Tax questions for a Independent Esthetician?

I am so confused as to what I need for next years tax's. I have my own room in a local salon, I book my own appointments, my customers pay me (not the salon). I don't get paid from the salon at all, just what I make off of my appointments. Saying all that, what exactly do I need to do in order to "show" income? Do I need a LLC, tax id #, separate checking account, business name (or can I just use my name) do I need to see an attorney or a accountant??? Any advice is greatly appreciated!

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Comment by Barbra Harrington on May 5, 2014 at 11:36am

Also, paying taxes quarterly--------------- oh yes, you can find out amount on irs.gov as well.  for your state.

Comment by Barbra Harrington on May 5, 2014 at 11:34am

Keli, I don't know where you are located.   Separate checking yes,  it does not have to be business account, you may pay$$$$$$$   spread sheet for treatments so you can track you treatments and $ amts.  for products you sell.   You can get a tax ID on www.irs.gov.  I believe it is at Most $35.00.  Males easy tracking for end of year!   Insurance yes.

Comment by body&skincarebyenith on April 20, 2014 at 12:09pm

April, yes everyone can get sued by having a corp or not *but* by having a corp your personal assets are protected.

Comment by April Thomason on April 20, 2014 at 11:55am

Just a few words. It is a common misconception that an LLC stops someone from suing you personally. Anyone can sue you, your salon, your kids, your mailman, etc... for any reason, founded or not. You will still incur the expense for defending yourself. This is why professional insurance is so helpful. So the taxes are a little more complicated with an LLC and the money is handled differently so ask an accountant. OK now about the taxes. When you are self-employed, not an independent contractor you don't "show" income, you "claim" it and it is what you say it is. Whether you use quicken, your bank statements or make it up completely. The only time you need to show it is if you get audited and then they will look at bank statements no matter what else you have to show. This is why it is helpful to have a "salon" account. Many banks offer free checking and it doesn't have to be a business account. And the only reason you really have to have a tax id that is not your ssn is if you have employees. And you can use your name as your business name, the IRS doesn't care. I have been self employed in this business for 25 years and owned my own salon for 9. And for all people interested the IRS has a form called an SS-8 that can determine if someone is an independent contractor or an employee. And there is also a difference between being self-employed business owner and an independent contractor. I know a lot of salon owners that have "employees" and list them as independent contractors to gain the tax write-off. I think that is very wrong and unfair. I do not have employees or contractors. Everyone in my salon has their own business. My salon business is actually renting space and that's what my business license says. Also everyone there has their own business license. And if you have any more questions you can call the IRS. I know everyone is so scared of them but they are very nice and really helpful. And NO ONE can answer your questions better and more thoroughly. lol. Good luck! 

Comment by Veronica Chouinard on April 3, 2014 at 11:28am

I am in the SAME EXACT situation that you are in.  It always starts out with what the tax laws are in your state, which is very important for you to find out what they are.  In my experience whether you are single or married, it is advisable for you to register your business under a name that you have created for it and register it as a Sole Proprietor.  Usually your tax ID# is your Social Security #.  I pay the Owner of the salon a % of my services.  The % of money that you pay the salon is an EXPENSE to you - which is deductible, so keep your records straight.  :)  I hope that helps.

Comment by Keli R Shirey on April 3, 2014 at 6:56am

Thanks girls for all the helpful information....it's much appreciated!

 

Comment by Karen Clark on April 1, 2014 at 2:15pm

I recommend opening a bank account separate from your personal account and only use the funds from that account for business expenses.. It makes taxes so much easier.  I rent a room to an Esti at my salon and she was required to get her own business license from the city/town of operation, personal liability insurance and if you are a sole proprietor, then your SS # is your tax ID #.  If you plan on selling retail then you will also need to apply for a seller's permit.You can use your name for your business, (Keli's skin care ect) but depending on your state you will need to file a fictitious business name in the local paper. Also if you're trying to decide whether the LLC is the right structure for your business, you may want to consult an expert instead of doing it online as they can go over all of your concerns.  At the end of the year you will want to itemize all your expenses, rent, insurance, products, basically anything you had to purchase to make your business operate and submit them to your CPA.

Comment by Nadia Lbaz on March 26, 2014 at 12:07pm

I am experiencing the same thing! I would say LLC and yes filing quarterly taxes, own business bank acct and cr card. LLC you can claim your house if working from home, mileage the whole 9 yards i am reading.

Comment by body&skincarebyenith on March 24, 2014 at 11:20pm

I would suggest to find legal advice, but this is how I'm going to do it. I am going to do a LLC with a fictitious name, its own bank acct, just because I will be protecting my personal assets this way. By using your own name, you are not protected. So in case of some lawsuit or the like, if you use your name and SS#, they can go after your personal possessions.

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