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Top Tax Tips to Wrap Up Your Year Profitably · Salon Success Secrets — The podcast for salon owners who are done hustling harder and ready to break their revenue ceiling.

• 0:34
  Speaker 1: awesome.
• 0:35
  Speaker 1: All right, so it is.
• 0:36
  Speaker 1: I know you can't believe it, but it's almost november 1st, towards the end of the year 2024 is you know, closing in soon, if you're just listening to this in 2024.
• 0:45
  Speaker 1: And so today we have a really incredible opportunity for you.
• 0:48
  Speaker 1: We're going to give you some top tax tips.
• 0:51
  Speaker 1: Yes, say that three times really fast, be a tongue twister for you, but today's going to be a beautiful way to learn how you can have some really amazing tax strategies to set you up for success come year end.
• 1:04
  Speaker 2: Yes, I love this.
• 1:05
  Speaker 2: You know, I remember once upon a time I was, you know, just a few years into salon ownership had been saving some money to be able to purchase some new equipment and, you know, carried that over into the next year and then ended up having a giant tax bill that I had not planned for.
• 1:24
  Speaker 2: And you know, that's the difference, I think, between having a CPA and having a tax strategist.
• 1:29
  Speaker 2: You know they're both super important roles.
• 1:31
  Speaker 2: We're going to dive into kind of what the difference is between the two.
• 1:34
  Speaker 2: But at the time I just had a CPA and so you know, of course she was just trying to comply with the law and she wasn't, you know, creating that future vision.
• 1:42
  Speaker 2: She didn't know.
• 1:43
  Speaker 2: And so you know, I ended up having to pay tax on on something it it ate into that equipment budget because it was some more tax than I had planned on paying and so had.
• 1:55
  Speaker 2: At the time I had a tax strategist.
• 1:57
  Speaker 2: You know it could have saved us money and, you know, put that money back into our business where we could have made a bigger difference.
• 2:04
  Speaker 1: Yeah, man, that's a great story lens, and you know I think you need both of those on your team.
• 2:09
  Speaker 1: You need a CPA and a tax strategist.
• 2:11
  Speaker 1: But, like, really, that does give you the view through a whole different lens when you have somebody that's kind of looking out for you in a different way.
• 2:19
  Speaker 1: And so when we talk about the five year in tax tips to keep your profits, the first one drum roll please is a really great one, and it's about paying yourself in your kids and so like, if you've done this, you, you, you know all about this, but it's paying yourself ensures that you're not leaving money in the business to be taxed at a higher rate.
• 2:40
  Speaker 1: We like to look at this from a salon standpoint anyway, because as a salon owner, you should be taking home a salary for what you do in the salon as well, because that's going to make it easier for you when you come to sell.
• 2:51
  Speaker 1: A lot of times what we see happening is salons are not salon owners, are not even paying theirself.
• 2:56
  Speaker 1: They're just kind of living off their profits.
• 2:57
  Speaker 1: So the profitability looks so higher and then they want to go sell and they're like, oh wait, I haven't paid myself at all, and so you know it's a whole different role to view.
• 3:07
  Speaker 2: Yes, you know, and I think too, just thinking about, like you know, incorporating your kids inside of your business.
• 3:14
  Speaker 2: So, you know, in 2023, you could legally pay your kids up to $13,850 and it's $14,620 for um, but you can legally pay your kids.
• 3:24
  Speaker 2: So think about um.
• 3:25
  Speaker 2: You know age appropriate things for you to be able to pay your kids inside of your salon, and so, whether that's social media or cleaning and organizing, you know there's a ton of things that they can help you with inside of your salon that you could potentially deduct.
• 3:41
  Speaker 2: You know, as far as tax savings, and then the cool thing with that is that you can already start to set up your kids to be millionaires.
• 3:48
  Speaker 2: You know, which I think is something that we talk about inside of our coaching program with how do we, as salon owners, teach our team to become millionaires?
• 3:55
  Speaker 2: And, you know, help create millions for our teams.
• 3:59
  Speaker 2: You can do the same thing for your kids.
• 4:00
  Speaker 2: You can save that money in tax savings, but then you can also put it into, you know, a Roth IRA or some sort of an IRA that will generate money for years to come for those kids as well.
• 4:15
  Speaker 1: Yeah, I love that, I love, I love having your kids involved.
• 4:18
  Speaker 1: And even for me, like, um, I have adopted my nieces you can do that for like as long as you have full legal custody of them.
• 4:25
  Speaker 1: They're still like technically your kids.
• 4:27
  Speaker 1: So, like my nieces love to do like social media and organizing things like that, because it does help them teach them entrepreneurial skills either as well, so you're making their life better.
• 4:37
  Speaker 1: So I just like to say that, like you're not just going to say, oh, I'm going to pay my kids just for tax purposes or tax write-offs like make it like greater, help them understand the roles of business as well.
• 4:48
  Speaker 2: I love that.
• 4:48
  Speaker 2: So let's dive into tax tip number two, which is to go ahead and clear out old inventory.
• 4:53
  Speaker 2: So you know it's it's much better to write off unsold or obsolete inventory than it is to be able to pay for that, um, you know, with property tax at the end of the year.
• 5:07
  Speaker 2: So I can really reduce your taxable income when you write it off.
• 5:11
  Speaker 2: Plus, then you're not paying that property tax on top of it.
• 5:15
  Speaker 2: So it's a great thing to go in and see, hey, what's not moving, so that you already know, hey, I'm going to clear this off the shelves.
• 5:22
  Speaker 2: You know, maybe find a local charity or somebody that you can, you know, donate it to and use that for some sort of charitable deduction.
• 5:35
  Speaker 1: Yeah, so you're saying Linda, that old, dusty number 28 hairspray that's been sitting on there probably should do maybe like an end of season sale to help clear out those shelves.
• 5:45
  Speaker 2: Yeah, Do an end of season sale and then hey, if it doesn't sell before January 1st, get it off your shelves Totally.
• 5:52
  Speaker 2: Don't continue to pay property tax on it.
• 5:55
  Speaker 2: Give it away to somebody that it's going to make a difference in their life.
• 5:59
  Speaker 2: Save yourself some money.
• 6:00
  Speaker 2: It's going to be a win, win, win for everybody.
• 6:03
  Speaker 1: Awesome, I love that.
• 6:04
  Speaker 1: All right.
• 6:05
  Speaker 1: So tip number three is a home office deduction.
• 6:07
  Speaker 1: So if you're truly working from home, or any part of your salon's administration or planning is being done in your home, you can acquire home office deduction that can help offset your expenses.
• 6:18
  Speaker 1: So you can deduct a proportion of your expenses, such as utilities, internet, mortgage interest, based upon the square footage of the office space.
• 6:28
  Speaker 2: Yes, and so this is great.
• 6:29
  Speaker 2: You know, this is something where a tax strategist and a CPA is going to see this differently.
• 6:33
  Speaker 2: A CPA is going to say, hey, we're just going to take a portion of your home and consider that a write off.
• 6:38
  Speaker 2: But if you're working with a tax strategist and you have like a tax optimization worksheet that you're working for, you'll know to add in those additional things like Jen was talking about.
• 6:49
  Speaker 2: You'll put in your home square footage, your office square footage, you know, and then you'll add in everything from your mortgage, mortgage interest or your rent or whatever that is, your property taxes, your homeowners insurance, repairs, maintenance, garbage, like literally everything you know.
• 7:04
  Speaker 2: The list goes on and on, and then it's going to come up with that number.
• 7:08
  Speaker 2: So, whereas your CPA is just going to be like, all right, we'll do 10% of what your mortgage is, you know, and or you know whatever percentage of the thing is.
• 7:16
  Speaker 2: And hey, this is no, no diss to a CPA.
• 7:18
  Speaker 2: Cpas are wonderful, we need them, we love them.
• 7:20
  Speaker 2: You know.
• 7:22
  Speaker 2: I know Jen and I both work with incredible CPAs.
• 7:24
  Speaker 2: They're great, but their job is to follow the law and they don't like to view, they don't want to ruffle any feathers, you know, and a tax strategist doesn't either but they really study that law and they say, like how can we still be in alignment with that law, but make it, make the most sense so that we can keep more money inside of our business, so that we can do, you know, create a greater experience for our customers and our employees alike?
• 7:54
  Speaker 1: Yeah, awesome.
• 7:55
  Speaker 1: And so tip number four this is a great time to do a quick salon equipment audit.
• 8:00
  Speaker 1: So, like, just walk through your doors and look around and say, hey, if we replace this, this would probably upgrade, you know, the salon or the guest experience or client experience.
• 8:10
  Speaker 1: Or like, if we added some chairs here, this could really help the flow of where clients can sit.
• 8:15
  Speaker 1: And so because once section 179 deductions allow you to deduct the full price of certain new or used to purchase equipment during the tax year so that you can write that off, and really it's a huge win because, like, it's going to help your guest experience a much more beautiful chair, much more beautiful station or whatever it may be and so it's going to create that win for you as a salon owner to have that deduction.
• 8:38
  Speaker 2: So good.
• 8:39
  Speaker 2: Yeah, I love saying, you know, walking through the space and envisioning something greater.
• 8:45
  Speaker 2: I think that's super important.
• 8:47
  Speaker 2: You know, I think tip number five is incredible as well.
• 8:51
  Speaker 2: So this is, you know, really looking at how, if you have additional money at the end of the year, look at how you can invest in either coaching or education, you know, because this can really help provide leaps and bounds of growth inside of your business.
• 9:09
  Speaker 2: So when you're able to identify areas that you could really use an enhancement or an upgrade and already start to invest in them towards the end of the year, not only would you, you know, get to experience some tax savings that would reduce your taxable income, but also it could propel you the next year to really be having, you know, a greater need for tax strategy as well.
• 9:34
  Speaker 1: Yeah, I love what they say is like your net, your net worth is equal to your net worth, and so like really having that group of people that are helping you see blind spots in your business and really helping you become the most beautiful version of yourself.
• 9:48
  Speaker 1: Wow, that's like I feel like where you like 10 X, that's where you're really able to stay in your power and see what's truly possible for you.
• 9:56
  Speaker 2: Yeah, I love that your net worth isn't greater than your network, or however it's that.
• 10:01
  Speaker 2: I love that you brought that up, cause that is so incredible.
• 10:04
  Speaker 2: Like doing an audit of that too, you know is is huge this time of the year, you know, and so really thinking about, okay, great, these are all amazing.
• 10:13
  Speaker 2: Hey, jen and Lindsay, I don't know if you know this or not, but you guys aren't CPAs or you're not tax strategists.
• 10:18
  Speaker 2: Oh, we're not weird.
• 10:19
  Speaker 2: I thought we were.
• 10:20
  Speaker 1: We definitely aren't.
• 10:21
  Speaker 2: So definitely talk with your CPA or your tax strategist.
• 10:26
  Speaker 2: You know we a good friend of ours is an incredible tax strategist inside of you know he's.
• 10:35
  Speaker 2: He's a great person.
• 10:35
  Speaker 2: His name is Edward Collins.
• 10:37
  Speaker 2: You can find him on Instagram, edward Collins, underscore up leveled.
• 10:41
  Speaker 2: You know you can get some really valuable free information from all of his.
• 10:46
  Speaker 2: You know YouTube videos or Instagram videos, whatever it is but then also looking for some CPAs, you know that that really align with what it is that you're trying to create, cause I know who I started with and who I'm with now.
• 10:58
  Speaker 2: As far as the CPA has changed, as my business has grown, my needs have changed as well.
• 11:04
  Speaker 2: So just really looking into that to see, hey, is this working for me?
• 11:07
  Speaker 2: Is this working against me?
• 11:08
  Speaker 2: You know, if any of this information has been new to you, it might be time to say like, hey, what can I look at next?
• 11:17
  Speaker 1: Yeah, and so we just want to say you know, stay proactive about taxes now so you can be more profitable, start to the next year.
• 11:23
  Speaker 1: And we have this really incredible resource, really incredible resource.
• 11:28
  Speaker 1: It is available.
• 11:28
  Speaker 1: If you check out our whatever you're watching YouTube or Instagram but you can check out our Instagram assets.
• 11:38
  Speaker 1: It's called the.
• 11:39
  Speaker 1: What is it called?
• 11:48
  Speaker 1: It's the tax optimization worksheet.
• 11:49
  Speaker 1: Yes, and so do that, and we'll be sure to get that sent over for you.
• 11:51
  Speaker 1: And it's a really cool calculator just to start taking what tax bracket you're in and then what kind of savings you could get just by, you know, applying the right tax savings.
• 12:00
  Speaker 2: All right, happy tax savings, we'll see you.