In short

Tax support for salons and spas includes the entity or Schedule C return, correct reporting of booth rent income, Forms 1099 for qualifying payments to independent professionals, depreciation of chairs, equipment and build-outs, sales tax records for retail products, and employer obligations on tips reported by staff, including the employer share of Social Security and Medicare taxes on reported tips.

Booth rent and independent professionals

Booth rent is business income to the salon owner. When a salon pays independent professionals for services, it may need to file Form 1099-NEC for qualifying payments; we collect a Form W-9 from each contractor at the start of the relationship.

Tips and employer taxes

Employees who receive tips report them to their employer, and the employer withholds and pays employment taxes on reported tips. The IRS covers the rules in Publication 531 and Publication 15. We keep tip records that tie to payroll so the return and payroll filings agree.

Equipment and improvements

Styling stations, dryers, treatment equipment and leasehold improvements are depreciated or expensed under rules in Publication 946. We keep costs and in-service dates organized.

Inventory and supplies

Retail products held for sale are inventory; back-bar products used up in services are usually supplies. Keeping them separate makes cost of goods sold accurate.

Owners who rent a booth elsewhere

Stylists who rent a chair are self-employed. They report income on Schedule C and pay self-employment tax; we help them keep income and supply records and plan estimated payments.

Records we request

Booth rental agreements.

Key terms

Definitions for terms used on this page:

  • Cost of Goods Sold: Cost of goods sold is the direct cost of the products a business sold during a period.
  • Self-Employment Tax: Self-employment tax is the Social Security and Medicare tax paid by people who work for themselves, calculated on net earnings from self-employment.
  • Depreciation: Depreciation spreads the cost of a long-lived business asset over the years it is used, rather than deducting it all at once.

Salons & Spas problems this addresses

  • Tips paid by card must reach staff and be reported correctly
  • Booth renters and commissioned employees are paid in completely different ways
  • Retail product sales need inventory and sales tax tracking
  • Booking software totals rarely match card processor deposits
  • Gift cards and packages are sold long before services are delivered