It is that time of year again—tax season—and in honor of the season, the Beauty and Bodywork Insurance Program has put together a list of a few tax tips for massage therapists, estheticians, and cosmetologists who are self-employed or own their own business.
TAX TIP #1: DEDUCTIONS
You can deduct business expenses, including the expense of purchasing business insurance. In order for a business expense to be deductible, it must be considered both ordinary and necessary. This means that it must be an expense that is considered normal for the industry, and it must offer your business an important (though not necessarily indispensable) benefit. Liability insurance and other business insurance usually falls under these categories.
Some other business expenses you may not have considered include the cost of travel and lodging if you attend a conference in your field, the cost of going to lunch with other massage therapists to discuss ways to improve your practice, and the cost of continued education in your field.
For more information on deducting business expenses visit the IRS website on deducting business expenses.
TAX TIP #2: KEEP RECORDS
Remember that you must keep records of all of your business transactions going back at least three years. This is essential in case you are selected for an audit. It will also make your life easier when it comes time to calculate your business expenses.
TAX TIP #3: BE HONEST
Be honest and report your cash income, including tips. This will protect you and your business in the long run.
Of course, we at BBI are insurance experts and not tax experts, so if you have questions about this information or need more information about preparing your taxes consult a tax specialist or attorney.