Do you Own or Work for a Hair Salon or a Barber Shop?
Get the biggest bang for your buck this tax season!
As a shop owner you can elect to structure your business in different forms. You can choose to operate your business as a sole proprietorship, partnership, or as a corporation. Your business may have employees who work for you or you may decide to operate without employees. Another common arrangement is renting space to another individual who operates an independent business. This is commonly referred to as a booth renter and will be discussed later in this publication. It doesn’t matter which business structure you choose; there are basic principles that do not change. Income received in the course of your business is taxable income and must be reported on the appropriate income tax return form.
As a booth renter, or independent contractor, you may need to make estimated tax payments during the year to cover your tax liabilities. This is because as a booth renter (independent contractor), the business does not withhold taxes from your pay. Estimated tax is the method used to pay tax on income that is not subject to withholding, such as earnings from self-employment you receive as a booth renter. Estimated tax payments are made each quarter using Form 1040-ES, Estimated Tax for Individuals. For additional information regarding tax withholding and estimated tax, see Publication 505, Tax Withholding and Estimated Tax. If you hire others to work for you it is possible that these workers would be your employees.
As a booth renter you can hire others to work for you as your employees. If you have employees in your business, you would be required to deduct from their pay social security, Medicare and federal income taxes. This would require you to file quarterly Forms 941, as well as an annual Form 940. You would also be required to file Forms W-2 for each employee who worked for you during the calendar year.
Call Dream Tax Service Inc. today (404) 207-7829 to get your FREE consultation and take advantage of all of your tax deductions in the upcoming tax season….
Dream Tax Service Inc.
PH: (404) 207-7829
Fax: (877) 265-6798