The joy and pride a lash artist experiences while doing lashes is unmatchable. If your business is growing and attaining new heights of success, it is also a testimony to your excellent lashing skills and business acumen.
However, while as a lash artist, you love what you do, filing taxes can have quite the opposite effect on you. It can be a 'taxing' job during that time of the financial year when you need to get those numbers crunching to ensure you are claiming for the correct expenses to get maximum return. While a certified tax accountant should be the expert you ought to seek, understanding what and how to file your claims as a lash artist is equally integral. Let's get enlightened!
When to file your tax return?
The new financial year starts on July 1, 2022, and you can lodge your claim from this day onwards. However, suppose you are a TFN holder. In that case, the Australian Taxation Office discourages salaried employees from lodging their return too early because it delays your tax refund as most employers (ABN holders). Government bodies like Centrelink, banks, and health funds have until July 31 to file individual employee details. So, when the statement in your MyGov account reads tax ready, you will most likely have 2-10 weeks to get your return.
If you are lodging your taxes on your own, you have until October 31 to submit your expenses. Still, if you are availing a tax accountants service, you have until May 15 to lodge your return (ensure you register with a tax agent before July 31 if you haven't).
What to file for your tax return as an eyelash business?
To get industry-specific information on what you can claim and deduct, the hair and beauty guide on the Australian Taxation Office website has all the details here. Any work-related expenses directly to your lash income can be claimed as an expense. Here is a rough breakdown of what you can claim:
- Travel: If you travel between workplaces or visit clients at their homes to provide your service, you can claim the costs of using your personal vehicle, taxi fares, parking, and toll fees that meet the tax deductions criteria.
- Training: You can claim costs if you have taken up training or enrolled in any upskilling or business program to improve your lashing skills or help you earn more. It can include textbooks, stationery, course fees, and certain travel expenses.
- Work Equipment: All the equipment you use for work, including lashes, lash products, insurance for your tools and equipment, or any repairs, can be claimed. However, remember, if your equipment and tools are more than $300 (lash bed, lighting equipment, chair, etc.), you can claim depreciation costs over several years, and if they are less than $300 (lash products), you can claim a deduction for the entire cost. In addition, if you are paying any interest over a loan for purchasing work equipment, you are entitled to claim that expense too.
- Clothing expense: As a lash employee, if you are required to wear clothing that protects you from potential risks, injuries, or illness or have a work uniform unique to your lash salon, you can claim expenses for buying, hiring, repairing, or laundering them.
- Miscellaneous expenses: If you have costs related to personal protection at work, such as gloves, facemasks, sanitisers, and sprays, because your nature of work requires close contact with your clients, you can claim them. If you are paying any fees for a professional association or subscribing to any work-related publications, you can claim these expenses too.
- Work-from-home business expenses: Ensure you keep a record of your work hours. If you are running your business from home, you can claim expenses on your utilities. Itemised work-related phone bills and depreciation costs of furniture can also be claimed under the home office expenses.
What can't you file for your tax return as a lash artist?
- Travelling between work and home is not considered an expense, even when working overtime.
- The purchasing, hiring, repairing, or cleaning of 'Conventional clothing' cannot be claimed. Conventional clothing can be defined as regular clothing without a business logo.
- If your employer reimburses your travel and clothing expenses, you can't claim your return on them.
- If you want to study make-up artistry, it is not directly related to your lashing business, which disqualifies you from lodging a return.
- If you have subscribed to music to play at your salon or paid for childcare, any fines you have incurred or vaccinations received as a workplace mandate cannot be claimed either.
What records to keep to file your tax return?
While lodging your tax return, the ATO requires you to keep records of your claims. You must submit your Tax File Number, ABN, and income tax statements for last year. In addition, you need to submit records of your annual payments, payments received, products purchased and investments, and any other extra income. Keep receipts (electronic or physical dockets) of work-related expenses you wish to claim. Ensure that the receipts have the supplier's name, amount, and date. You are not required to keep receipts of any expense under $10 and don't sum up to $200. Keeping a record of it in a diary suffices.
How to choose a competent tax agent to help your lash business?
With a busy lash schedule, getting into a cumbersome and meticulous job like tax return can be too much to fit into your schedule. Letting a professional handle what they are trained in is advisable. Choosing a competent tax agent is primary, especially when you want to do the right thing and benefit from your return. Here is what you need to look for while choosing a tax officer
- Ensure your tax professional is registered and not just a certified practising accountant. As per ATO, tax agents must complete a stipulated amount of hours researching and learning tax law every year to continue registering to lodge a tax return. Ask them their tax agent number to check their authenticity.
- Choose an experienced tax professional/office who has been in the business for a while and has had great reviews online.
- Choose a tax agent who charges you by the hour to file your return and not charge you based on your refund.
- How would you be submitting your paperwork- through software or a template? A tax professional that uses electronic filing of your taxes is less likely to make mistakes than one that submits paperwork manually.
Filing your taxes can feel overwhelming, but it doesn't need to be that way if you take the right steps. Good luck!