A booth renter as defined by The Internal Revenue Service as one who is not an employee of a salon or barbershop and are always considered self employed. They are responsible for record keeping and timely filing of returns and payment related to their business. See IRS Self Employed Individual Tax Info.
As a booth renter, you are self employed which means you are in business for yourself. The key phrase to take note of is “You Are In Business”. This means that there are certain things you must have in place in order to run your independent beauty business correctly. Below is a quick reference guide for booth renters to help you understand more about your independent beauty business. Although the Quick Reference Guide is just a snippet of what you need, it is highly suggested that you purchase the book “Independence Day” a business building, marketing and informational guide for booth renters and salon owners who have booth renters.
The Quick Reference Guide for Booth Renters
As Booth Renter, you are responsible for the following licenses & Credentials:
-Tax Identification License
-Professional Liability Insurance
-Products & Tools
Contact your local State government for specific licensing laws for your state. l
As a Booth Renter, you are responsible for purchasing all products, tools and materials that are needed to run your independent beauty business.
-Hair products: (shampoo, conditioner, hairspray, setting lotion, etc..)
-Tools: (Curling Irons, Blow Dryers, Flat Irons, etc...)
-Materials: (Styling Capes, Towels, gloves, rollers, scissors, combs, etc...)
-Marketing & Advertising (Website, postcards, mailers, commercials, etc..)
You are also responsible for you own Medical, Dental & Disability Insurance. Most importantly you are responsible for keeping track of your own finances which includes income on services rendered with tips. Good and accurate record keeping of your finances is very important to the IRS. This will determine how much taxes you pay. To keep accurate records of your finances, we suggest the Record Keeping Appointment Book. It is the only Appointment Book designed for the Independent Beauty Professional to keep track their income. It’s an Appointment book and general ledger all in one!
Taxes - As a Booth Renter, you are responsible for filing your taxes with the IRS. It is suggested that you hire an Accountant to help you file your taxes.
It is very important as an independent contractor (Booth Renter) to pay your taxes. If you want to experience some of the finer things in life such as houses and cars, you have no choice but to pay taxes. If you’re desiring to purchase your own home, it is required that you bring your last three years’ tax returns to the mortgage lender. Remember, if you are an independent contractor, then you are in business for yourself. This means you are an entrepreneur and responsible for your own taxes. Now don’t be afraid of Uncle Sam, because being a small business owner has some great tax advantages. Most of the things you purchase for your business can be used as a tax write off. Let’s explore these categories further:
1. Advertising: You can write off any money spent on advertising such as, flyers, money spent on a photo shoot for hair magazines, hair video productions, radio & newspaper ads and poster ads to name a few.
2. Mileage: I’m sure most of the miles you put on your care are for business such as, driving to and from the beauty supply store, driving to hair shows and classes and driving to any event pertaining to hair. All of these miles can be written off !!!
3. Insurance: You can write off the insurance you have paid on your personal liability insurance.
- 4. Mortgage Interest: Did you take out a loan to finance your business? Well you can write off the interest paid on the loan.
5. Office Expenses include such items as towel services, business cards, hair magazine purchases & subscriptions, tickets purchased for hair classes, stamps/envelopes purchased for mailing promotions, appointment books, pens, pencils, etc…
6. Rent or Lease: Booth Renters can write off the Booth Rent they paid.
7. Repairs & Maintenance: This category applies mainly to salon owners. You can write off things such as fees paid to someone to clean your salon, floor maintenance (waxing & buffing) and any repairs that had to be made to your salon for upkeep. If you’re like me, you will spend a lot of money to maintain the upkeep of your salon.
8. Supplies are a huge category for all stylists. Did you know that you can write off every dollar spent on relaxer, shampoo, conditioner, comb, brush, spritz, blow dryer, oil spray, etc… The list goes on and on. We spend more money on supplies than in any other category. I knew one stylist who spent $17,000 in supplies last year. (What a write Off!)
9. Taxes and Licenses: You can write off the fees that you paid to renew your cosmetology and business licenses.
10. Travel: Did you spend money to fly to some hair shows last year? (Example: Bronner Bros., Chicago Midwest Beauty Show, IBS New York Show) Well you write off that plane ticket and hotel cost.
11. Meals & Entertainment: You can also write off the money you spent on food while you were at the hair show as well as the money you spent on the tickets to get into the show.
Other information for Independent Beauty Professionals/Booth Renters
- Business Credit
- Incorporating you beauty business
These are some of the great tax advantages that we have as a hairstylists/cosmetologists, so contact an accountant today and get those taxes filed. Remember for everything you write off, please keep the receipt in case of an audit. If you have any questions regarding any of the categories listed above, contact an accountant. For other great information on how to run your Independent Beauty Business, purchase the book “Are You Running A Business OR Just Doin’ Hair” OR “Independence Day”