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Tax Filing Tips for Hair Salons, Barbers, and Hairdressers

self employed hairdresser bookkeeping

It’s ridiculous that so many salon scheduling and management applications are available. To be considered for a station at The Strand or To apply for employment, simply contact us (Use our contact form) and be sure to include contact information with your inquiry. We would be happy to answer any further questions or concerns you may have. Set your pace, no one is going to tell you that you have to cram in an extra client when you want to take extra time and care with one of your clients.

Third-party customer reviews are mostly positive for Xero, but some customers note that the pricing has consistently increased for the accounting services. DocuPhase is a cloud-based software that offers tools for managing documents, automating workflows, and capturing OCR text. You may track your revenue and spend effortlessly, determine your taxes, and complete your annual tax return, preventing costly tax audits. Easy-to-use templates are a great feature of Sage Accounting since they make it easier to get things done in less time.

Here’s your step-by-step guide to getting your bookkeeping squared away!

Self-employment taxes may be covered by the refund if the stylist qualifies for earned income credit. Stylers under 25 years of age may qualify for a lower self-employment tax rate and the earned income credit. Hair stylist tax deductions include buying local ads, printing business cards and flyers, participating in local events and more.

What are the duties of a self-employed hairdresser?

Examples of Freelance Hair Stylist duties are greeting customers, scheduling appointments, determining client requirements, cutting and trimming hair, straightening or curling hair, operating cash registers, coloring and bleaching hair, and maintaining hair cutting tools.

In the case of withholding taxes from wages, the employee files taxes based on the income shown on their W-2 form. Individuals who are self-employed, however, must submit tax documentation as business owners. When business owners prepare their taxes there is a different tax process to follow. As an independent hairstylist, you need to pay both self-employment tax and income tax. The IRS requires all U.S. citizens who are self-employed and have net earnings of ​$400​ or more during the year to file Form 1040. If you make less than ​$400​ but meet any other requirements listed on the 1040 form, you still have to reports your earnings.

The Importance of Scalp Treatments and How to Recommend Them to Your Clients

Tax form 1040 can be used by self-employed stylists to complete their taxes. In addition, Schedule C must be completed in order to determine whether income earned during the year was a profit or loss. In order to figure out the amount of self-employment taxes due, Schedule SE is completed. If you need guidance on which filing status applies to you, it is important to consult with a professional accountant or tax preparer, who can give you guidance. Linda Rost started Better Bookkeepers in 1999, and since then the team has worked for over two decades. In this time, we’ve developed bookkeeping solutions for countless unique, small businesses and honed razor-sharp attention to detail.

self employed hairdresser bookkeeping

Not only is it important in case you need to return something or refund someone, but you should have a record of everything for tax season, just in case. Not only do you need to keep a record of your expenses and income for tax purposes, but you need to understand what your budget is from year in and year out. With detailed information, you can find out how much you need to spend on supplies and where you can cut down. Although customer service reviews are mostly positive, some FreshBooks users report that they’ve been double charged, and customer support is not always responsive to these issues.

Get (financially) fit online

But it isn’t as clear-cut for the stylists and barbers who work at these businesses. Thankfully, there are a couple of easy ways to tell if you’re an employee or an independent contractor. You can also deduct the cost of any offline advertising, from postcards in your local shop to advertising in trade magazines or local directories. If you spend any money promoting your business to attract more clients, then you can claim this back as well.

There are free and paid versions, and typically the paid versions have more features. Some apps offer free 30-day trial periods and others offer discounts for paying annually in advance. Employees often have federal income tax withheld from their paychecks as well as Social Security and Medicare payroll taxes.

Get the up-to-date profit and loss statement for self employed hairdresser 2023 now

While some other advanced programs feel like they require an accounting degree to navigate, FreshBooks keeps it simple. Paid add-on services include online ACH and credit card processing and payroll. But these cost more than some competitors, so if you process a lot of payments, you may end up paying more with Wave’s “free” accounting than you would with a paid app. The free version is pretty impressive, even compared to some paid accounting apps.

  • Current and former clients include The HOTH, Bisnode Sverige, Nutracelle, CLICK – The Coffee Lover’s Protein Drink, InstaCuppa, Marketgoo, GoHarvey, Internet Brands, and more.
  • You can deduct 58.5 cents per mile when you use your car, truck, or van for business purposes from January 1 to June 30, 2022.
  • Consider reaching out to a tax advisor if you have just started your journey as an entrepreneur.
  • The accrual method means you are recording all transactions, regardless of whether you’ve received the payment—making it a very accurate and established way of bookkeeping.
  • In addition to managing your accounts, calculating your revenue, and automating your payroll, you may use this tool.
  • Although customer service reviews are mostly positive, some FreshBooks users report that they’ve been double charged, and customer support is not always responsive to these issues.

Depending on your plans for using QuickBooks, Better Bookkeepers will train you accordingly. If your needs are fairly basic, then a quick crash course might be right for you. On the other hand, we’re also prepared to offer thorough training that will all-but make you a QuickBooks expert.

Tax Tips for Salon Owners

Accounts payable is the account in which you pay all other vendors or contractors what you owe, like the business owner if you rent a booth in their salon. Whether you’re a part-time independent contractor or growing your enterprise, you’ll need to manage your finances, and that means seeking out an accounting app. If you’re a freelancer and want simple accounting with a focus on your needs, FreshBooks is a solid choice. If you have more than five clients, you’ll need the Plus version, but all of the plan tiers are reasonably priced.

Starting in 2021, the maximum income subject to Social Security Tax is ​$142,800​, according to the IRS. If you’re filing taxes for 2020, the 12.4 percent part only applies to the first $137,700 earned. According to the IRS, an additional Medicare tax of 0.9 percent may apply if your net income exceeds a certain threshold, such as ​$200,000​ for single individuals. Working with an accountant can also help you realize what you can claim on your taxes, meaning what can be deducted. If you are purchasing any sort of materials or consumables like shampoo, dyes, towels, etc., those can be written off your taxes. Travel costs can also be deducted, along with any small items purchased during that year like scissors, rollers, straighteners, etc.

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