Hair Stylist + Salon 2019 Tax Deduction Checklist
Tax Day is upon us, and if you’re reading this – chances are you’re still struggling with your taxes. But fret not because we have you covered! Below are some acceptable deductions for salons that will help you get more back on your taxes.
What are acceptable deductions?
Generally, deductions are the things you spent on for your business to make money. This can either be the most mundane objects or absolute necessities for your salon to run smoothly. However, it is important to remember that these things should be appropriate for business.
Because hair stylists are categorically self-employed, we are often a target for IRS audits. Declaring items that are not part of your salon’s expenses will only trigger an audit.
Below are some acceptable expenses you can declare on your tax return
Hair Care Products and Tools
• Shampoo, conditioner, styling products, hair color and wax removal
• Styling tools
• Salon supplies like towels, caps, clips, among others
Salon Furniture and Equipment
• Chairs, stools, carts and trays
• Waiting room area items including furniture and magazines
• Computers, tables or iPads at the reception
• Credit card processors and hardware
Training and Continuing Education
• You cannot deduct for education expenses “to qualify you for a new trade or business”. However, after you are licensed, you can deduct the cost of classes to improve your job skills or that your employer requires.
• Subscriptions to trade magazines and journals
• Online CD’s and videos
• Trade shows and certifications
• If you traveled to attend classes and salon-related functions, you can deduct travel expenses to include transportation, meals, mileage and hotel.
• Salon owners with employees can deduct salaries, benefit plans and uniform expense.
• Deduct any expenses associated with advertising your business in trade magazines, cards, flyers, and social media, as well as business cards, business website.
• You can deduct bank charges and merchant fees for your business bank accounts.
• If you borrowed money for your business, interest incurred on loans and credit cards are deductible as well.
• Make sure to keep records of your capital expenses as you can write off your business start-up costs, business assets and improvements. Portion of start-up costs is written off in the first year with the remainder depreciated annually over the next 15 years.
• With Section 179, you can write off new purchased equipment up to $500,000. This includes furniture, salon equipment and office equipment like computers, scanners and printers.
• Clothing, such as beauty tunics and salon uniforms, is deductible if they cannot be worn off the job.
• Both business and professional license
Repairs and Maintenance
• Services that you utilize to keep your business running smoothly, like sharpening scissors, equipment maintenance and salon cleaning services, are also deductible.
• Software services like online booking services and business-related online subscriptions like cloud services are acceptable as well.
• Liability insurance and healthcare
• Salon space is deductible whether it is owned or rented (including booth rent)
• You can also deduct if space in home is used (portion deducted of house expenses such as cooling, heating and insurance)
• Your business operations rely heavily on your telephone and internet services, so be sure to include those as well.
• Gas, electric and water are needed to keep the salon running so you can deduct these, too.
• If your business donates to the community which include out-of-pocket costs, you can also deduct them from your return.
Meals and Entertainment Deductions
• To qualify, be sure to keep detailed records that document for each expense the amount, the place, the people attending and the business purpose. Without that documentation, you get no deduction.
• Receipt scanner can be your best friend. Scan receipts and save on Dropbox or any online cloud storage services. Backup on thumb drive. You can sort receipts by date or class. Be sure to make note on receipt the people who attended the event and the business purpose.
Energy Efficiency Improvements
• Are you using solar technology for your business? Being an eco-friendly salon has its benefits. If you’ve made energy improvements to your salon or building before 2016, you may qualify for a tax credit. While different from a tax deduction, tax credit allows you to get a dollar-for-dollar discount on your federal taxes.