Hairstylists can work as salon employees or as freelancers running a business. Salon and barbershop owners are responsible for staffing, payroll, customer service, and more while running a successful business. There are plenty of tax deductions and claims you can make when self-employed.
Business income and expenses are reported on Schedule C including storefront or chair rental, salon supplies, and hair utensils. You can also claim the depreciation of assets like styling chairs and wash stations, as well as employee wages and benefits, and your share of Medicare, Social Security taxes, and unemployment insurance.
Reporting Income and Earnings
All of your earnings need to be listed on the income-reporting section of Schedule C. This includes the fees and tips earned from clients as well as the sales of beauty products. It’s important to keep careful records of all income and earnings to maximize your tax return and take advantage of tax deductions. Careful record keeping is important in case the IRS ever audits your business.
The perfect way to keep your important documents organized and accessible is to file them in custom folders. Mines Press is a leading manufacturer of custom pocket folders. They offer custom presentation folders in a variety of durable paper stocks and colors. Choose from foil stamping, embossing, or full-color printed promotional folders. You can use the online design tool to create a folder design featuring your own custom artwork and business card slits or choose from available templates. Pocket folders are a great way to keep important information and marketing materials organized and easily accessible.
Claiming Business Expenses
You need to denote the cost of buying products for sale separately from other expenses. Subtracting the cost of goods sold from your total revenue equals your gross profit. You then determine your net profit by subtracting your other expenses. Examples of claimable business expenses include tools, equipment, and towels, business cards, marketing materials, the cost of your beautician’s license, continued education and training, business taxes, and car and travel expenses. You can get an in-depth explanation of business tax write-offs on the IRS website, or by having an accountant prepare your taxes.
Salons often have additional beauty services such as waxing and manicure and pedicure services. Nails and skin weaken over time, becoming sensitive to cracks, splits, breaks, stains, and uneven ridges. The best way to give your nails the vital nutrients necessary for healthy nail growth is to add a buffer to your nail care routine. The Trysprig nail buffer kit features a natural ingredient-rich formula that restores weak nails and stimulates nail growth.
The best nail buffer manicure and pedicure kit prevents stains and nail splits, supports fungus recovery, promotes longer, stronger nails, aids recovery from false nails, and creates a natural shine finish that lasts up to two weeks. The Trysprig nail kit is the best home manicure option to treat brittle nails that have been damaged by harmful chemicals and adhesives from acrylic nails and gel nail polish.
Self-employment Tax and Estimated Payments
The self-employment tax in 2021 is 15.3 percent of your net income. This tax is what an employer typically takes out of your paycheck for Social Security and Medicare. This tax needs to be reported on Schedule SE, and you can write off half of the self-employment tax as a deduction on your 1040. Employers typically take care of withholding taxes as well.
Self-employed filers pay estimated taxes that serve the same purpose. Estimated taxes are paid quarterly if you think you’ll have a tax bill of $1,000 or more for the year. Failing to pay estimated taxes and having to pay too much the following year could result in a tax penalty from the IRS.
The best way to prepare for tax time is to keep careful records of your income and earnings. Whether you prepare your taxes yourself or work with a tax preparer, take advantage of every write-off and deduction.