Taxes 101: Deduction Checklist for Hair Stylists and Barbers

Hairstylists and barbers provide invaluable haircutting and styling services to people from all walks of life. There's a particular art to enhancing their customers' personal appearances, and it's clear that hairstyling and cutting professionals take immense pride in their craft. While cutting hair is an incredibly important part of their jobs, they should also dedicate time to giving their tax liabilities a trim.

Whether you operate as a small business, are self-employed, or are an independent contractor with a side hustle, it's essential to understand your financial responsibilities and sensible, efficient methods to reduce your annual tax bill.

Use this informative article as your checklist for the top deductions available for hairstylists and barbers. 

10 Tax Deductions for Hairstylists and Barbers: Definitive Checklist

Before taking advantage of deductions for your haircutting business, you must choose the standard or actual deduction method.The standard deduction is a way to lower your taxable income without tallying up your actual expenses, also known as itemizing deductions.

Most low- to middle-income earners will claim the standard deduction, as it equals more than their expenses if itemized. Higher-income earners tend to have more expenses and are likelier to itemize and deduct their individual expenses.

Some deductions can be used with either method, while others might be exclusive to the standard or actual deduction methods. 

Home Office

Taking advantage of the home office deduction can be incredibly helpful for tax planning purposes, but there are strict requirements you must adhere to to qualify. The area you designate as your home office must be used exclusively for business purposes– in your case, cutting or styling hair, and it must be your principal place of business that is used regularly.

You can use the standard deduction method, which requires you to determine the square footage of your home office.You may also use the actual deduction method, which requires calculating the total costs for your home office space. Generally, this means adding up all of your total home costs. Here are a few of the expenses this includes: 

• Regular rent payments

• Mortgage interest payments

• Property taxes

• Utilities like heating, water, and electricity costs 

• Repairs in the office space or general housing maintenance 

• Home insurance premiums

• Other eligible operating expenses or losses

• Other vital costs required for office operation, including high-speed internet 

After adding up the total costs, you must determine how much applies to your home office. For most expenses, such as heating, rent, mortgage interest, and insurance, the total cost is divided according to the size of your office in relation to your entire home. Find out what percentage of your home is taken up by your office and use that to divide these costs.

Vehicle

When traveling for business, it's important to keep track of mileage and other expenses that can be deducted. Qualifying business travel can include client appointments, attending a continuing education course or seminar, or running work-related errands.Similar to the home office deduction, you can choose to use the standard or actual expense deduction methods.

The 2024 standard mileage rate is 67 cents per business mile. If you use the standard mileage deduction, you must follow restrictions on depreciation expense deductions and car payments. Accurate mileage recording is easy with 1-800Accountant's mobile application.

If your vehicle operating expenses exceed your standard mileage deduction, you can deduct transportation expenses using the actual expense method.Instead of deducting your business mileage, determine your expenses for business-related travel. For example, consider the following costs. 

• Insurance

• Registration fees

• Licenses

• Gas

• Repairs and maintenance

The actual expense method usually allows for larger depreciation expense deductions.

Equipment and Supplies

Hairstylists and barbers require specialized equipment and supplies to do their work, which are typically deductible.Consider the following examples of cutting and styling equipment and supplies for tax deductions:

• Hair cleaning supplies (shampoo, conditioner)

• Cutting and styling equipment (scissors, combs, barber chair)

• Other equipment and supplies (hairdryers, handheld mirrors, smocks)

Marketing and Promotions

Marketing and promotions are crucial to attracting clients and establishing your hair business. Therefore, most of these costs can be claimed as tax-deductible expenses. Business marketing and promotional expenses are deductible as long as they only serve a business purpose instead of a personal purpose. For example, you can't deduct the costs of personal gatherings just by inviting prospective customers along for the ride. 

Phone and Internet

You can deduct phone and internet costs whether you use them partially or exclusively for business purposes, as they represent necessary business expenses. You can deduct the entire bill if you use your phone and internet exclusively for work.

However, if you use your phone and internet for personal and business purposes, track the portion of your cell phone and data usage related to your hairstyling or barber work to deduct the business-related cost on your tax return.

Travel Expenses

Business travel is any travel outside your home city for an entire day or more intended entirely for business purposes. You should be able to deduct all business travel expenses that meet these requirements.Keep detailed records of the money you spend on:

• Transportation

• Tolls

• Lodging

• Parking

• Tips

These are all deductible travel expenses for your haircutting business. 

Licenses

Hairstylists and barbers typically need specific licenses and certifications to operate their businesses in their states. They may need to perform certain duties, such as attending a haircutting program, working as an apprentice, and passing tests to obtain or maintain their licenses.

The fees associated with obtaining and renewing licenses for your business are tax deductible. 

Training and Education

Attending professional conferences and seminars and continually educating oneself about industry changes, new techniques, and other breakthroughs in the haircutting industry are important and necessary for running an efficient business. Your costs associated with continuing education are deductible.

Advertising

Like marketing and promotions, advertising is an important way to attract new clients to your hairstyling or barber business. Your advertising costs can be deducted for: 

• Print and online ads 

• Commercials and other promotional videos

• Web costs 

Other advertising costs may also be deductible. If you're not unsure if your current advertising initiatives qualify, speak to a tax professional. 

Insurance

Premiums for business insurance, including hairstylist insurance, are usually deductible. If you pay for your own health insurance instead of receiving it from your spouse's employer or another source, you can fully deduct what you've paid. 

Things Hairstylists and Barbers Cannot Deduct

Hairstylists and barbers can deduct many costs related to their businesses, but not everything qualifies. For instance, while certain travel-related expenses can be deducted, daily travel usually can't. You cannot deduct costs related to daily commuting from your home to the hair salon or barber shop. And the parking you pay for once you arrive at the office doesn't qualify, nor do any tickets you receive while in transit.

While generous deductions are available to hairstylists and barbers, it's essential to understand the limitations of what you can deduct. 

Hairstylist and Barber Tax FAQs

Are there any tax credits available for barbers and hairstylists?

Barbers and hairstylists participating in professional degree courses and meeting three IRS requirements can claim the lifetime learning credit (LLC).The IRS requirements include: 

• You, your dependent, or a third party pay qualified education expenses for higher education.

• You, your dependent, or a third party pay the education expenses for an eligible student enrolled at an eligible educational institution.

• The eligible student is yourself, your spouse, or a dependent you listed on your tax return.

What if bookkeeping is not perfect and expenses weren’t properly documented?

If your expenses weren't properly documented or you've fallen behind on your books, engage a professional experienced in catch-up bookkeeping.

No matter how far behind you are–even by months or years–1-800Accountant's robust catch-up bookkeeping service will catch you up quickly and error-free, providing you peace of mind knowing your financial data is accurate and complete. 

Can personal styling choices be deducted as a marketing or promotion expense?

Normal, everyday personal styling choices, including hairstyles and clothing, aren't typically allowed to be deducted from your taxes. 

Cut and Shave Your Tax Burden to the Limit – Call the Experts Today

It's clear that hairstylists and barbers have many deductions they can take advantage of, but finding the time to trim their taxes while cutting hair can be challenging. That's why many business owners, entrepreneurs, and self-employed individuals in the beauty business trust 1-800Accountant, America's leading virtual accounting firm, with their financial work.

Whether you need small business taxes, tax advisory, or any of our professional accounting services, we have the solution you need at a price that works within your budget. Schedule a quick consultation—usually 30 minutes or less—to learn how we can help your hairstyling or barber business.