Tax Tips for Beauty Professionals
One of the most frequently discussed topics in my DMs and my coaching calls is taxes. I totally understand the struggle of trying to navigate this super complicated system as an independent contractor or sole proprietor- on top of managing the day-to-day of your business.
I am 100% not a numbers person (I definitely didn't go to beauty school to do math all day), which is why I outsource this part of my business to my amazing accountant. However, there are a few tips I implemented early on in my business that I want to share today to hopefully save you a few headaches down the road. You can also listen to the most recent episode of the podcast here, where I dive into this topic in depth!
+ Find a tax person before you think you’re ready. It's an expense, but it's important to get your books in order before you really start making money.
+ Once you find a good tax person, ask them about tax breaks, what type of business you should form (S Corp? LLC?) and why. Someone who really knows the ins and outs of the tax system will be able to help you maximize your benefits.
+ Open a business account separate from your personal, and keep everything separate. Do use your business account for supplies, training courses + anything biz related.
+ In addition to your business account, open a business savings and a tax savings. Saving ahead of time will help alleviate some of the financial strain of tax payments.
+ At the end of each week, divide up your cash and put a small amount in your taxes and savings accounts, then pay yourself what you need to live in a way that works for you. If I make $1000, I typically would keep $500 and take the rest and split it up between my other accounts just to be safe.
+ Pay yourself weekly because this closely mimics how we take $$$ from clients. I do believe in paying yourself before making out spending on employees/supplies etc. This way of thinking was re-affirmed by the book Profit First. Check out more books that helped my business here.
+ Have your tax person manage your monthly expenses (your books) so that end of year they have it all organized.
+ Pay quarterly taxes.
+ Don’t overspend on your business or keep dumping money back into it just to “grow the business” if you have no idea what that means or don’t even necessarily want that.
+ Please please please have a retirement account- it’s good for taxes and for for your future ☺️
Hopefully these tips are helpful for getting yourself on the road to financial success. Please just know that if you, like me, are not a math person- you can and absolutely should get help with this part of your business. If you need more guidance in this, or any other, area of your business, feel free to book a call with me any time.