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Beauty Salons and Barber Shops Edition

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IRS Tax Audit Manual for Beauty Salons and Barber Shops

The IRS Is Looking For the Ugly Truth In Your Salon Business!

Your clients come to you seeking beauty. Cuts, perms, updos, massages, manicures, tanning – whatever services you are offering to your clients to brighten their outlook on life. The IRS sees a business filled with potential worker classification issues and under reporting of income.

The salon industry is cash intensive, which makes it a prime target for an Internal Revenue Service tax audit. The books and records provided are often limited, especially in salons or shops that are not computerized. One of the biggest challenges you will encounter when responding to an Internal Revenue Service audit will be whether or not your stylists and other salon workers are properly classified.

With your purchase of the manual, you will receive, Absolutely Free, the IRS Manual For Determination Of Worker Classification. This manual is sold elsewhere for as much as $39.00.

Salon Worker Classification and the Internal Revenue Service

“…the one factor which appears to hold overriding persuasive value in the case of hair stylists is the nature of the remuneration under the agreement between the hair stylist and the shop owner. The factors tending to show an employee relationship seemed to predominate over independent contractor type factors in those situations where the remuneration is based on a percentage of earnings, whereas the opposite is true in those situations where the hair stylist rents the chair for a fixed monthly fee.”

The IRS knows that most products are marked-up 100% -are you documenting the discounts properly?

What about income from tips?

“An employee is required to give his or her employer a written report of his or her tips for each month by the 10th day of the next month. This report is required for each month that an employee received tips of $20 or more while working for that employer.”

  1. How are walk-ins, cancellations, and no shows designated in the appointment book?
  2. Are hair stylists independent contractors or employees? How are the hair stylists compensated?
  3. Does the salon offer its own line of products? Is commission income being reported properly?
  4. If you’re working 6 days a week are you reporting that you’re working less than 6 days?
  5. Are you reporting income from tips?

If you don’t understand how the answers to these questions can affect your tax liability, YOU ABSOLUTELY MUST HAVE the manual, specifically designed for the Beauty Salon and Barber Shop Industry.

Download your copy now and be ready!

TABLE OF CONTENTS

  • Introduction…1
  • Initial Interview and Information
  • Document Request 1
  • Interview Guide 2
  • Information Document Request 4
  • Income 5
  • Salon Revenue 5
  • Appointment Book 6
  • Fraud 8
  • Employee vs. Independent Contractor 10
  • Common Law Factors 10
  • State Regulatory Authority 12
  • Revenue Ruling and Court Cases 12
  • Tips 14
  • Determining a Tip Rate 15
  • Calculating Unreported Tips 17
  • Other Audit Considerations 18
  • Glossary 27
  • Bibliography 29
  • Industry Sources 31
Don’t forget – The IRS Tax Audit Manual for Beauty Salons and Barber Shops is tax deductible as a business expense!