Did you know that as a hair stylist you may be considered a business and not a self employed professional? This goes for hair stylists, dressers, colorist, and just about any professional in the beauty business. Below, we will share some essential lessons in business bookkeeping for hair stylists that can help save you thousands.

1. Are you a Corporation or an Individual?

This can be a huge question when it comes to filing your taxes. You are most likely filing your taxes as an individual by default. However, you may be overpaying your taxes to the tune of hundreds to thousands of dollars per year. We recommend you consider setting up a corporation here in Texas. With the right local provider – not an internet provider – you can end up paying just the one time fee that can pay for itself in tax savings.

Did you know? There where over 400,000 licensed hair stylists in the United States in 2023. Most of those work full time and can serve up to eight clients a day. Source: Gitnux

2. Deduct ALL Expenses

We all know that working in the beauty industry is not free. You pay for everything from your workspace to disposable combs. Be sure to deduct all your expenses in full such as:

  1. The cost of your workspace – whether it is a chair in a salon or an exterior structure in your home.
  2. Any expenses from training you receive from a school, certification course, licensing exams, and more. This also includes any charges for textbooks, parking, etc.
  3. Major expenses such as your styling chair itself, a drying chair, and any laundry equipment.
  4. Beauty supplies such as shampoo, conditioner, coloring, manual tools, styling tools, and even cleaning supplies.
  5. Common business expenses such as insurance, utilities, and other professional services.
  6. Marketing expenses including your website, business cards, booking system, ads, and even promotional giveaways.

3. Deduct ALL PARTIAL Expenses

In addition to the above, you may also deduct partial expenses for your taxes. For example, if you use part of your home to style hair, you may deduct part of this expense. Additionally, if you get health insurance through an employer but still pay part of the premiums, you may be able to deduct this. Be sure to contact your local bookkeeper for clarification on what is a full or partial deduction.

Rent is often the biggest expense for hair stylists, with the charges ranging anywhere from $500 to $3,200 per month. Source: Salon Biz Software

4. Keep Track of it All

With 80,000 new IRS agents, audits are sure to go up. Be sure you keep track of every expense by saving receipts. We recommend doing so both physically and digitally. You may also use a spreadsheet system or accounting software to help keep track of all your expenses. Finally, a professional bookkeeper is always the best way to keep track of everything and stay audit safe.

More Business Bookkeeping for Hair Stylists in Houston

Are you a hair stylist or of similar occupation and are paying too much in taxes and other expenses? We are experienced bookkeepers with many professional clients looking to make the most of their bottom line. Learn how we can help you by contacting us to set up an appointment and learn more.