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Cutting Your Taxes: Tax Tips for Beauticians & Barbers

There are many tax tips for beauticians and barbers that can help you keep more money.

There are many tax tips for beauticians and barbers that can help you keep more money.

If you’re a beautician, hair stylist, or barber, you’re probably used to cutting hair on a daily basis. What you may not be an expert at is how to cut your taxes and keep more of your money. Consider these tax tips for beauticians and barbers to help reduce your next tax bill from Uncle Sam:

Consider setting up a formal legal entity for your business.

If you run Jodie’s Hair Salon, having a formal name is one thing. But you should consider establishing your salon as a formal legal entity, such as an LLC, S corporation, or C corporation. Business entities allow their owners to take advantage of more IRS business tax deductions, give them added credibility, and can also reduce the chances of an audit.

Claim all eligible tax deductions for beauticians & barbers.

As a self-employed professional in the beauty industry, you may be eligible to claim these deductions on business expenses when filing your return:

  • Property rental costs for your salon
  • Maintenance expenses for property, i.e. utilities, a cleaning service, structural repairs
  • Equipment, i.e. computers, cash registers, furniture, lighting fixtures, barber chairs, scissors, razors, hygiene supplies, hairdryers, window displays, office supplies
  • Cost of goods sold, i.e. hair care products, shampoo, conditioner, hair gel, hairspray, etc.
  • Employee salaries, insurance, retirement accounts, sick leave, vacation pay, awards, bonuses, etc.
  • Depreciation on property
  • Fees for accounting, legal, and other professional service providers
  • Property insurance, liability insurance, etc.
  • Marketing/advertising expenses to spread the word about your hairstyling services
  • Business gifts to customers (limited to $25 per recipient per year)

Remember that tips are considered taxable income.

Cash tips you receive from your customers are considered taxable and are subject to federal income taxes, along with Social Security and Medicare taxes. Tips are also subject to taxation through your state income tax – if you operate your business in a state with such a tax.

Account for property taxes.

If you operate a beauty salon or barber shop in a space that you’ve purchased, you are likely on the hook for property taxes. These taxes can take a big bite out of your budget, especially if you operate your salon in a high-traffic area or downtown in a major city.

Account for possible sales taxes.

Generally speaking, a service like a haircut is not considered taxable. However, if you sell hair care products like shampoo or hairspray, you’ll need to collect sales taxes from your customers who purchase these items from your business. Be aware of your local area’s sales tax rates. If you have multiple salons, these rates could vary by location.

Get more tax tips for beauticians and barbers – along with tax tips for all professions – by working with the accounting pros at 1-800Accountant. Call 1-800-222-6868 or check out the “Services” page on www.1800accountant.com.

Photo credit: The photograph included in this blog post is used with permission via the Flickr Creative Commons license.

What Kinds of Small Business Marketing Costs are Deductible?

Social media marketing is one of many types of marketing you can deduct as a small business owner.

Social media marketing is one of many types of marketing you can deduct as a small business owner.

Opening the doors to a new small business and spreading the word about it is not cheap. Fortunately, the IRS allows entrepreneurs to claim marketing expenses as a tax deduction when filing their taxes each year. No matter what type of startup venture or established company you operate, you should be able to deduct the following types of small business marketing expenses:

- Print advertising

Let’s say you run a small ad for your small business in your local daily newspaper. Maybe there’s an industry-related publication in which you buy ad space. Perhaps you print out marketing collateral or have business cards made to promote yourself. Whichever options you choose, you can write off print advertising costs as a tax deduction when filing your taxes with Uncle Sam.

- TV and radio commercials

Would you love to hear an excited narrator describe your startup venture in a booming radio voice? Want to see your products come to life via a television spot? These types of small business marketing can be costly, but they remain a very effective way to gain leads and make sales. The good news is that TV and radio advertising expenses are tax deductible. From production to buying ad time on a local or cable station, you can typically claim all of these related costs as a write-off for your business.

- Signage/billboards

If you have a retail location for your bike shop, you’ll probably need some signage on the exterior of your building with your company name and perhaps some other information. You could also have a marketing firm create a billboard ad for your company to be displayed on the side of the road. These types of marketing costs are also deductible.

- Internet/search engine marketing

The Internet is a fantastic 21st-century marketing tool. You may want a “.com” or “.mobi” website for your small business. You may choose to utilize Google AdWords or create banner ads on relevant sites as a way of driving traffic to your own website. Search engines like Google, Bing, and Yahoo offer other search engine marketing tools as well. Most forms of Internet marketing cost something, so you can deduct your online advertising costs since they’re considered a business expense.

- Social media marketing

Do you have a Facebook business page, a Twitter business account, or a LinkedIn business profile? Social media is an extremely effective and convenient way to reach your potential customers online, especially since everyone is browsing the web on every possible device these days. From Facebook ads to YouTube commercials that precede your favorite videos, social media marketing is a big industry. Thankfully, small business owners can write off these costs.

- Promotional events

If you haven’t officially launched yet, you may want to hold a “grand opening” for your new retail store or mom-and-pop restaurant. If you’re established, you may choose to hold events or attend trade shows to make others aware that you exist. Any expenses for promotional events you host or attend to get the word out about your small business are generally fully deductible.

Get more small business marketing and tax deduction tips through 1-800Accountant. Call 1-800-222-6868 or check out www.1800accountant.com.

Image credit: The image included in this blog post is used with permission via the Flickr Creative Commons license.

6 Essential Traits to Look for When Building a Small Business Team

Assembling a small business team is much like building a new house. You have to carefully handpick the materials you’ll need to maintain a successful enterprise over time. The following 7 traits are those you should look for when hiring individuals to join your team in hopes of attaining a prosperous future for your small business:

1. Self-motivated

Seek out those who are self-motivated. This means individuals who can get up each morning with an inner-drive and motivate themselves to work hard each day. We all get down on ourselves at times, which is normal, but adding those to your small business team who are already eager to do great things can be a big benefit.

2. Proactive

The term active is in the word proactive – and for good reason. Someone who is proactive is able to take the bull by the horns and get things done without being hindered by potential conflicts or stress. For example, if a problem pops up with the backend workings of a website, a web developer would immediately jump into action to get it resolved so that a company’s website would be fully functional again in no time. Proactive individuals can make the right decisions when necessary.

3. Innovative

Finding innovative thinkers is not always the easiest task. But hiring these types of professionals is critical to the ultimate success of your startup venture. An innovative thinker is one who thinks outside the box and comes up with unique and refreshing ideas to help a small business grow. Look how far innovative thinking took Steve Jobs in his career.

4. Adaptable

Running any small business or startup venture requires a great deal of adaptability on the part of the business owner. The same can be said for those he or she manages. People who are easily frustrated by change are not the ones you’d want in your business. Find candidates who have proven to be adaptable in prior positions, and inquire in your interviews about how they’ve dealt with change and the need to adapt. You never know what lies ahead on your business path, so being surrounded by individuals who can handle uncertainty is a must.

5. Reliable

Reliability may be the most important trait to be on the lookout for when assembling your staff. Find people who will get to work on time. Find people who will get their work done each day. There is no greater feeling than knowing you can rely on someone to get the job done within a certain timeframe.

6. Loyal

It’s hard to find loyal employees who will stick it out through the thick and thin. The good news is that there are loyal people out there. Do your best to identify and hire these types of workers. Focus on nabbing individuals who are looking to grow into a position and move up the ladder. If you can keep your best employees with you for several years, your chances of long-term success will go up significantly.

1-800Accountant is here for all of your small business accounting and consulting needs. To learn more about how we can help you put your business on a path to prosperity, call 1-800-222-6868 or visit www.1800accountant.com.

Reeling in the Savings: Tax Deductions for Fishing

Reeling in tax deductions for a fishing business is much easier than reeling in a big catch.

Reeling in tax deductions for a fishing business is much easier than reeling in a big catch.

It’s National Fishing Week! Fishing is a hobby many amateur anglers enjoy in their free time. But it’s also a big industry. Many entrepreneurs out there run fishing charters, give fishing tours and lessons, and are active on the water in a variety of capacities.

The IRS generally allows self-employed individuals in the fishing trade or those who own a fishing-based business to reel in some savings by claiming the following ordinary and necessary fishing expenses as tax deductions when using Schedule C of Form 1040:

Property

  • You can depreciate the cost of your fishing boat for a trade or business using the 7-year property depreciation approach. You can depreciate traps, nets, pots, and other such items using this model as well, unless you determine that you will only be using them for less than one year. In this case, you can claim their initial cost as a deduction.
  • For any repairs or improvements to property like fishing boats that increase their value, make them more useful, and lengthen their life, you must depreciate the money you spend to make these modifications. Otherwise, you can claim these expenses as a write-off.

 

Transportation Expenses

  • You can typically write off the fuel you buy for your fishing boat. (NOTE: You may be eligible to claim a fuel tax credit as well.) Consider maintaining a mileage log with data on the distances you travel on your boat for business purposes.
  • You can only deduct transportation if it is for business purposes. For instance, if you report to an office complex where you house the administrative side of your business and then drive to a dock where your charter is housed, you can write off this trip behind the wheel using mileage or actual expenses.

Fishing Tools & Equipment

  • Fishing reels, tackle boxes, storage bins, coolers, life jackets, GPS systems and other common tools and supplies needed for fishing trips are considered deductible business expenses.

Meals & Entertainment Expenses

  • Meals are deductible for fishing professionals if you’re away from your ordinary “tax home” doing business and your trips are overnight or long enough to require a time of rest for you to perform your trade. Fishermen often spend many hours using their reels throughout a workweek, making it common for them to need to reenergize with food they bring on their boats. That’s why this deduction can be a nice perk to save on taxes.
  • If you conduct business activities during a meal or entertainment event, you can write off 50% of these expenses.

Marketing Expenses

  • Any expenses you incur to spread the word about your fishing business are deductible, including business cards, a website and web hosting, social media marketing, etc.

Home Office Expenses

  • If you operate your fishing business out of your home office when you’re not on the water, you can deduct a portion of your residence via the home office deduction. This may include phone and Internet access, electricity, and other expenses. Take a percentage of your home bills based on how much is spent on business activities, and then you can write off this amount on your tax return. You may also use the flat-rate home office deduction method by claiming $5 per square foot of home office space for up to 300 square feet with a maximum deduction of $1,500.

Get more tax deductions for fishing and ways to save money through IRS business deductions by working with the accounting pros at 1-800Accountant. Call 1-800-222-6868 or visit www.1800accountant.com.

Image credit: The image included in this blog post is used with permission via the Flickr Creative Commons license.

Hackers Strike IRS, Access 100,000 Taxpayers’ Information

Identity theft and tax scams have become a serious issue for innocent American taxpayers in recent years. A new hack that hit the IRS proves this point more than ever.

On Tuesday, May 26, the federal tax collection agency reported that online hackers targeted an IRS service in order to gain access to personal information for over 100,000 taxpayers.

The identity thieves hacked an online service called “Get Transcript,” a system that allows taxpayers to request tax documents and information for filing and recordkeeping purposes. They bypassed a security questionnaire that asked for a taxpayer’s date of birth, street address, tax-filing status, Social Security Number, and other personal information. The IRS became aware of the hack due to an unusually large number of taxpayers that were seemingly requesting transcripts from February through mid-May of this year.

“We’re confident that these are not amateurs, that these actually are organized crime syndicates,” said IRS Commissioner John Koskinen in a press conference.

According to the agency, it has launched a full criminal investigation into the breach and said its main computer system remains operational and secure.

“In all, about 200,000 attempts were made from questionable e-mail domains, with more than 100,000 of those attempts successfully clearing authentication hurdles,” the agency said in a statement.

The IRS is certain that tax refunds were stolen through the hack. It is currently investigating exactly how many fraudulent refunds were stolen. Koskinen estimates that under $50 million in tax refund money has been claimed by the fraudsters. He added that the agency will notify all taxpayers whose information was accessed by the hackers.

“This tax scheme is simply one more piece of the much larger puzzle of more and more tax scams rearing their ugly heads every year,” said Bert Seither, Vice President at 1-800Accountant. “We are dedicated to helping everyone with their tax and accounting needs, but we feel especially obligated to assist those who have become innocent victims of tax fraud.”

If you are one of the affected individuals whose personal information was compromised through this hack, 1-800Accountant is here to help you navigate through this situation. We will offer you a free one-on-one tax consultation to ensure your taxes are in order – and to make sure you receive your tax refund for 2015 and beyond. To claim this offer, call 1-800-222-6868 today. Visit www.1800accountant.com. To learn more about our services.

Speeding to Savings: Tax Tips for Race Car Drivers

It can be very expensive to win a checkered flag. But using these tax tips for race car drivers will help you keep more of your hard-earned money.

It can be very expensive to win a checkered flag. But using these tax tips for race car drivers will help you keep more of your hard-earned money.

Auto racing is an incredibly popular sport. From NASCAR to the IndyCar Series, fans across America attend and tune into auto racing events all the time. Plus, many individuals are involved in the amateur racing circuit in their free time.

With the Indianapolis 500 this weekend, check out these tax tips for race car drivers – no matter if you race for fun or drive as a full-time profession:

Determine if racing is your hobby or your business.

If you race on a track as more of a hobby than a formal business, you’ll likely be strapped to claim many tax breaks on auto racing expenses when filing taxes with the IRS. You cannot claim losses on Form 1040 designed to offset other income you earn. In addition, any deductions you claim on expenses cannot exceed any prize winnings you earn through this activity. If you report consistent financial losses as a race car driver, the IRS will probably assume that you are not partaking in this activity to make money. Therefore, you won’t be viewed as a for-profit business. On the flipside, you can show Uncle Sam that you are indeed operating as a business by having a business plan on paper and by showing your financial statements. In essence, you must provide ample evidence that you participate in auto racing on a full-time basis to qualify for business-related tax breaks.

Claim applicable tax deductions for race car drivers.

If you are taking home checkered flags and paychecks for your prowess behind the wheel of a race car, you are eligible to write off your auto racing expenses as a tax deduction.

Tax deductions for race car drivers may include:

  • Depreciation on a race car, computer for tracking speed, race track, etc.
  • Fuel
  • Car supplies, i.e. tires, replacement parts, etc.
  • Other supplies, i.e. pens, paper, notebooks, etc.
  • Transportation to racing events and promotional appearances (either mileage or actual expenses)
  • Meals, lodging, and entertainment related to racing events
  • Casualty losses from a crash in a race
  • Merchandise you sell to promote your brand, i.e. t-shirts, bumper stickers, hats, flags, etc.
  • Marketing expenses
  • Professional fees for accountants, attorneys, racing consultants, etc.

Document all of your expenses – and save receipts.

As a race car driver, you’ll likely be on the hook for numerous expenses since the field of racing is certainly no cheap endeavor. So make an effort to carefully document all of your expenses. Save receipts, and consider scanning them onto your computer for convenience when you need to access them in the future. Use a mileage log to track your transportation expenses. It’s especially important to document all of this financial information if you’re trying to show the IRS that your racing activities are a business rather than a hobby.

Consider establishing a formal business entity.

If you’ve pursued racing as a hobby, but you’re now focusing on it as your primary profession, it’s wise to consider creating an LLC or corporation for your trade. Establishing a legal business entity can increase your credibility as a reputable race car driver. In terms of IRS taxes, it can help you reduce your tax liability through tax strategies available to formal business owners rather than those who work as sole proprietors. From tax deductions to tax credits, you’ll be glad you decided to add “LLC” or “Inc.” to your business card.

To learn about more tax tips for race car drivers and those in any profession, turn to the accountants at 1-800Accountant. Call 1-800-222-6868 or click over to www.1800accountant.com.

Image credit: The image included in this blog post is used with permission via the Flickr Creative Commons license.

6 Things Every New Startup Needs to Succeed

Opening the doors to a shiny new startup venture requires a great deal of resources. You can’t just go to your favorite department store and buy a business off the shelf. It takes time, money, and support to achieve startup success. Fortunately, by knowing what you need to surround yourself with, the startup puzzle can be much less stressful to figure out where to fit all the pieces. Consider these things that every new startup needs to enjoy a prosperous future:

1. An in-depth business plan

In order for an entrepreneur to discover long-term startup success, he or she must have a solid, in-depth business plan on paper. This written plan of action should consist of the following sections

  • Basic company profile
  • Detailed description of company
  • Overview of industry, competition, & market
  • Detailed description of products/services
  • Marketing plan
  • Financial plan
  • References/appendix

2. An accountant

Startups often fail because they are not built on solid financial ground. To help you ensure your finances are in order and you’re fulfilling your additional IRS business tax requirements, it’s critical to work with an accountant. Ideally, your accountant should specialize in business taxes – and should have experience working with other small business owners in your specific industry. With the 70,000-page federal tax code, additional business filing requirements at play, and the availability of numerous tax breaks exclusively for startups, you don’t want to jeopardize your business by trying to handle your own small business accounting.

3. Legal support

In addition to accounting support for your IRS business taxes, you should have legal council on your side as well. Consider contacting an attorney to review all of your business paperwork and important documents. There are many laws at the local, state, and federal levels that apply to startups. Don’t get caught red-handed. Consult with an attorney to ensure you follow the rules of small business ownership. Plus, if you get sued for any reason, you’ll need legal support to get through such a case.

4. Adaptable and flexible owner(s)

The term startup is used to describe a variety of businesses. But the cornerstone of a startup is that it typically tries innovative strategies and can change on a dime. This flexibility is something owners of startups should possess. You may lay out a detailed business plan, but a good portion of this roadmap will likely change over time. So don’t be stuck on certain ideas if they aren’t providing results. Be adaptable so that you can manage to get over the hurdles.

5. Funding already in hand

Making money with a new startup takes time. You have to be patient in order to establish your business as an authority. With that said, it’s a must to have startup funding already in your bank account. This means having capital you can use to get off the ground – and to help maintain your enterprise in the initial stages before you start generating revenue. Consider using personal funding, a loan, or even crowdfunding.

6. Technology, including a cloud platform

Technology has advanced nearly every industry under the sun. These days, successful startups take full advantage of technology, including convenient cloud computing. Small business owners who use cloud systems to store files that they can access anywhere from any device have a big edge over others. From documents to spreadsheets to presentations, it’s so easy to put files in the cloud so you have them whenever you need them. (Learn more about how the cloud works here.) In addition, startups should have a website, pages on social media, and listings in online business directories. Security should be accounted for here as well, so invest in reliable servers, antivirus and antispyware software, and other solutions to keep your startup safe from the many unscrupulous individuals out there.

Learn what else your startup needs by checking out this SingleHop article. For all of your small business and startup accounting needs, turn to 1-800Accountant by calling 1-800-222-6868 or by visiting www.1800accountant.com.

It’s Time for Spring Cleaning…of Your Finances

dollar signsMost people think spring cleaning is all about getting your house clean, tidy, and in order during the springtime when the weather is starting to feel a little more comfortable outside. However, you certainly shouldn’t overlook your finances.

Check out these spring cleaning tips for your finances:

– Update your budget.

If you don’t have a personal budget that you use to make sure you’re spending money wisely, it is time to create one. If you have one, it’s time to update it. Make a list – or spreadsheet – of all regular expenses you have. Then make a note of any money you spend on dinners, movies, new clothes, or other things that aren’t exactly necessary. Determine if you can cut out any of these costs. Or, you might be able to spend money on less expensive goods and services that are just as beneficial as their pricey counterparts. It’s all about examining the reality of your finances and seeing how you can improve on them.

– Organize your paper files – and shred unnecessary records.

Take some time this spring to organize your paper documents. These could be receipts, invoices, tax returns, bank statements, and any other relevant documents you’ve been saving. Put them in appropriate file folders for easy access. Shred any paperwork you no longer need as well. It’s tough to part ways with certain documents. But if you know for sure that you don’t need to keep something, get rid of it.

– Digitize financial records.

A great way to maintain records without letting them pile up in the corner of your home office is to digitize important records. Scan them into your computer. You could even use a backup solution or cloud service to make them accessible anywhere on your smartphone or tablet. Just remember to keep them organized on your computer so you can find them easily when you need them.

– Review and consolidate bank or retirement accounts.

Some people will set up multiple bank accounts and even retirement accounts like IRAs. In certain situations, this may be necessary. But if you have several accounts with varying amounts tucked away in them, why not consolidate them all into one or two accounts? It’ll make your life a lot easier, and it’ll reduce your paperwork. Plus, having just a single account will mean only one password to remember for online access. In addition, consider looking into accounts that will make you more money over time via interest.

– Review your tax situation and look for new tax-saving opportunities.

Taxes play a big role in how much money we keep and, unfortunately, how much we must fork out to Uncle Sam each year. But if you have a good handle on your taxes, you can reduce your tax bill. Explore new potential tax deductions or tax credits. Consider any recent life changes that may qualify you for such tax-saving measures. You could save thousands of dollars through completely legitimate tax breaks. It’s all about understanding and navigating the complex federal tax code, which is much easier to do with the help of an accountant.

For more finance and tax tips on how to stay organized and keep as much of your money as you can, turn to the accounting professionals at 1-800Accountant today. Call 1-800-222-6868 or check out www.1800accountant.com.

Image credit: The image included in this blog post is used with permission via the Flickr Creative Commons license.

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