Tax Filing Tips for Beauty and Wellness Professionals

The Internal Revenue Service kicked off the 2022 tax filing season a little earlier than usual. And that means it’s time for small business owners to be prepared to submit their financial records and file for taxes. So, if you’re a service provider who hasn’t already filed, continue reading this short article, which offers tax filing tips to beauty professionals.

Whether you’re a Booksy provider filing as a shop owner, staffer, or independent contractor—here’s some information on what you’ll need to file an accurate tax return. Even if you’ve filed for taxes in the past, it’s good to know the actions you’ll need to take. Or keep in mind the documents that you should bring to your accountant.

Remember that being a service provider oftentimes has a host of perks. For many beauty professionals, working in the industry may offer a more flexible schedule, a passionate career, or possibly the joy of opening and running a shop or salon. Tax filing shouldn’t take away from any of those benefits. Instead, use this time to stay on top of your responsibilities starting today.

Shop or Salon Owners 

The best way to get started with tax filing is by organizing your financial records before sitting down to actually file your taxes. This next piece of advice is for shop or salon owners who own the physical location where they operate and offer services, while employing regular staffers or contractors:

1. Properly classify your small business by choosing one of the following categories: a sole proprietorship, partnership, or as a corporation.
2. It’s generally your responsibility to withhold taxes from your employees’ paychecks. And depending on their wages, you should have withheld income for Federal Income Tax, Social Security Tax, and Medicare Tax. 
3. It is also an employer's responsibility to pay liability for the employer’s share of Social Security and Medicare Taxes—this portion, your share, is not withheld from employees. 
4. Most employers must pay both a federal and a state unemployment tax, according to the Federal Unemployment Tax Act (FUTA), which provides for payments of unemployment compensation to workers who have lost their jobs. 

In addition to reporting all taxable income on the appropriate income tax form, you should also be responsible for issuing a complete Form W-2 tax form. Also known as the Wage and Tax Statement, you will need to issue a W-2 Form for each of your employees who earned a salary, wage, or other compensation.

Employees and Staffers

When it comes to tax filing, as an employee or staffer, there are just as many things to consider. This section is dedicated to individuals who work at a barbershop or salon and are paid on an hourly or salary basis and a shop owner determines how the space operates. Know the following:

1. You are responsible for your share of state and federal taxes. But it should be the responsibility of your employer to withhold taxes from each of your paychecks. 
2. Your employer will provide you with a W-2 Form that details your income. 
3. Most employees are no longer able to deduct their unreimbursed employee expenses on their taxes.
4. If you do not pay all of your taxes through withholdings, you might have to pay an additional amount.

Use your W-2 tax form when filing your federal and state taxes. This form shows the relevant information about the income you’ve earned from your employer. A W-2 tax form also shows the amount of taxes withheld from your paycheck. Information on benefits provided are also available, along with some other relevant information pertaining to your employment over the past year.

Independent Contractors or Booth Renters

Many beauty and wellness experts across the country refer to themselves as independent contractors or booth renters. These professionals operate an independent business. But those same industry experts rent booth space from a shop or salon owner. 

Independent contractors or booth renters usually pay a rate that’s due weekly, bi-weekly, or monthly. The following is a list of important tax related information for independent contractors or booth renters. 

1. You may need to make estimated tax payments during the year to cover your tax liabilities. And that’s because as a booth renter or independent contractor, the business usually doesn’t withhold taxes from your pay.  
2. Estimated tax is the method used to pay tax on income that is not subject to withholding. For example, earnings from self-employment you receive as a booth renter. 
3. Estimated tax payments are made each quarter using Form 1040-ES, Estimated Tax for Individuals. 

Know that your federal tax responsibilities are limited to reporting your income earned and expenses. More specifically, a sole proprietorship would file Form 1040. Use Schedule C to report business income and expenses, and use Schedule SE to report Self-Employment tax.

How Booksy Can Help with Tax Filing

Booksy service providers have a host of tools to help with tax filing. In particular, our software has a number of reporting features. Those same tools let you easily access and review your financial details. And all of that information is broken down into digestible graphs or charts.

In particular, the Stats & Reports tool is designed to help Booksy providers analyze important information that relates to business spending, profits earned, client appointments, and revenue earned. Use this information in a variety of ways. Better run your own businesses, manage staffers, and stay organized with regards to clients. 

Whether you need proof of income, want to consult the figures before filing for taxes, or need to have a printed copy for your files—Stats & Reports has everything you need. And despite the different reports that are available, accessing all of the data is simple.

Access high-level financial reports detailing your business performance. Review data for specific days, months, weeks, years, or define your own custom date ranges. But just remember that this information is available to every Booksy provider. Start this calendar year off right by gaining the financial support you need as a beauty professional.