Taking The Fear Out Of Taxes

To paraphrase Benjamin Franklin, nothing is certain except death and taxes, and with April 15 creeping up on us, we asked Ashley Lantz to help navigate the murky waters of filing your taxes as an independent salon owner. Ashley is a SolaGenius Ambassador and owner of TressPassing in Avondale, Arizona, just outside of Phoenix.

Let’s face it, no one wants to be audited by the IRS, but Ashley was also afraid of not having enough money to pay her taxes on time each year. When she discovered Profit First by serial entrepreneur Mike Michalowicz, who developed a behavioral approach to accounting, her whole approach changed. His theory is simple enough: Take your profit first and divide and allocate only what remains for expenses in order to transform your business from a cash-eating monster to a profitable cash cow.

His advice was a game-changer for Ashley. “Now I set aside enough money to pay my taxes each month, but it’s based on my take-home pay, not my gross income.” As it turns out, meticulous record-keeping is crucial, and Ashley uses SolaGenius to help with that. The cutting-edge app, which is designed to accept bookings 24/7, streamline your calendar, accept payments, get analytics and run reports, also keeps track of your expenses just like QuickBooks does. “Every time I purchase something for my business, I take a picture of the receipt with Expense Tracker.”

“Don’t be afraid to ask for help,” she says, “especially if it’s your first year in business. Find someone you can trust and be candid about how much money you’re bringing in. I went to a friend from high school who works for a big accounting firm, but if you don’t know someone like that, hire an accountant.” If you’re just starting out, she says, don’t forget to keep receipts for what you spend to furnish your suite, like chairs for the reception area or salon décor. “They all fall under the category of start-up expenses.”

Because she’s also a traveling educator for two major brands, Ashley keeps track of any expenses she doesn’t get reimbursed for while she’s on the road—meals that aren’t provided, cabs or Ubers, mileage or even plane fare. 

So, in light of the 2017 Tax Cuts and Job Act, here’s a list of some of the deductions beauty professionals can take each year:

1. Rent You can deduct the full amount of rent you pay each month.
2. Cell Phone Usage Keep track of how much you use your cell phone for business. Do customers book appointments that way? A good rule of thumb is to claim 50% of your bill.
3. Travel You cannot deduct your daily commute, but you can claim mileage for, say, driving to and from the beauty supply store or driving to a trade show. Keep a log of all trips taken throughout the year. The standard deduction is about 59 cents per mile, but your tax professional will compute it for you if you provide a record. You can also deduct the cost of airfare to attend a trade show or other business-related event. Similarly, you can deduct the cost of a hotel if you have to stay overnight for a business-related event.
4. Tools and Equipment You can write off tools of the trade—blow-dryers, flat irons, clippers, combs and brushes—as well as towels, shampoo and conditioner for use at the back bar, styling products, and other supplies you purchase to conduct business.
5. Refreshments Do you provide coffee or tea or other refreshments for your clients? Keep receipts and deduct those expenses.
6. Insurance If you’re paying for general liability insurance, you can deduct the premium.
7. Health Insurance You can deduct the premiums for health insurance through a private policy. Your tax preparer can let you know if you qualify.
8. Individual Retirement Account You can deduct what you pay into an IRA if you have one.
9. Cleaning Services You can deduct the cost of a cleaning service if you use one or deduct cleaning supplies purchased to do the job yourself.
10.  Advertising If you’re buying ads on Facebook or Instagram or in local papers or magazines, keep a record of these expenses. SolaGenius can help you build your website and also has text message marketing, which is included in the monthly fee that can be deducted from your taxes. Do you pay an annual fee for a website domain? You can deduct that, too. Window clings or posters, business cards or service menus are deductible as well.
11.  Continuing Education You can deduct the cost of attending trade shows or taking classes and workshops designed to improve skills or help you run your business more efficiently.
12. Uniforms You can deduct the cost of smocks, aprons or other clothing if you can’t wear them off the job.
13. Licenses You may deduct the fee to renew your cosmetology license.

Remember, you can audit-proof your business by maintaining good records, and it’s never too late to start keeping documentation. “In that respect, SolaGenius has been invaluable,” says Ashley, who self-identifies as a compulsive record keeper. Not a bad trait to have if you don’t want to get a call from the IRS.