As we step into a new year, it's not only the perfect time to refresh and re-stock our makeup kits but also to get our businesses in tip-top shape, financially. As makeup artists, understanding the essentials of tax preparation is important for a successful, stress-free and organized year ahead. In this blog post, we'll cover some key aspects you need to know to navigate tax season with ease, take advantage of the reimbursable mileage rate and discover deductions to decrease your tax liability.
Here we go, 4 tips for tax season for make-up artists!
1. A Tax Season Number You Need to Know:
The Reimbursable Mileage Rate is an important number in your makeup business but easily overlooked and forgotten. Tracking your mileage going to a job, to different locations, taking a road trip for work and shopping for supplies needs to be documented. If you use your vehicle for business-related purposes, you may be eligible for mileage reimbursement. For 2024, the standard mileage reimbursable rate is 67 cents per mile.
Here’s a scenario: If you are working on a commercial, TV or film production, let’s say you are shooting on location and it is one hour from your home base and the client or hiring company is paying mileage. You need to keep track of this mileage. Once the job is complete, you will add this number to your invoice. You will be reimbursed 67 cents for every mile you drive for that job. If you drove 40 miles to location and 40 miles back home, the numbers to include on your invoice would look like this.
You take the 80 miles total you drove and multiply it by .67 cents (mileage rate)=$53.60. This rate and billable expense is for the use of your own vehicle for business purposes. Example: 80 miles x .67=$53.60.
Another scenario: If you work on weddings or with personal clients, you can use this mileage rate to help you set travel rates or include them in your overall rate to ensure this expense is covered along with the upkeep of your vehicle.
In addition to adding these numbers to your invoice, it is vital to keep a detailed mileage log in general that includes the date, purpose of the trip, and mileage covered. This log serves as crucial documentation during tax time and ensures you claim the maximum deduction and will provide proof if you are ever audited. These logs are about $2.00 at your local office supply store.
Pro Tip: Keep your mileage log in your car. Everyday you leave your home or apartment, write down your beginning mileage in the log and an overview of the purpose of your trip.
2. Definitely Save The Dates!
During bridal season, the bride saves her date for the wedding. During tax season, the makeup artist saves the dates for tax filing! Now these are dates you want to list on your calendar immediately and then put them in BOLD and CAPITAL LETTERS! Why? Because these are very important and you do not want to miss them, you can’t afford too! Being aware of key tax dates is essential for smooth financial planning and avoiding any potential penalties.
TAX DUE DATES:
APRIL 15TH-The due date to file taxes for individuals in the United States.
ESTIMATED TAX DUE DATES:
For business owners, sole proprietors, partners including makeup artists who are self-employed, it's essential to be mindful of the due dates for estimated tax payments. These are also known as Quarterly estimated tax payments.
APRIL 15TH
JUNE 15TH
SEPTEMBER 15TH
JANUARY 15TH ( of the following year)
You will need to make estimated tax payments if you expect to owe tax of $1,000 or more when your return is filed. Consult with a tax professional to discuss your situation.
Heads Up Tip: You should mail your tax payment by midnight of the tax deadline date so it is postmarked by the due date. From year to year, the filing dates may vary a day or two but just plan on them always being due on the 15th day of the months above.
3. It’s All About the Paper, literally!
Receipts and documentation, now keeping up with this responsibility can be daunting. I’ll say it, maybe even a bit boring! However, accurate record-keeping is the foundation of a successful business and navigating successfully through tax season. Keeping a record of all business-related expenses, including receipts for makeup products, tools, gas, oil change, apps and any other necessary items for your work. You will need these for filing taxes, knowing where you stand in your business and in the event you are audited. Both paper and digital copies of receipts are acceptable, so consider using apps or software that make it easy to organize and store your documentation. Having a well-organized system ensures a smooth and stress-free tax preparation process without spending too much time on this portion of your business.
Pro Tip: The sooner you create a process for entering receipts, the better. And, the sooner you begin using accounting software, the absolute best. This will save you time and hassle in your bookkeeping. If you do enter receipts by hand into your accounting software, stay on top of it either daily or I suggest weekly.
4. Saving Money!
Understanding which expenses are deductible can significantly impact your tax liability. As a makeup artist, consider the following examples of deductible business expenses:
a. Makeup and Beauty Products: Any products purchased for professional use can be deducted.
b. Travel Expenses: Deduct mileage, accommodation, and meals for business-related trips.
c. Education and Training: Costs associated with improving your skills or attending workshops.
d. Marketing and Advertising: Expenses for promoting your services, including business cards and website development.
e. Studio or Office Space: If you have a dedicated space for your makeup business, a portion of your rent or mortgage may be deductible.
*Remember to consult with a tax professional to ensure you are maximizing your deductions while staying within the bounds of tax regulations.
Starting the new year on the right foot involves more than just updating your makeup kit. As a makeup artist running your own business, understanding the ins and outs of tax preparation is essential. By staying organized, keeping detailed records, and taking advantage of available deductions, you'll not only navigate tax season more smoothly but also maximize your financial success in the long run. Here's to a prosperous and well-prepared new year in your makeup artist journey!
