Posted on March 30, 2018
Sola Salon Studios
April 17 is fast approaching, and while filling out all those forms can be a head-spinning slog, there is no reason why, even when down to the wire – no judgment, we’ve been there – you or your hired tax pro can’t make tax time work in your favor.
And while now may not be the best time to clobber you with judicious reminders about contributing to your IRA by April 15th for tax savings and investing in your future, Sola’s up-to-the-minute strategies are compiled from several of America’s most credible tax experts for serving up a few best-of-the-net reminders before 2018’s most dreaded day of the year.
Tip 1: A Meta Moment
If you earn tips, you're responsible for paying income, Social Security, and Medicare tax on the tip money you receive. To the IRS, tips are taxable income just like fees for your services.
Tip 2: Tools of the Trade
Make that pricey $400 Dyson hairdryer you purchased in 2017 earn its keep; any equipment costing up to $500,000 required for running your salon may be treated as a business expense for the year that it was bought.
“Renting your own salon space means you can deduct some or all of the costs, depending on the scenario,” says Sarah Nieschalk, a licensed tax professional at Tax Defense Network adding, “Much like your inventory, virtually any furniture you use in your salon is tax-deductible.” This includes sofas or chairs for customers in your studio or those they occupy while you’re reshaping their appearance. Supporting furniture for equipment, such as racks or mobile counters, may also be deducted. (source: SheKnows.com, a good read)
Massage tables, check. Salon furniture, yep. You get the picture.
Without making it too complex, the pundits at Turbo Tax go into meticulous detail about why self-employed beauty and grooming pros can write so much off. Check out their salon dedicated page for specifics and discover everything that you might write off — from your continuing professional education fees and sponsored social media posts to magazines and more.
Tip 3: Who Knew Child Labor Could be a Good Thing?
Let’s clarify that right now: we’re not talking about other people’s children, only yours and when they’re under 18. If they helped out around your salon this year, you can deduct that. According to the IRS, “payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.” (source: Entrepreneur.com)
Tip 4: Keep More of What You Earn
Isn’t one of the reasons you set up your Sola studio to reap the earnings benefits? According to a recent survey in Entrepreneur magazine, approximately 93 percent of small business owners overpaid their taxes over the past dozen years. Don’t be that person!
Tip 5: Download SolaGenius NOW for Preventing Future Mistakes
From client transactions to purchasing products to sell in your salon, keeping every single receipt is oh-so-important for both accuracy and in case there’s an audit. Since you’ve already tidied up during spring cleaning, keep that streamlined momentum strong by going paperless and committing to SolaGenius. As your own boss, this handy-dandy app saves precious moments for growing your business, maximizing your income and staying atop crucial admin and management tasks like keeping track of all service and product payments as well as any inventory purchased for retail sales.
One last thing: if you’re lacking confidence in pulling this all together by deadline, don’t wait another minute to seek assistance from a trusted, licensed tax pro. Perhaps poll your Sola neighbors, asking for their recommendations on reliable help, or pool your resources together to hire one expert to serve you all at a negotiated fee.