Being a self-employed beauty professional has its downside, but it also comes with plenty of perks. When it comes to doing your taxes, one of the biggest perks is the ability to reduce your total taxable income by deducting expenses related to running your business.Expenses are any costs related directly to the operation of your business. The IRS is the ultimate arbiter of what’s in-bounds and what isn’t, but you might be surprised at what counts. Your morning latte? No, but the phone you use to book appointments? Yup. You can even deduct a percentage of your rent if you use any of your home for business purposes, like an office or to see clients.
The top beauty business expenses include:
Rent (chair, building, etc.)
Marketing materials (business cards, sponsored IG posts, giveaway items, etc.)
Cell phone (with this you can only deduct the percentage of your phone you use on business interactions. If you use your phone 60% of the time for business, then you can write off 60% of your total cell phone costs.)
Travel to events and classes (including plane tickets, Uber/Lyft costs, and half of your lodging costs and meals, if those are required to attend)
Mileage (any appointments that take you offsite or any errands related to your beauty biz you can write off $0.56/per mile that you had to drive)
Uniforms (if you work at a salon or spa that requires uniforms, you can write off this cost)
Childcare (if you have to pay for childcare while you work, you can write that off.)
Business owners have their own set of deductions that can help put money back in their pockets too. These are known as capital expenses, and they’re more flexible than you might think. Capital expenses are fairly broad, but the IRS mostly counts assets that will keep a business running for years to come, like building costs, work laptops, or even a vehicle. Deductions from capital expenses can be spread out over multiple years, so beauty business owners should take advantage of them.
Just like with tips, do yourself a favor and track your expenses all year long. At the first of each month, go through your business expenses from the previous month and track them in your spreadsheet, notebook, or software.
Here’s how you’ll want to track them:
Category (ex: rent, supplies, etc.)
Date purchase was made
Description of how it applies to your business
Receipt for physical proof of your purchase
Keep the receipts. Keep the receipts. Keep. The. Receipts. Is it a hassle? Yes. Should you do it anyway? Oh, yes. You won’t necessarily need them to file, but if you’re ever audited, you’ll be very glad you’ve got that paperwork.
Depending on your circumstances, you may also want to keep track of the odometer readings in your car. If you commute between different branches or go on work-related trips, you may be able to write off miles driven. Just be sure to keep note of what you drove for work versus personal use.