The tax tips every hairstylist needs
I know first hand that tax season can be one of the most daunting times of year for independent hairstylists. Somehow, each year, I march my way through the piles of receipts and deadlines and live to tell the story.
The first year I did my taxes I spent a lot of time on the floor crying over how much I owed and the stress of figuring all of it out. I don’t know about you, but school never taught me a lick of knowledge about taxes. (Or anything pertaining to running a business, actually.) I had to learn the hard way. The really hard way: I’m still paying monthly for the tax mistakes I made the first few years. But through the heartache of those first few years I learned a lot of valuable lessons about how to make tax season easier on myself and I want to share those with you:
Find a really good CPA.
Whats funny with this one is that i’m not practicing what I preach. I’ve been to 3 different CPA’s in 4 years, and I wasn’t happy with any of them. I know they are essential, though, and I’m still trying to find my “person.” But even if they’re not a perfect fit for you they can offer a lot of advice on what you can and can’t write off, how to organize your expenses, and they can make setting up your payments a breeze. If you absolutely can’t find anyone - you can use turbo tax like I did last year which is still very helpful when it comes to filing and paying your taxes. But do some research, get some referrals, and try out a couple CPA’s to at least gain some knowledge (my hope is that you’ll have better luck than me.)
Get quickbooks for the self employed.
ASAP. Using quick books to organize your transactions is super helpful come tax time. No more scanning all of your bank statements for the correct transactions or shuffling through boxes of receipts. The best part is that you can take pictures of your business expense receipts, attach them to the correct transaction, file them under a specific category, and add any notes that you need to.
Have a separate business bank account.
This is a no-brainer. All of your income from your business should go in to this account, and all of your business expenses should come out of this account. If you’re not doing this, you’re setting yourself up for a world of hurt come tax time.
Do your research on write offs.
You can’t just go willy nilly and write off everything, but you may be missing important write offs as well - and you can’t always trust that a CPA will be aware enough to help you remember them. I highly suggest taking a day to do some digging on tax laws and write offs and create a list of do’s and don’ts for yourself. Once you have a good solid list of what you can write off, you can sort through your transactions and label them under those specific categories. (Again, quickbooks helps immensely with this.) And lastly:
Save, and make quarterly tax payments.
This is a big one, friends. It’s not as hard as it seems. My advice (not a CPA, just a girl who’s been through it) is to put aside 20-25% of your income every 2 weeks in to a separate savings account specifically for taxes. Every quarter, take that savings account and make your quarterly tax payment online. Set a reminder in your phone for when that quarter is due so that you don’t miss it. The last thing you want to do is spend the money you owe the IRS and be left with a $9,000 bill you can’t pay. Believe me, I know.
My hope is that these tips will save you some of the heartache I felt when I first entered the tax scene. If you’re experienced in the field and have any other helpful tips for making taxes easier please comment below and let us know!