With tax season upon us once again, it’s vital that you’re utilizing each tax resource available to you as a salon owner to uphold reporting accuracy, keep yourself out of trouble, and ultimately maximize your take-home revenue. Most budget-friendly resources for tax assistance, such as bookkeeping software, certified tax professionals, or Small Business Development Centers (SBDCs), can be easily accessed through a quick web search, and provide valuable support for managing your taxes. Let’s take a quick look at something even simpler, and more D.I.Y. than all those—the salon tax worksheet.
What is a Salon Tax Worksheet, Really?
Simply put, a salon tax worksheet is a living document you can use to organize and calculate various financial figures related to your business for tax purposes. It serves as a tool, helping you track income, expenses, and deductions relevant to your salon operations. While the specific details may vary, a typical salon tax worksheet usually includes the following components:
Before You Continue:
Follow along with our downloadable template!
Income
This section records all sources of income generated by your salon, such as haircuts, styling, coloring, retail product sales, and any other services provided. Overall, the accurate reporting of your income is a fundamental requirement for tax compliance so you meet any legal obligations and avoid potential penalties or audits. Providing a comprehensive overview of your earnings is also essential for preparing and filing accurate tax returns. Not to mention, the income section can even serve as a valuable tool for financial planning altogether. With it, you can analyze trends in income over time, identify peak seasons, and make informed decisions about pricing, promotions, and business strategies to maximize your salon’s profitability. If you’re unsure as to how you can calculate or find your accurate income numbers, Vagaro’s reporting feature is a great place to start.
The Sales Summary report in Vagaro, for example, can be used to calculate your business’s profit in just a few clicks. It precisely breaks down revenue and business cost into different columns, and automatically calculates the difference of the two. In essence, the Sales Summary streamlines how you use the salon tax worksheet.
Expenses
This part details the various expenses incurred from running your salon. Common expenses for salons might include rent or lease payments, utilities, supplies, equipment purchases or leases, wages for employees, insurance, marketing expenses, and professional fees. These can be found under the Business Cost column of the Vagaro Sales Summary. Identifying and documenting these expenses correctly can lead to significant tax savings for your salon when tax season arrives.
By juxtaposing the previously mentioned income section with the expense section of the worksheet, you can assess the overall profitability of your salon. This lets you identify areas where expenses may exceed income, meaning you can make more informed financial decisions and implement adjustments when needed. Speaking of financial decisions, when seeking funding, lenders may require a detailed breakdown of business expenses, which gives you even more of a reason to keep track of these.1 Essentially, the expense section on your salon tax worksheet is not only a record of financial transactions but also a critical instrument for tax planning, financial analysis, and overall business management!
Note:
A salon tax worksheet is not a tax write-off checklist. However, you can get that worksheet, here.
Deductions
Here, you can claim deductions to reduce your taxable income. Deductions may include items such as depreciation on salon equipment, business use of home (if applicable), mileage for business-related travel, and other qualifying expenses. Deductions help reduce the taxable income of your salon, leading to potential tax savings. That’s what makes accurately recording your deductions such a crucial aspect of tax planning and optimization.
Estimated Taxes
For many salon owners in the US, especially those who are self-employed or operate as sole proprietors, partnerships, or S corporations, quarterly estimated tax payments are required by the IRS.2 The estimated taxes section helps in calculating and planning for these quarterly payments since failure to pay them often results in penalties and interest charges, which would hinder your salon’s operations as a whole.
Before you continue:
Vagaro will automatically generate and send 1099s to your business’s employees with their own credit card processing account, which helps organize your year-end tax procedures even more so.
A salon tax worksheet is paramount to your organization as a salon owner. It plays a key role in ensuring you keep accurate and organized financial records. Maintaining a well-organized worksheet can help with tax planning as well, guaranteeing that you take advantage of all available deductions and credits possible. Additionally, it provides a clear overview of the financial health of your salon, which aids in making informed business decisions. All of this is a win for you as a salon business owner in the end.
If you’re a salon owner or beauty professional in search of software that grows with your business, we invite you to explore the possibilities of a complimentary 30-day trial. Flex, scale & grow your way to a better business with Vagaro.
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