As a self-employed cosmetologist or barber, you’re responsible for reporting your income as business revenue on Schedule C of your 1040 tax return. You can write off costs you incur while running your small business of one to reduce the amount of tax you pay on your styling revenues.
All the products and supplies you use in the course of business are completely deductible. Common product expenses for hair stylists include:
- Shampoo, conditioner, hair treatments and hair dye.
- Tonics, lotions, gels, creams, oils, straighteners, mousse, nail polish, nail polish remover and hairspray.
- Bobby pins, clips and rubber bands.
- Hair dryers, curlers and straighteners.
- Tea, coffee or wine offered as client refreshments.
You can deduct the cost of products you use on your clients as supplies expenses.Products that are accidentally thrown away or wasted are also deductible. If you sell the product to your client at a markup, list it as cost of goods sold _rather than a supply expense. If you give a product away as a gift, claim it under _gifts to clients. You can only deduct the first $25 in gifts to any one client.
Home Office Deduction and Rent Expense
If you rent a booth from a salon, the cost of your rent is deductible as a rent expense. If you work out of your home, you may be able to claim the home office deduction. You must have a space in your home that you use exclusively and regularly for hair styling in order to claim a deduction for it. If you style hair in your kitchen or living room, that doesn’t count because these spaces are also used for personal living.
Calculate the home office deduction by finding the relative square footage of your home office, then determine the square footage you use for business. Divide your business space by the total square footage. For example, if your home work space is 100 square feet and your house is 1,000 square feet, you can deduct 10 percent of your home expenses, including:
- Rent on your house.
- Utilities like electricity, gas, water and trash collection.
- Repairs made on your home.
- Homeowners or renters insurance.
You can deduct a whole host of other costs on your Schedule C, depending on what you paid for during the tax year. Common and often overlooked deductions include:
- Hair shows, seminars, conferences, membership fees and continuing education.
- Business tax, license fees, insurance and certification fees.
- Professional fees like accounting, tax, marketing or legal expenses.
- Miscellaneous office supplies like pens, paper, tape, envelopes, or clients and stamps.
- Mileage incurred driving to a client site — the 2015 IRS standard mileage rate is 57.5 cents per mile.
- Phone and Internet costs that are dedicated to your business.
- Liability insurance for your business.