Hairdressers: Top 5 Tax Deductions for Your Salon
Hairdressers: Top 5 Tax Deductions for Your Salon
As hairdressers or barbers, understanding tax deductions can make a significant difference in your tax return. Many salon owners miss out on eligible deductions that could help them save money at tax time. This guide highlights the top deductions to maximise your return, keep your business thriving, and ensure compliance with the Australian Taxation Office (ATO).
1. Salon Supplies and Equipment
From styling tools to shampoo and conditioner, the cost of essential salon supplies can quickly add up. The ATO allows you to claim deductions on products and equipment necessary for your business.
What’s Deductible?
You can claim deductions on:
- Hair care products used in the salon
- Styling tools (e.g., hairdryers, clippers, scissors)
- Barber chairs and workstations
For tools and equipment costing under $300, you can claim the full amount in the year you purchased them. For items over $300, the deduction is usually spread over the asset’s useful life through depreciation.
Expert Tip: Keep all receipts for these purchases. The ATO requires proof of purchase, especially for larger items that are depreciated over time.
2. Occupancy Costs: Rent, Electricity, and Water
If you lease a salon space, rent is a major business expense that’s tax-deductible. Utility bills, like electricity and water, used to operate your salon can also be claimed as deductions.
Maximise Your Deduction
- Claim rent as a direct business expense.
- Include water and electricity bills, as these are essential to keeping your business running.
Statistics: According to the Australian Small Business and Family Enterprise Ombudsman, occupancy costs often make up a significant portion of small business expenses. By claiming these, you can reduce your taxable income significantly.
3. Uniforms and Laundry Costs
Do you and your team wear branded or protective clothing while working in the salon? These uniforms, including aprons and branded shirts, can be claimed as tax deductions.
What You Can Claim
- The cost of branded or protective clothing
- Laundry expenses associated with maintaining work clothes
The ATO allows for laundry deductions, even if you wash these items at home. Just keep records of your laundry costs to ensure an accurate claim.
Expert Insight: Claiming deductions for uniforms and laundry is often overlooked by small business owners. Keep records of all work-related laundry expenses to save more at tax time.
4. Training and Professional Development
Investing in professional development is crucial for staying competitive in the hair and beauty industry. Fortunately, the ATO recognises training as a legitimate business expense. Whether you’re learning new techniques, taking refresher courses, or attending industry conferences, these expenses can be deducted.
Deductible Training Costs Include
- Registration fees for workshops or courses
- Travel expenses to and from training locations
- Accommodation costs if training takes place outside your area
By claiming these expenses, you’re not only enhancing your skills but also lowering your taxable income.
Tip: When searching for “training and professional development for hairdressers and barbers,” remember to check if your preferred courses are ATO-approved to ensure eligibility.
5. Marketing and Advertising
Marketing is essential for attracting clients and building brand loyalty. From online ads to social media promotions, marketing costs are fully deductible, as long as they directly support your business.
Claimable Marketing Expenses
- Social media advertising (e.g., Facebook, Instagram)
- Website hosting and development costs
- Business cards, flyers, and other promotional materials
Online marketing is increasingly popular among salons, with many salons shifting to digital advertising. According to a recent survey by the Australian Hairdressing Council, over 70% of salons have embraced social media marketing to reach new clients.
Maximising Your Tax Savings as a Hairdresser
As a hairdresser or barber, every deduction counts. By keeping detailed records of your business expenses, you’ll be in a strong position when tax time comes around. Remember, even small deductions add up and can make a noticeable difference to your overall tax savings.
Here are a few quick tips to ensure you’re maximising deductions:
- Stay Organised: Keep receipts and invoices for all purchases.
- Track Mileage: If you travel to clients or for business-related purposes, tracking mileage can lead to additional deductions.
- Seek Expert Help: A tax professional can help you identify eligible deductions and avoid missing out on potential savings.
Expert Insight: Hairdressers and barbers often miss out on valuable tax deductions by not keeping records of small purchases. Keeping accurate records and working with a professional can really boost your refund.
Final Thoughts
Tax time doesn’t have to be stressful. With a clear understanding of what you can deduct, you’ll be better prepared to maximise your return and reduce taxable income. By claiming these top five deductions, you’ll keep more of your hard-earned money and make your salon business more profitable.
Don’t forget that a professional accountant can be an invaluable asset during tax time, guiding you on specific claims and ensuring compliance with ATO regulations. Contact DJ Grigg Financial today to learn more about how to make the most of your tax deductions and keep your salon thriving.
Take Action: Start gathering your receipts, track your expenses, and ensure that you claim every deduction available to you. Tax time savings are within reach—make the most of them!
Addition Articles in our Hairdresser and Barber Salon Series:
Hairdressers: Managing Cash Flow in Quiet Season
Hairdressers: Unique Selling Point of Your Salon
Hairdressers: Use Financial KPIs to Grow Your Salon