How To Depreciate a Beauty Salon for Taxes | Small Business

Depreciation is loss of value over time and with use. If you own a beauty salon, you likely use a range of equipment that has a limited lifetime. So, treat the decrease in value of these items as an expense. Annual expenses reduce your annual net income, which in turn reduces the amount of tax you must pay each year. Although calculation of depreciation is relatively simple, you may want to use the services of a qualified accountant to ensure that all items in your beauty salon are depreciated properly.

Identify Depreciable Items

  1. Beauty salons and barber shops are equipment-heavy businesses. They use large amounts of equipment, including hair dryers, brushes, sinks, wood lamps, mirrors and barber chairs. These items lose value over time as the end of their useful lives draws nearer. When you file your taxes, take into account this loss in long-term value by depreciating the items. Items subject to depreciation are “fixtures” — i.e., those that require a large financial investment and cannot be moved or removed easily. Thus, smaller, portable items such as brushes, curlers and hair dryers are not subject to depreciation, but barber chairs, sinks and heat lamps are.

Determine Life Expectancy

  1. There are several methods of depreciation, but the far most common is the straight-line method. Before you depreciate your equipment, you must first determine its useful life expectancy. According to the Internal Revenue Service, most equipment found in a beauty salon has a useful life of five years. This includes electrical equipment such as heat lamps. Furniture, such as tables and barber chairs, has a longer useful life expectancy of seven years. To make sure you are not paying too much on your taxes, hire the services of a certified accountant. The accountant takes an inventory of your

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