The business end of working in the nail-care profession is of little interest to most independent workers until tax time. Then, as April 15th gets near they begin to stress out over whether or not they owe taxes.
Confused about how small business tax laws work, even when these hard-working men and women pay someone else to prepare their taxes, most self-employed workers still miss deductible items, and that means they pay too much tax.
No matter how good a tax professional is, if you don’t provide all of the necessary information and figures, your return will be wrong. And, any tax return that is done wrong will fail an audit if exposed.
Until nail-care professionals learn exactly what the IRS expects of them, they will continue to pay more taxes than they actually owe, and to end up in tax trouble. Understanding the tax rules for your industry is the key to surviving an audit.
It’s easy to stay on the good side of the IRS; all it takes is a firm desire to increase your profits and a little bit of honesty. Tax planning is an important part of running a successful business, and, once you understand what the IRS expects of the small business owner, you can grow your business with money you would normally spend on taxes.
When you rent space in another’s salon or spa, every penny paid for rent is deductible, and if the owner charges you fees for advertising, bookkeeping or other services, that too can be paid with pre-tax dollars.
Classes taken to learn new skills, all products used on your clients, miles driven when running business errands, money spent on client gifts, books and magazines purchased to stay current on nail trends, and self-employed health insurance are all deducted from your income before income taxes are figured. But there are hundreds of other deductible items as well. The IRS takes into account that old business rule… it takes money to make money, and you’ll want to deduct every penny you spend.
Nail techs who don’t stay current on IRS tax rules will also miss out on tax benefits. Tax laws change every year, sometimes offering huge savings for only a short period of time. So, even if you do your own taxes, it’s smart to speak with a tax professional occasionally, just to keep up on new tax credits and planning opportunities.
Tax return preparation begins on January 1st for the profit-minded business person. Planning for tax advantages on the first day of the year is a great way to cut your tax bill, and increase your odds of surviving an audit. A little tax education will do the rest.