6 Tax Deductions Salon Suite Professionals Should Know
It takes money to make money, and the salon suites industry is no different. As you begin to grow your business, you’ll encounter one-time and ongoing expenses. A silver lining amongst these costs is the potential for tax deductions.
The IRS offers a wide range of tax deductibles among business expenses. If you work with a professional accountant, you’ll more easily pinpoint these areas for potential savings. Even on your own, however, there are many straightforward deductions to be made.
As you start your new salon business, you’ll want to know where the potential for savings lies. Here, we’ll discuss some of the most common tax deductions for salon suite professionals.
1. Rent
One of the major expenses of becoming a business owner with salon suites is rent. Fortunately, rent is often one of the things that counts as tax deductible. For your rent to count toward a deduction, it can’t be money spent as part of a conditional sale. It must also fall within the current market value of the rental unit.
2. Equipment and Supplies
Section 179 of the Internal Revenue Code offers a chance for salon suites to deduct equipment expenses immediately, rather than wait for them to depreciate in value. The equipment can cost up to $2,500 ($5,000 with a financial statement). Some of the equipment you might choose to include in these expenses are:
- POS and computer systems
- Salon chairs
- Wash stations
For startup businesses purchasing a variety of equipment, this offers some relief come tax time. To qualify, you must purchase the equipment during the year you are filing taxes for.
3. Continuing Education
As a member of the beauty community, you know styles are constantly changing. As you continue your education, you can count on the IRS to allow deductions for educational needs, including:
- Lab fees
- Supplies
- Books
- Tuition
Educational deductions fall under IRS “Topic no. 513, Work-related education expenses”. Expenses need to be related to education that furthers your career as a stylist or salon suite owner. It can’t be used to train for a new job or role outside of your current employment.
4. Advertising & Promotional Expenses
Line 8 in Schedule C offers a spot for salon suites to claim marketing expenses as tax deductions. The promotions must be business-related, and you should keep all receipts or proof of purchase (such as invoices) to show the IRS.
Marketing can be costly, so it’s nice to know there are some ways to cushion the financial impact of advertising. Most reasonable marketing expenses are allowed, including food or entertainment costs used for promotion or community efforts offered by your business. This means hosting a local Christmas charity or even a launch party could be tax deductible.
5. Licensing
Shapes By Shade Suite 202 Pikesville MD Location
Running a successful salon requires licensing. Licenses must also be kept up to date. All of these things cost time and money. Fortunately, this is another area the IRS offers some tax incentives.
Any money spent to license your building or to keep your license current is tax deductible. These deductions are a little trickier than some of the others because they must be amortized over a 180-month period, as per “Section 197 Intangible”.
6. Miscellaneous Items (Business Phone, Dues paid to any organizations, cost of tool maintenance)
Any expense that doesn’t fit in a solid tax deduction category may still be eligible for a deduction. The IRS allows for miscellaneous deductions for things like professional fees for legal assistance or hiring an accountant, office supplies, and credit card fees (not the amount owed on your card, but additional fees for card usage).
You will need to consult an expert before claiming miscellaneous items, as there are some things that can’t be claimed. It’s important that you don’t claim any equipment, building upgrades, or donations made to charity among the miscellaneous claims.
Contact Quality Stylz Suites Today
Are you a beauty industry professional in Baltimore, DMV, looking to lease a high-quality salon suite? Quality Stylz Suites offers completely customizable salon suites with 24/7 access for your convenience. Setup, Wifi, and laundry service is available.
Visit us online or call 1-410-653-7895 to learn more.
