Girl Fade Away Posted October 31, 2021 Share Posted October 31, 2021 Hello everyone, it's great this site has a business sub-forum, just what I need right now! I have a regular 9-5 job but for the past year I have been cutting and styling hair for friends and family, at no charge. I have no formal training, but took a class on line and have become pretty good at it! I also cut and style my own hair and like better than any professional stylist I've seen. So I seem to have a knack for it. So I started advertising on Craigslist plus word of mouth and have developed a good following and this year so far I have made a little over $10,000! Cash. Do I need to report this on my taxes? Excuse my ignorance, I am assuming I do, but what but what if I didn't? I liken it to the money I made babysitting when younger. I am also thinking of opening my own salon one day but have no idea how to do this. I am not a business person per se, never took any business classes. Any advice? Thank you all in advance! Link to post Share on other sites
Alpacalia Posted October 31, 2021 Share Posted October 31, 2021 My sister runs her own business but she's also a former attorney. She hired a certified business tax advisor for hers. They'd probably know best. 1 Link to post Share on other sites
Wiseman2 Posted October 31, 2021 Share Posted October 31, 2021 2 hours ago, Girl Fade Away said: so far I have made a little over $10,000! Cash. Do I need to report this on my taxes? Absolutely contact a CPA asap. Not reporting cash income or payments received for contract work can lead to hefty fines and penalties from the Internal Revenue Service on top of the tax bill you owe. Purposeful evasion can even land you in jail, so get your tax situation straightened out as soon as possible, even if you are years behind. Additionally, laws vary by state, cutting hair for money generally requires a person first obtain a barber or a cosmetology license, either of which allow the holder to cut hair professionally in addition to providing other services. Take the ad down asap. Always check laws regarding taxes, licensure and a business license. 1 Link to post Share on other sites
Author Girl Fade Away Posted October 31, 2021 Author Share Posted October 31, 2021 17 minutes ago, Wiseman2 said: Absolutely contact a CPA asap. Not reporting cash income or payments received for contract work can lead to hefty fines and penalties from the Internal Revenue Service on top of the tax bill you owe. Purposeful evasion can even land you in jail, so get your tax situation straightened out as soon as possible, even if you are years behind. Additionally, laws vary by state, cutting hair for money generally requires a person first obtain a barber or a cosmetology license, either of which allow the holder to cut hair professionally in addition to providing other services. Take the ad down asap. Always check laws regarding taxes, licensure and a business license. Thank you @Wiseman2, that was helpful. I thought the ad might be okay since I see ads for babysitting and housekeeping services from individuals looking to make exrta money and they don't have a license and it's not a professional business. But certainly don't want to be doing anything illegal. I will claim the money I made this year next year when filing my 2021 taxes. I waitressed when in college and never declared my cash tips as income, fortunately I was never audited but I could have been and been in big trouble. Thank you again for reading and advising. Good advice. 1 Link to post Share on other sites
ajequals Posted October 31, 2021 Share Posted October 31, 2021 Yes. and you need an tax specialist. all those little receipts you collect from cleaning supplies to laundry detergent, even electricity can come in very handy 1 Link to post Share on other sites
Wiseman2 Posted October 31, 2021 Share Posted October 31, 2021 27 minutes ago, ajequals said: Yes. and you need an tax specialist. all those little receipts you collect from cleaning supplies to laundry detergent, even electricity can come in very handy Absolutely. Many things are tax deductible when applied to your business. Link to post Share on other sites
Foxhall Posted October 31, 2021 Share Posted October 31, 2021 (edited) I should know something on this area although I am not familiar with the American system, You are obliged to declare it- certain of that. I think the form for self employed income there is a Form 1040, Schedule C in your case, just download that and see can you follow the guidelines Out of curiosity , from looking there you will be obliged to send in this tax return for 2021 in either January or April next year, that Irs website, they make it a little complicated dont they!! Anyway dont worry about that, dont let that put you off continuing your business, nice that you have generated some side cash and are getting call, the tax returns will be easy enough once you get the first one over with. Edited October 31, 2021 by Foxhall Link to post Share on other sites
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