Guide to Self-Employed Hairstylist Taxes

You’re a hairstylist or barber who decided to pursue the freedom of an independent contractor. Congratulations! Self-employed individuals enjoy a wealth of benefits and opportunities. But with that new status also comes a host of different requirements come tax season.

How do hairstylists file taxes when they are their own boss? Whether you’re renting space at a hair salon or strictly making house calls, you’re going to need to know how to file taxes as a hairstylist that is classified as self-employed.

“Self-employment tax” is a term commonly used to refer to the Social Security and Medicare taxes you pay when self-employed. When you have a full-time job with a W-2, your employer covers half of your Social Security and Medicare taxes. When you’re self-employed or work as a contractor, you pay the employer’s portion as well.

Self-employed barbers and hairstylists, like other independent contractors or freelancers, have specific tax responsibilities. Here’s everything you need to know about self-employed hairstylist taxes. (Note: In this article, “hairstylist” and “barber” will be used interchangeably, as self-employed tax rules are the same for both positions.)

  1. Determine if you are considered self-employed: The first step is to determine if you are classified as self-employed. Who is self-employed? According to the IRS, you are self-employed if any of the following apply to you:
    1. You carry on a trade or business as a sole proprietor or an independent contractor.
    2. You are a member of a partnership that carries on a trade or business.
    3. You are otherwise in business for yourself (including a part-time business or a gig worker).
    1. If you are self-employed, youfile taxesas abusiness owner: If you determine that you are in fact self-employed, then you are technically considered a business owner and must therefore file taxes as a business owner. If you’re thinking, “I don’t own a business, I’m just an independent contractor!” – in the eyes of the IRS, when it comes to filing taxes, it’s the same thing. For taxation purposes, the IRS considers independent contractors to be self-employed people, and self-employed people file taxes as business owners.

    Self-employed people are required to file an annual return and pay estimated tax quarterly. The form of business entity you are will determine the paperwork you’ll need to fill out come tax season. The different tax forms (which we will expound upon below) for each business structure can be found on the IRS website.

    1. Documentchecklist: When business owners file their taxes, they must provide information that can be found on the following documents:
      1. W-9, 1099, or complete record of annual income
      2. Business deductions
      3. Documentation for dependents: Social Security Cards and driver’s licenses
      4. Form 1040
      5. Schedule C and Schedule SE
      6. Copies of Quarterly Tax Payment Vouchers
      1. Keep detailed records all year long: Hairstylists must maintain comprehensive records of their earnings, especially as some companies do not issue 1099s. These records include cash payments, checks, and credit card charges for the services provided.

      Keep records of expenses like supplies, booth rentals, and business cards. These records offer insights into the total tax deductible expenses during tax time. Qualified buisinessexpenditure associated with styling qualifies as a tax deduction for hair stylists. Additionally, if a cell phone is used for client communication, the business use potion of the cost can be deducted.

      1. File quarterly estimates: Stylists should make quarterly payments for state, federal, social security, and Medicare taxes. These payments, submitted to the IRS via Form 1040-ES in April, June, September, and January of the following year, correspond to the income earned in those respective quarters. Any excess tax payments are typically refunded at the end of the year.
      1. File your annual return: A self-employed stylist uses Form 1040, along with Schedule C, which assesses profit or loss. In order to report your Social Security and Medicare taxes, you must file Schedule SE, which determines self-employment taxes owed. If quarterly payments were made, they offset the yearly tax amount. Those not making quarterly payments must pay their full annual tax billwhen filing their self-employed barber taxes. Instructions for each form are available on the IRS website.

      Form 1040 includes income, deductions,dependents, and more. Stylists under 25 may qualify for earned income credit, potentially covering self-employment taxes. Business expenses are deductible, and while receipts aren’t required by the IRS, keeping them is required.

      Stylists may file a state tax return based on local laws, paying taxes according to state guidelines. Costs related to running the business or booth are deductible in this filing.

      Male stylist trimming client

      How Do I Know What My Self-Employed Hairstylist Employment Status Is?

      As per the IRS guidelines, you are considered self-employed if any of the following conditions apply: You engage in a trade or business as a sole proprietor or independent contractor; you are a member of a partnership involved in a trade or business; and/or you operate a business independently, including part-time or gig work.

      As a general rule, if you filled out a Form W-9 and received a Form 1099-NEC during tax season, you are categorized as an independent contractor; if you filled out Form W-4 and received a W-2, you are considered an employee.

      What are Some Tips on Tax Preparation for Self-Employed Hairstylists?

      Tax preparation for self-employed hair stylists can be smoother with careful planning and organization. Here are some tips and best practices to help:

      Keep Detailed Records: Maintain thorough records of your income and expenses throughout the year. This includes receipts for supplies, equipment, booth rentals, and other business-related costs.

      Separate Business and Personal Finances: Have a separate business bank account and credit card to streamline financial tracking and make it easier to identify business-related transactions.

      Understand Deductions: Familiarize yourself with tax deductions specific to your industry. This may include expenses for tools, equipment, supplies, business mileage, and even a portion of your home used for business purposes.

      Use Accounting Software: Consider using accounting software to track income and expenses. This can simplify record-keeping and make tax preparation more efficient.

      Quarterly Estimated Tax Payments: Stay on top of your tax obligations by making quarterly estimated tax payments. This helps prevent a large tax bill at the end of the year and potential penalties.

      Keep Track of Receipts: Even though the IRS may not require receipts for every expense, it’s wise to keep them organized in case of an audit. Digital copies can be especially useful.

      Home Office Deduction: If you have a exclusivespace for your business at home, you may be eligible for a home office deduction. Ensure you meet the criteria and calculate the deduction accurately.

      Professional Advice: Consult with a tax professional or accountant who specializes in self-employment taxes. They can provide personalized advice, help you navigate hairstylist tax deductions, and ensure compliance with tax laws.

      Stay Informed About Tax Laws: Tax laws can change, so stay informed about any updates that may affect your business. This may involve attending workshops, reading relevant publications, or consulting with professionals.

      Organize Documents for Filing: As tax season approaches, gather all necessary documents, including 1099s, receipts, and other financial records. This ensures a smooth and timely filing process.

      What Can Hairstylists Write Off on Taxes?

      Woman having hair coloured at home by hairdresser

      Self-employed hairstylists and barbers can take advantage of various hairstylist tax write offs and barber tax deductions to reduce their taxable income. Here is your comprehensive hairstylist tax deduction checklist::

      • Supplies and Tools: The cost of hair styling tools, scissors, combs, styling products, and other supplies used in your business.
      • Booth or Chair Rental: If you rent a booth or chair at a hair salon, the rental fees are generally deductible as a business expense.
      • Business Insurance: The cost of liability insurance to protect yourself and your business.
      • Uniforms and Work Attire: The cost of purchasing and maintaining work-related uniforms or attire. The clothing must be worn as a condition of employment or work agreement; and the clothes are not suitable for everyday wear. It is not enough to wear distinctive clothing, the clothing must specifically be required as a working condition.
      • Professional Development: Expenses related to continuing education, workshops, and training to enhance your skills.
      • Home Office Deduction: If you have an exclusive space at home for administrative tasks related to your business, you may be eligible for a home office deduction.
      • Business Mileage: If you use your vehicle for business purposes, you can deduct the cost of business-related mileage. This may include travel between multiple salon locations, to client events or homes, or to purchase supplies.
      • Advertising and Marketing: Expenses related to advertising your services, including business cards, flyers, website development, and online advertising.
      • Client Amenities: Costs associated with providing amenities to clients, such as magazines, refreshments, or other items that enhance the client experience.
      • Telephone and Internet Expenses: A portion of your phone and internet expenses if they are used for business purposes, especially if you use your phone to communicate with clients.
      • Professional Memberships and Subscriptions: Membership fees for professional organizations and subscriptions to industry-related publications.
      • Health Insurance Premiums: If you are self-employed and not eligible for health insurance through an employer, you may be able to deduct the cost of health insurance premiums.
      • Retirement Contributions: Contributions to a retirement savings plan, such as a SEP IRA or Solo 401(k).

      What can you NOT write off?

      • Personal Care Costs: Expenses related to personal grooming, such as haircut expenses, everyday clothing suitable for non-work occasions, and dry cleaning costs (except for uniform-related cleaning).
      • Penalties for Legal Violations: Fees associated with legal violations, including parking tickets or court fees.
      • Commuting Mileage to a Fixed Workplace: Deductible mileage for commuting to a fixed workplace away from your residence.
      • Life Insurance Premiums: Premiums for life insurance, especially when you are the designated beneficiary, even if the policy is obtained to secure a business loan.

      How Collective Can Help with Your Self-Employed Hair Stylist Taxes

      Now you know how to file taxes as a barber! If that still sounds overwhelming – and it totally can be – let Collective help you. Collective handles the tax and accounting side of your business – so you have more time to focus on your passion. LLC formation, S Corp election, bookkeeping, monthly financial reporting and an average member tax savings of $10,000. Estimate your tax savings to get started.

      Our website contains general information only and this information is not to be taken as legal, tax, or financial advice. You should consult with your attorney and/or tax advisor to get answers to your specific questions.

      Get help with Hair Stylist Taxes

      Collective handles the tax and accounting side of your business - so you have more time to focus on your passion. LLC formation, S Corp election. Bookkeeping, monthly financial reporting and an average member tax savings of $10,000*.

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      Collective Hub Inc. is not a law or financial firm. We do not provide legal or financial services or advice. We provide self-help tools for your convenience.