April 14, 2015

7 tips to reduce the tax burden for your salon or spa.

1. According to law you can reduce your tax liability by hiring family members to carry out work in your salon or spa. Pay your children and spouse to perform assigned duties. This way you can shift from higher tax rates to lower ones.

2. Consider hiring independent contractors for your salon or spa instead of employees. You will save on payroll taxes. However ensure that you meet the IRS’s criteria for your salon or spa.

3. Take advantage of tax deductions allowed for charitable donations. Make donations in November or December instead of January so that you can include the donations for tax deductions in the current year for your salon.

4. Maximize your expenditure on equipment and office supplies for your salon business. Buy in advance for a quarter and use the tax deductions allowed in the current fiscal year.

5. Include expenses of business related travel in the salon or spa business current year.

6. Pay all bills due before the end of the year. Payment to rent, insurance, and utilities related to the business can be included for accounting and applicable tax waivers if you are on a cash basis accounting system. In Advantage Software date your bills in the current year and paybills using the Advantage Salon Software and Spa Software before the end of the financial year closing.

7. Plan a retirement plan and make payments before the end of the year. This will reduce your income for the year and proportionately the tax due. Be sure to check on the limits. Plan a feasible and beneficial strategy with your accountant.

8. Be sure to deduct from your taxable income money paid to licensing fees, businesses taxes, and annual memberships to businesses related organizations. Be sure to deduct interest paid on borrowings for running the business and related fees. Insurance premiums paid to insure the business office and machinery are eligible for tax deductions. Make a list of your memberships and check which ones are eligible for tax deductions.