It’s that time of year again when beauty professionals start thinking about taxes. As a beauty business owner, there are certain write-offs that you need to be aware of. From advertising and marketing expenses to equipment purchases, here is a breakdown of what you can and cannot write off for your beauty business.
Advertising & Marketing Expenses
Any expenses incurred from advertising and marketing your business are generally tax deductible. This includes things like website design and hosting fees, social media management services, SEO services, print and digital ad campaigns, promotional materials such as flyers or brochures, etc. When filing your taxes this year, make sure to keep track of all receipts related to these expenses so that you can deduct them on your taxes.
Equipment & Supplies Purchases
The cost of equipment and supplies used in connection with your beauty business may also be deducted from your taxes. This includes anything from makeup brushes and lash lift kits to salon chairs and skincare products. Just make sure to save all purchase receipts so that you have proof of the expense come tax time.
Travel Expenses
If you travel for work purposes (like attending industry conferences or workshops), those associated expenses may also be deductible on your taxes. Make sure to document any travel costs such as airfare, hotel accommodations, meals while on the road, transportation costs (Uber/Lyft rides or rental car fees). All receipts should be kept handy in case the IRS requests them during an audit.
Car Expenses and Mileage
If you use your car for business purposes, such as running errands or going to appointments, then you can deduct those expenses from your taxes. You can either track the actual cost of gas and oil used in your vehicle, or you can use the IRS standard mileage rate (57.5 cents per mile in 2020). In addition, depreciation (or lease payments), tires, repairs and maintenance, insurance payments, registration fees, loan interest, property tax, parking fees and tolls are all considered deductible car expenses.
Meal Expenses
Meals are a great way to network and build relationships with clients and other professionals in your industry—and luckily they're also tax deductible! However, you must be able to prove that these meals were necessary for conducting business. To do this, make sure to keep detailed records of who was present at the meal and what was discussed during it. You should also keep receipts so that you have proof that these meals were actually purchased by you.
Home Office Expenses
Doing part or all of your work out of your home? Then there are several expenses associated with running a home office that may be deductible on your taxes. These include things like rent or mortgage payments (if using a designated space in your home exclusively for business purposes), utilities (such as electricity, water and internet) as well as furniture (desks, chairs etc.) used in the home office space. Make sure to document these costs carefully so that they can be deducted on your taxes!
Depreciation (or lease payments)
If you own any furniture or equipment used in the running of your business, such as desks and chairs for a salon suite or lash kits for a lash tech, then you can deduct the depreciation on those items from your taxes.
Self-employed health insurance deduction
Self-employed individuals who purchase health insurance may write off 100% of premiums paid
Childcare
Individuals who need child care while providing their services – like needing someone else watch their kids during appointments – may deduct up to 35%
Professional Service Expenses
Any fees paid towards professional service providers like accountants & lawyers which help keep one's books organized & advise on legal issues pertaining to one’s business may be deducted
Startup Costs
Initial costs associated with launching a new venture – like rental deposits & licensing fees – can often be written off
Business-Related Education
Tuition & materials associated with taking courses geared towards increasing knowledge within one’s field may be deducted. This means that all of the courses that you take with The Annex to continue your education can be written off.
Business Interest & Fees
Payments made towards interest accrued via loans taken out by businesses & associated bank fees may be written off
Business Insurance
Premiums paid towards insuring businesses against potential risks – like theft protection – can often be deducted
With so many deductions available specifically tailored toward Beauty professionals , it behooves entrepreneurs within this sector understand what deductions apply. Not only will taking full advantage of all applicable deductions save money come tax season, but it will also ensure compliance with all applicable laws . Being aware of what is allowable when filing taxes helps make sure that each person involved stays ahead financially. As always, seeking guidance directly from qualified professionals either at financial institutions or Certified Public Accountant offices remains highly recommended. That said, knowing which deductions pertain specifically toward Beauty Professionals provides entrepreneurs within this space additional leverage when they speak with financial advisors. Armed with this detailed knowledge should ensure every entrepreneur takes advantage of every available opportunity when filing their yearly returns. Keeping track of all applicable deductions throughout the year simplifies preparation come April 15th ! Having accurate records allows entrepreneurs within this space maximize their return on investment come tax season! Good luck!
Please comment below with anything that I missed to help your fellow beauty professionals!