Stylists throw money at the Internal Revenue Service as if the IRS was a long lost relative that comes begging for assistance each year. It’s crazy!
If you had a few hundred dollars set aside at the end of the year, and wanted to give it away, would the IRS be your first choice? Absolutely not. So let’s look at one business expense that will put hundreds of extra dollars in your pocket each year.
Let’s talk about Business Mileage. Yes, letting Uncle Sam pay for filling up your gas tank and getting you around town. This is what the Internal Revenue Service is currently willing to do.
The U.S. government will allow business owners (that’s you, if you are an independent stylist and not a salaried employee of a salon), to use your car, van, or pickup truck mileage as a legitimate business deduction.
The most recent rules allow for:
50 cents per mile deduction for business miles driven.
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations.
Keep in mind that the standard mileage rate cannot be used for any vehicle used for hire. For example, if you travel to a Beauty Trade Show and rent a car, you cannot deduct your “mileage” for the car rental. However, you may deduct the price of the rental car and the exact cost of the gasoline as a business expense.
Stylists leave so much mileage money on the table because they have no system to document their mileage. A simple mileage journal will keep everything in order and support your claims to the IRS.
This is what your mileage journal should briefly include;
Date -
Beginning odometer reading -
Ending odometer reading -
Purpose for travel -
Person who you met with -
Things you discussed -
So what are legitimate mileage expenses? Here are some examples.
You drive 3.5 miles to a friend’s house to discuss the cost of new extensions.
You drive 11 miles to a beauty supply store to purchase hair conditioner.
You drive 2 miles to lunch to talk with a friend about how to promote extensions in the high school where she teaches.
You drive 270 miles to a trade show.
You drive 87 miles to a relative’s home so you can demonstrate to her church group how extensions are applied.
You drive 1 mile to the post office to mail your credit card bill for hair extension supplies.
Get creative and write down every mile that you travel to promote and manage your business. Make sure that mileage expenses are legit.
Will taking the time to keep track of your expenses make a difference? Consider this. If you drove just 2,000 business miles for the year, you could deduct 50 cents per mile and receive a $1,000.00 business deduction. If your tax bracket is 20%, you would put an extra $200.00 in your pocket that year rather than paying it to Uncle Sam.
Now that’s a lot of free gas!
Note: Always check with your tax advisor or the IRS to determine current rules and regulations regarding mileage deductions.
Logan is founder of Donna Bella Milan hair extensions and lashes and an author of the Donna Bella weblog.