3 Things Salon Owners Must Know About Taxes
Tax season can be SUCH a headache. As a salon owner, you have so much to worry about—so we’re making it easier! Here are three things you should make SURE you don’t overlook!
1. Your employees must be classified correctly.
A common mistake is that employees are classified as independent contractors, when they are actually employees. As the owner, it’s your responsibility to ensure your business complies with state and federal employment tax laws.
2. You must collect taxes on tips.
As the owner, you must collect income tax, employee Social Security tax and employee Medicare tax on employees’ tips. Once your employees report their tips to you, the ball is in your court to appropriately report them to the federal government.
3. You can claim a refundable tax credit against your share of Social Security tax.
The Employee Retention Tax Credit (ERTC) allows employers to get a tax credit for their share of Social Security tax equal to 70% of the qualified wages. The max ERTC available is $7,000 per employee per calendar quarter.