tax is fun... said no one in the history of ever!
But suffer no more, hair friends. This tax time, we’re saying NO! No more worrying over what to claim and how to claim it, and no more stress over the difference between a BAS and GST. We want you to feel good (at least mildly better) about this year’s EOFY admin, so we’re about to flip the script on tax and make it, let's say, up to 30% more fun?! (That was a tax joke, btw).
As your trusted partner of the hairdressing industry, the team at Haircare Group has been working hard to find simple ways to get the most out of your tax return. Here are our top tips for this year’s tax season for salon owners, home hairdressers, independent stylists and hairdressing apprentices.
Tax Tips for Salon Owners
Running a salon is rewarding and challenging in equal measure, and it requires a great amount of drive, passion and dedication to your profession, team and community. As they say, with great responsibility comes very-complicated-tax-returns (right?) ... Well, kind of. Here are some easy tips to get you through the next tax season if you own and operate a salon or employ a stylist team.
1. Call in the pros (hire an accountant)
No shade on your skills as a bookkeeper, but let’s be real; if you don’t let your clients use box dye at home, why not leave it to the experts when it comes to your taxes? Accountants live and breathe tax, so you don’t have to and can immediately save you time and money. It’s 100% the best yearly investment you’ll ever make.
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Credit @thatssojen via @haircaregroup
2. Lodging your BAS can be a B, sometimes
To add to complex tax tasks, lodging your Business Activity Statement (BAS) is often a time-consuming and confusing process. See above, literally – your new best friend, your accountant, will be able to process and lodge these statements in no time. It’s like a half head with a root stretch - good for approx. a quarter of the year, with minimal maintenance in-between appointments.
3. You get a new dryer, you get a new dryer!
Whether you need a new coffee machine for the salon, salon supplies, tools and brushes, or new POS equipment, add them to your cart before June 30, seriously. Aside from better coffee, there are a few reasons for this.
As a small business owner, you may be able to claim your purchases for new salon equipment, and anything related to the business on your yearly tax return. In turn, this reduces your taxable income (what you’ve earnt) and increases your deduction (your tax bill). In some cases, if you purchase a large piece of equipment, you could be eligible for an ‘instant tax write-off’*. It’s a win, win. Of course, this can also be a trap to overspend, so chat with your new BFF, your accountant, before you buy.
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*What's an instant write-off? For example, if a salon owner buys a new computer for approx. $2500, they can potentially claim an immediate deduction for the full cost of the computer reducing their taxable income for that year, resulting in a reduction in their tax bill for that financial year.
Tax tips for working from home hairdressers and stylists
Working from home as a hairdresser is a dream. Setting your own hours, minimal overheads, cheeky naps in-between appointments? What a life. The not-so-great bits might be the admin that’s all yours to own. Here are some tax tips for self-employed hairdressers.
1. Claim working from home expenses
If you work from home as a hairdresser or stylist to earn an income (even if it’s on a part-time basis), there are several things hairdressers can claim on tax. You may be able to claim a percentage of your rent, utilities and internet (to name a few) for your overall tax return. You just need to keep a record of these expenses and consult with a tax professional as to how much you can claim.
2. You deserve an upgrade
Just like working in a salon, a working-from-home set-up still needs up-to-date styling equipment, furniture, and tools to do the job. Whether you’re a sole trader or an incorporated small business that works from home, you may be able to claim all these professional expenses at the end of the financial year. Make sure you keep all of your receipts for any equipment, from even very small purchases such as foils and colour to large-scale equipment upgrades like basins and bulk-buy electrical goods and tools.
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3. You’re doing well, sweetie (keep up the socials)
Making it on your own can be a slog. It’s a hustle to get your client base up and running, and getting your name and reputation out into the world is a must for successful working-from-home hairdressers and stylists. We encourage you to keep up your social media activity with new and exciting content and get your work out there in the way of marketing and paid advertising online. All of these activities, whether it be content creation/production costs, subscription scheduling tools, internet costs, phones, cameras, props, or models, are all expenses that you can submit to be claimed on your tax return.
4. Split decisions
When you’re working from home, your work and home life might blur into one, so your personal purchases and professional expenses can become one big pile of receipts. To keep work and life as (financially) separate as possible, it’s a great idea to have multiple bank accounts on the go to split your professional expenses, and living expenses, and even have an extra account for your quarterly tax bill (the dreaded BAS!)
Tax Tips for Hairdressing Apprentices
Between life at a busy new salon and studying, tax is the last thing you think of when you’re an apprentice. Here are a few ways to get the most out of your tax return if you're a hairdressing or stylist’s apprentice.
1. The obvious one: claim study and work costs
If you’re a student hairdressing apprentice, chances are you’ll be out of pocket during this time. From buying tools to using your personal phone to record in-salon work and buying tools. All of these expenses such as internet, phone, computer equipment, scissors, styling tools, uniform and footwear (if a certain style has been specified by your employer) can potentially be claimed as a work expense on your end of financial year tax return. You just have to make sure they are all legitimately linked to your work and study as an apprentice, and you can check the ATO’s website to find out which expenses you can claim.
2. Keep a record of your travel
If you’re required to travel for your work or to different salon locations as an apprentice, you may be able to claim your travel expenses as a deduction. Costs like fuel, public transport and parking fees can all add up to a sizable sum. All you have to do is keep track of your travel expenses and keep your receipts to submit your claim for these expenses on your tax return.
3. Track your education expenses
As a proactive apprentice, you’re probably attending online workshops or in-person education seminars. Thankfully, you can claim self-education expenses if it relates to your employment. Make sure you keep a record of all your costs associated with any hairdressing educational courses, materials, and subscriptions.
4. Level up: consult the experts
No apprentice is an island when it comes to tax, so get some professional advice where you can. It might seem like your taxes are no big deal compared to a small business or a salon owner, but apprentice hairdressers and stylists have different out-of-pocket costs compared to employees, you may be sitting on a bigger tax return than you think!
Get (financially) fit online
No time for a new (financial) relationship in your life? Dip your toe into the world of tax with some of these forward-thinking, no BS, financially fit content creators (some are practising accountants and former business/tax pros).
They’ve got podcasts, video tips and websites dedicated to making sense of all things tax and small business finance. Check out;
@taxinvestaccounting 🚨Maximise your tax refund with moror vehicle deductions🚨#fyp #tax #taxagent #taxadvice #australia #aussietax #taxtok #taxtips #moneytok #money ♬ original sound - taxinvestaccounting
To recap, here are our top tax tips if you’re in the hair care industry:
- Reach out to the people who love tax more than you, AKA an accountant
- Don’t underestimate the power of hair salon bookkeeping
- Upgrade with new tech, new equipment and supplies before June 30
- Have separate bank accounts for work and living expenses
- Claim working-from-home expenses and self-education
See, we told you we’d help you out!
Get EOFY-ready with Haircare Group. Upgrade with the latest professional hair care products from leading brands or explore The Hub for more salon accounting tips.
Disclaimer: Any tax tips or advice provided in this article are for informational purposes only. Always seek professional advice before making any decisions related to your personal or small business finances and taxes. Haircare Group cannot be held responsible for any losses, damages or expenses that may arise from using or relying on the information provided.