish a
line of credit when your financials are at
their best. No one ever needs money in the
good times, but when you need it in the lean
times, banks tend to say no.
handle retail inventory in
their accounting practices?
P: What’s the biggest threat to a small spa’s
d: Spas need to minimally have a monthly financials?
inventory count. Retail prices should be d: Cost control is the biggest challenge of all
reviewed when product orders are made to small organizations. The cost of product is
account for vendor price increases. Spas should consistently on the rise and not all spas take
practice FIFO—First In, First Out—to ensure time to re-cost their services periodically to
that product turnover is in-line with any ensure that the menu price is still in-line with
expiration dates. Par levels should also be profit expectations.
established and adhered to so that there is not In addition, a monthly or even bi-monthly
P: What should a spa operator look for in any more product in-house than what is inventory will keep product shrinkage to a
an accountant or financial consultant? needed to get through to the next order. controllable minimum.
d: A spa operator should find a firm that Labor cost control is also a determining
understands the wellness and hospitality P: What should a spa operator do if they’re factor in profitability; as your spa team earns an
industry. There are many different moving completely overwhelmed by managing a spa’s increase in wage and/or commission, the estab-
parts to these industries that are not present finances? lishment of a wage plan with set wage and
in other industries. d: There comes a time in any business when commission ranges will ensure consistency as
The uniqueness of how spa team members
are compensated, the number of back bar
the operator must understand what made them
and their operation successful, and it may not
the earning potentials of your team members
change. n
MAY
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PULSE 2019
37