The business purpose of working in the nail care profession is of little interest to most freelancers until tax time. Then, as April 15 approaches, they begin to stress about 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 people still miss out on deductible items, and that means They pay too much tax.
No matter how good a tax professional is, if they don’t provide all the necessary information and figures, your return will be wrong. And, any tax return 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 really owe and end up in tax trouble. Understanding the tax rules in your industry is the key to surviving an audit.
It’s easy to stay on the good side of the IRS; all you need is a strong desire to increase your profits and a little honesty. Tax planning is an important part of running a successful business, and once you understand what the IRS expects from a small business owner, you can grow your business with money you would normally spend on taxes.
When you rent space in someone else’s salon or spa, every penny paid for the rent is deductible, and if the landlord charges you fees for advertising, bookkeeping, or other services, that too can be paid with pre-tax dollars.
The classes taken to learn new skills, all the products used on your clients, the miles driven running business errands, the money spent on gifts for clients, the books and magazines purchased to keep up with nail trends and insurance self-employment doctor are deducted from your income. before income taxes are calculated. But there are also hundreds of other deductible items. The IRS keeps in mind that old business rule…it takes money to make money, and you’ll want to deduct every penny you spend.
Nail technicians who are not up to date with IRS tax rules will also lose tax benefits. Tax laws change every year, sometimes offering huge savings for a short period of time. So even if you do your own taxes, it’s smart to talk to a tax professional from time to time, just to keep up to date with new tax credits and planning opportunities.
Tax return preparation begins January 1 for the for-profit business person. Planning for tax advantages on the first day of the year is a great way to lower your tax bill and increase your chances of surviving an audit. A little tax education will do the rest.
