Well, I sure hope you have kept records of all of your income (including tips) and your expenses like booth rental and supplies. If you have, then this won't be real hard - if you haven't, you will have a problem and will have to try to reconstruct the year.
You'd report your income and expenses on a schedule C or C-EZ, and also fill out a schedule SE to calculate your self-employment tax (social security and medicare). The numbers from the bottom of the two schedules will transfer to your form 1040.
Good luck.How does a Hair Stylist pay taxes?
You are going to file as a sole proprieter. You'll file form 1040 and include schedule C and form SE. As a small business owner, you need to keep close records of your finances. All cash received is recorded as revenue on the schedule C. Any expenses you incur in the course of doing business reduce your income. These include the rent you paid, but your scissors, clippers, combs, curlers, dyes, capes, and hair products are all legitimate business expenses. If you send your scissors out to be sharpened, that's included as expenses. I'm sure there are others I have not even considered. If you purchase items that have a useful life of more than one year, they should be recorded as assets, and depreciated over the useful life of the asset. The IRS has CLADR tables to tell you the useful life. Depreciation is nothing more than recording the expense for a purchase in a later year (e.g. you purchase a $100 item, and it has a 5 year useful life, you'll record $20 expense each year for that item). That's a very simplistic view, and not correct, because I've used straight-line depreciation (same amount each year), whereas the IRS uses MACRS (Modified Accellerated Cost Recovery System) for most assets. Your income or loss from business is recorded on line 12 of the 1040
An employer withholds medicare and social security tax from an employee, but also must remit an equal share to medicare and social security. As a sole proprieter, you are in a sense, both the employee and employer and thus must remit these. That's where schedule SE gets filed. This gets recorded on line 58 of the 1040.
Have I thoroughly confused you yet? My recommendation is to go to H%26amp;R Block and have them file your taxes for you. They'll guide you through the entire process, and help you get your records in order for 2008, so that you have a good set of records. For someone just starting out, it's well worth the money. They'll also get you estimated payment vouchers (1040-ES), so that you can make quarterly estimated payments to the IRS and avoid the penalty for underpayment of estimated taxes.
Don't forget, you'll probably need to file a state return as well, unless you happen to live in one of the 5 states without income taxes. H%26amp;R Block can help with this too.
Good luck with you're endeavors. It sounds like you're off to a great start.
Hair Stylists generally operate as independent businesspeople. Keep track of your income and ALL your expenses so you can complete Schedule C of Form 1040 next year to figure your income/loss. Many people who rent booths (like ';Great Clips';) will keep track of your earnings for you and provide you with a form 1099-MISC at the end of the year.
If your operator does not provide that service, then you need to keep detailed records yourself. You will also need to file estimated tax payments quarterly or you will receive a penalty from the IRS at the end of the year.
Advice: Ask one of the other stylists that's been there a few years how they set up their record keeping.
well my wife is a hairstylist and she has the same setup as you.
you will have to pay taxes on yoru income no matter what , just like a normal person would on their payroll check.. the only diff with you is if you have kids .. you'll get a eic credit ... at that point they'll just take what you owe out of your return and send you the rest .. depending on how much you made and how many kids you have you should get a nice chunk.
we got back well over 5 k
If you make $400 or more, then you must file tax return. You will do Schedule C (Form 1040): Profit and Loss from Business (Sole Proprietorship). On schedule C you will report your income and deduct your business related expenses. On your net income from self-employment (that is from schedule C) you pay 15.3% employment taxes. For this you use schedule SE (Form 1040).
Make sure to file your tax return before April 15, 2008. Also for your 2008 income, you may need to make estimated tax payments. The first payment for 2008 is due on April 15, 2008, which will be one-fourth of your tax on your 2007 Form 1040.
For more information read:
http://taxgeek.spaces.live.com/blog/cns!鈥?/a>
As others have said you will need to file a schedule C and pay self employment tax. You need to send in to the IRS on a quarterly basis estimated taxes. There are forms provided by the IRS for this purpose. The 15.3% mentioned by another poster is the absolute minimum you will want to send to the IRS.
Keep track of all your business expenses so you can claim them on the Schedule C. Any advertising you do, business cards, supplies, rent and any inventory you may keep for resale should also be accounted for as well. Go to H %26amp; R Block ask them for a business expense record book. That will help you organize your income and expenses.
Best to you!!
You should know that not taking out taxes means that you may owe money. I would file but don't be shocked if you end up owing money.
No comments:
Post a Comment