Tax time is quickly approaching and filing for taxes as a small business owner and sole proprietor can feel overwhelming. We recommend having a tax consultant/accountant help you to ensure you are doing this correctly and get all of the benefits of your tax deductions. We’ve outlined a list of deductions you may be able to use for your Salon Suite business. The most important thing to remember is that because you are a sole proprietor/business owner, you can deduct many of your business expenses. Make sure you head on over to the IRS website to research any new tax changes since last year.
- Products, tools, equipment and supplies: Nearly all of the things you buy for your Salon Suite may qualify as a tax deduction. This includes furniture, supplies, décor, etc. Make sure you are keeping track of your receipts. HELPFUL TIP: Have one business credit card for ALL of your business expenses. Do not put anything else on the card unless it is for your business. This way, it is easy to keep track and all you have to do is hand over your credit card statements to the tax consultant.
- Education: Continuing your education makes you a better stylist and salon owner. Hairstylists and barbers may qualify for education tax credits. “If you’re taking professional training to acquire or improve job skills to further your career as a stylist or barber, you may be able to qualify for the Lifetime Learning Credit. The credit can be up to $2, your spouse, or a dependent on your tax return. A tax credit like this one is preferable to a tax deduction because it lowers the tax you pay instead of your income, as a deduction would. To qualify for this credit, you must be enrolled at an eligible educational institution that participates in a student aid program run by the U.S. Department of Education. You’ll know if your educational institution qualifies if they send you a Form 1098-T for the tuition payments you made. You can also ask the school if they qualify. If your school doesn’t qualify, you may be eligible for a deduction for the money you spent on education if you’re self-employed or an independent contractor.”, (Turbo Tax)
- Marketing and Advertising: Marketing and advertising materials such as business cards, flyers, Facebook ads, rack cards, website hosting fees, graphic design payments for your logo and any other expenses are usually deductible as long as they are used to promote your Salon Suite business.
- General Expenses: Any cleaning expenses, office expenses, office supplies, etc. As long as it is for your business, these are generally allowed as tax deductions.
- Charity/Donations: If you participated in the September Childhood Awareness Month for St. Jude, contribute monthly to St. Jude/ Suite Relief efforts, or had a day where a certain percentage of sales goes to charity, donated any supplies to a local shelter, you can write them off as a tax deduction. Make sure you have your paperwork in order and/or have receipts for these.
- Business Insurance & Rent: Insurance intended to protect your business, examples include fire, theft, flood, property, malpractice, errors and omission, general liability, workers’ compensation, . Rent or lease payments on items that aren’t vehicles or equipment, office or land rent, including any government taxes on those items can be used as well.
- License:. Your business and cosmetology license fees are also a deduction if you renewed or received your license in 2021., One of the many benefits of being a Suite Elite Member are our partnerships with companies like Stride and Square. Taxes can be extra-complicated for Independent Owners: quarterly taxes, multiple income streams, and various deduction considerations can make taxes a stressful component of ownership. On top of that, you’re on your own to figure this stuff out. Fortunately there’s an easy way that we can help out, at no cost to you! By offering access to Stride’s free Tax App, you can better understand your tax obligations, maximize your tax deductions and lower your tax bills. Check out their free webinar or read more about taxes on their blog. Download the Stride Tax app to keep track of your deductions. Our partnership with Square will help you keep track of your income for services and retail easily in one place.
To learn about some more tax tips for sole proprietors, read here.