If you hire employees, you'll have payroll tax obligations, which include withholding federal and state income taxes, Social Security, and Medicare taxes. Additionally, you may be responsible for providing employee benefits. Independent contractors, on the other hand, are responsible for paying their own taxes. It's crucial to correctly classify workers to avoid legal and tax issues. Consult an attorney or tax professional for guidance on worker classification.

Sales tax regulations vary by location, so check with your state and local tax authorities to determine if your salon services are subject to sales tax. If required, you will need to collect the tax from clients and remit it to the appropriate tax agency.

To optimize your salon's tax structure, consider forming a business entity such as an LLC or an S Corporation. Consult with a tax professional to determine the best structure for your specific situation and explore tax-saving strategies, such as maximizing deductions, credits, and retirement planning.

Self-employed salon professionals are responsible for paying both the employer and employee portions of Social Security and Medicare taxes, known as self-employment taxes. Be prepared for these additional taxes, and consider making estimated quarterly tax payments to avoid penalties at year-end. Consult with a tax professional to ensure you handle these taxes correctly.

The frequency of tax filings depends on your business structure. Sole proprietors usually file annually, while other entities, like corporations or partnerships, may have different schedules. Be aware of federal, state, and local tax deadlines to ensure you file on time and avoid penalties.