Trim Taxes: Common Tax Deductions for Hair Stylists

When you’re a self-employed hair stylist, staying on top of your finances can be just as important as staying on top of the latest hair trends.

One of the best ways to keep your tax bill as low as possible is to track your business expenses. Every purchase that you make for your business is likely to be deductible on your taxes—and every time you take a deduction, you lower the amount of income that you can be taxed on. Essentially, the lower your income, the less you pay in taxes.

While the IRS doesn’t have a pre-approved list of expenses that you can definitely deduct, you’ll know that a purchase is deductible if it’s both ordinary and necessary for your business; in other words, if it’s both 1) typical for your line of work, and 2) essential to doing your job well.

Here are some common tax deductions for self-employed hair stylists.

Booth Rentals or Salon Expenses

Whether you rent a booth or operate a full salon, you can deduct expenses associated with running your business, such as rent, utilities, and maintenance. If you rent space in a hair salon, the cost is fully deductible the year you pay it. This is the case whether you pay a flat fee every month, pay a percentage of your earnings, or a combination of both.

Home Office

If you do your hair styling from home, you’ll most likely qualify for the home office deduction so long as you dedicate a space in your home exclusively for your business. Remember: It doesn’t have to be an entire room.

 Even if you don’t see clients at home, you may still qualify for the home office deduction. Do you have a dedicated space in your home that you use for administrative or management activities for your business, like bookkeeping, ordering supplies, or appointment scheduling? You’ll likely qualify.

You can get this deduction whether you’re a homeowner or renter. But it’s particularly valuable if you’re a renter because it enables you to deduct a portion of your rent (an expense that is ordinarily not deductible). To take the home office deduction you need to figure out how much square footage of your home or apartment you use as an office. You then deduct this percentage of your mortgage or rent, utilities, and other home expenses.

Continuing Education and Licenses

As a hairstylist, you’ll likely need to keep up with the latest trends, techniques, and styles to stay competitive in the industry. The good news is that you may deduct the cost of any classes, seminars, or workshops related to your profession on your tax return. For example, if you attend a workshop on coloring techniques or hair extensions, you may deduct the cost of registration fees, travel expenses, and materials. 

You can also deduct the cost of continuing education courses required to maintain your license. For instance, if your state requires you to complete a certain number of hours of continuing education each year to maintain your license, you may be able to deduct the cost of those courses. 

While you can’t deduct the cost of attending cosmetology school, you can deduct the cost of obtaining and renewing your cosmetology license and any local or state business licenses.

Hair Styling Tools and Supplies

Tools and supplies are an essential part of a hair stylist's job, and the cost of these items can add up quickly. But, you may be able to deduct the cost of all tools and supplies you purchase to perform your job. This includes hair products, combs, brushes, hair clips, scissors, hairdryers, curling wands, and more. In addition to the supplies you use on your clients, you can also deduct any refreshments you provide to customers. 

Work Clothing

 It might be tempting to think of clothes as a business expense, but the IRS has very strict rules for which items of clothing can be written off. In order to be considered a business expense, the clothing must:

• Be specific to your profession

• Not be suitable for everyday wear

What exactly does that mean? If you wear a smock or apron while working with clients, you can deduct the cost of purchasing the items since you aren’t wearing those outside of work. On the other hand, if those black combat boots are comfortable for standing during long days but the first shoe you grab when heading out on your day off, they can’t be deducted since you wear them outside of your work as a hairstylist. 

Travel Expenses

When you’re a hair stylist, there’s a good chance that a lot of your work happens outside the salon. Depending on your clientele, you may need to travel for work-related purposes, whether it’s for a photo shoot, fashion show, or event such as a wedding. 

The IRS considers travel expenses to be the ordinary and necessary expenses of traveling away from your tax home for your business, profession, or job. What is your tax home? Generally, it’s considered the entire city or general area where your main place of business or work is located, regardless of where you maintain your residential home. 

You can generally deduct the cost of transportation, such as airfare or gas, and the cost of lodging while away from your tax home. You typically can also deduct the cost of meals and other incidental expenses, such as tips, laundry, and telephone calls. It’s important to remember you can't deduct expenses that are extravagant or for personal purposes, which makes keeping good records incredibly important.

Advertising and Marketing Costs

Whether you’ve built up an established client base or you’re trying to drum up new business, your business relies on you promoting your services. The cost of advertising can add up quickly, but you might be able to deduct these expenses on your tax return. 

So what exactly qualifies as a marketing and advertising expense? This could include the cost of business cards, flyers, and ads in local newspapers. You can also deduct expenses related to creating and maintaining a website, such as design costs and hosting fees. Social media advertising, such as boosted posts or ads on Facebook and Instagram, is also a deductible expense. 

You can usually deduct the expenses for in-person marketing events. For example, if you host a booth at a local bridal expo, the cost of renting the booth, creating promotional materials, and any samples with your logo can be deducted. 

Merchant Processing Fees

 Accept credit and debit card payments from your clients? You may incur fees for accepting payments through credit cards, debit cards, or other electronic payment methods. These pesky fees, known as merchant processing fees, can be deducted as a business expense on your tax return.  

Insurance

Any insurance you buy for your hair styling business is fully deductible. This includes liability insurance, which can cover you in case of accidents or injury to clients or employees, as well as property insurance, which can protect your business property against damage or loss. Health insurance premiums for yourself and your employees can also be deducted.

You can reduce your taxable income and save money on taxes by tracking your business expenses and claiming deductions come tax season. Remember, tax laws can be complicated, so if you have questions, it’s always a good idea to consult with a tax professional to ensure that you are taking advantage of all the available deductions and complying with tax laws. 

With careful planning and record-keeping, you can minimize your tax liability and keep more of your hard-earned money. If you really want to get your taxes under control, give Found a try and take the guesswork out of taxes. Found’s tax tools help you run your business with newfound clarity and ease. No more toggling between costly apps; sign up for free.

The information on this website is not intended to provide, and should not be relied on, for tax advice.