Helpful Tax Tips for Independent Stylists and Salon Owners

As independent stylists or salon owners, you get the freedom and the responsibilities that come with being your own boss. You set your own hours, design your own client experience, and bear all authority for your own finances. That includes stepping up to the plate at tax time and filing your taxes correctly.

Doing taxes as an independent stylist or salon owner might seem overwhelming at first, but with a little preparation, you don’t have to dread those IRS forms. Here are a few tips to get you through this tax season in one piece.

Tax Tip 1: Keep good records all year long

Keep thorough records of all financial transactions to make tax filing as easy as possible. You should be tracking things like:

•       Total income (including tips)
•       All business-related receipts
•       Purchases and expenses
•       Assets
•       Stimulus payments
•       Inventory lists and purchases

You can easily keep track of any card transactions paid through StyleSeat via the app and mobile web. With our Revenue Report feature, beauty professionals can get a detailed spreadsheet that lists all transactions for a given period of time, including cash, checks, and other credit transactions. You can also generate a report for a specific year and access information such as taxes per appointment.

It’s especially important for stylists and barbers to keep track of information about assets, such as salon chairs and waiting room furniture that depreciate in value over time. You need to know when and where you bought each asset, the cost of any improvements, and how you use it.

Also, keep your business expenses and personal expenses separate. Set up a business checking account and credit card. Otherwise, sorting through business versus personal expenses at tax time could become a nightmare.

This helpful list from the IRS provides more information on the types of records you’ll need in order to complete your tax filing.

Tax Tip 2: Know your filing status

You need to choose the right filing form for your employment type, so make sure you know what kind of worker you are. Are you self-employed, an independent contractor, or an employee?

Turbotax has an entire section on this in their tax filing tips for hair salons, but it boils down to this: if the salon you work at gives you a W-2 form at tax time and your federal income tax is already taken out of your paychecks, you’re an employee. If you rent or own a styling space yourself, or the salon you work at gives you a 1099-NEC form at tax time, you’re self-employed/independent contractor.

If you are a StyleSeat professional who qualifies for a 1099-K tax form, you will receive an email from our payment processor Stripe to the email associated with your account. April 15, 2024, is the last day to file taxes, but keep in mind this date is subject to change by the IRS. We recommend deferring to IRS sources for up-to-date details.

Tax Tip 3: Write off those expenses

As a small business owner, you are entitled to tax deductions based on your business expenses for the year. To reduce the amount of taxes you owe, make sure you take advantage of every deduction you deserve.

• Major expenses like professional licenses, workshops, or continuing education classes count as write-offs. This includes travel and lodging for business-related trips. Even gas and car mileage count if you commute to your space or travel to people’s homes.
• Rent money. Do you rent a booth? That’s a deduction! Do you rent a suite? This article breaks down the dos and don’ts of suite rental tax deductions.
• Daily supplies. Write off your scissors, your blow dryers, your hair color supplies, your mirror, your cotton balls. If it’s a tool that is typical for your industry and you need it to do your job, it’s fair game.
• Phones. If you use your phone for business, even if it’s your personal cell, you can claim a portion of the bills as a deduction. Learn more about how (and how much) to deduct when it comes to phones.
• Advertising costs. If you spent money to spread the word about your business, claim that money when you file.
• Management or accounting software that helps you run your business can be written off.
• Repairs and utility bills for your styling space count if you cover those costs yourself.
• Your accountant or tax preparation fee. Yep, you can write off the fee for doing your taxes while you’re doing your taxes. How meta!

If you are unsure whether or not something is deductible, check out this article about IRS regulations.

Tax Tip 4: Don’t go it alone

You wouldn’t advise a client to thread their own eyebrows or trim their own fade haircut. They come to you for that service because you’re the expert. Similarly, if you haven’t been to school for business and finance, you should consider tapping an expert at tax time — or throughout the year.

A knowledgeable accountant can help you grow your business and turn a healthy profit. A tax specialist can help you find every deduction, dot every “I” and cross every “T” on your tax forms. Independent professionals and small business owners across industries can attest that an investment in these professional services is well worth it if you want your salon business to thrive and grow. Learn more about how to find a tax preparer or accountant near you.