If you are like most small business owners, you know there is no shortage of reminders that tax season is just around the corner. While you are crunching numbers, we are here to help you keep as many dollars in your pocket as possible. We have complied a list of some of the most common tax-deductions for Salon Suite Owners.
1. Rent Expense: A huge perk to leasing a studio in a salon suite is the rent you pay can be deducted as a business expense.
2. Equipment and Supplies: This is a key category for tax deductions as equipment & supplies are a large portion of a Salon Suite owner’s expenses. When thinking about your business, consider what are the “tools of the trade” you use daily? Included in this category could be towels, smocks, aprons, color, shampoos, conditioners, gels, scissors, hair dryers, curling irons, etc. In addition, you will want to talk to your Accountant about including the business use of your computer and any office supplies you use for your suite business.
3. Continuing Education: Part of being a suite owner is continuing education and keeping yourself at the forefront of the industry. The IRS considers continuing education including classes, seminars, conventions, DVDs, etc as tax deductible. The cost of traveling while away from home on business is also tax deductible. If you attend a continuing education meeting, the mileage is a business expense and can be deducted. In addition, any magazine subscriptions, books or trade journals related to your industry you use to stay current on trends or to improve your knowledge are also deductible.
4. Advertising and Promotion Expenses: An advertisement for the sole benefit of your business is deductible. If this is the year you started your suite salon business the costs for setting up (and maintenance of) your business website can be deducted as well as the printing of business cards, brochures, gift cards for clients and Social Media advertisements. Client gifts up to $25 per recipient are also deductible.
5. Licenses: There are three parts the IRS allows beauty professionals to deduct on their taxes regarding licensing. The cost of professional licensing, the education expenses to maintain that licensing and anything you pay to have your license renewed.
6. Insurance: Enough said.
7. Miscellaneous Items: In addition to what we have mentioned above, there are several items that are tax deductible to be aware of when doing business and preparing your taxes including: the business use of your cellular phone, dues paid to a professional organization for people in your profession, dry cleaning for clothes you wear on the job only, cost for having your "tools" or scissors sharpened and tax prep.
As you are navigating through the tax world, one trick we have found helpful is to ask yourself "is this expense deductible?" To quote the IRS website, “To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.” As always, we strongly recommend you enlist the help of an Accountant regarding your taxes and keep your receipts.