And now that you have started your blog, you want to make sure that you are doing things right.
Or maybe you've had your blog for a while now, but still aren't sure about what qualifies for tax breaks and expense deductions for your blog.
There is a shortage of accountants and CPAs in the business world who fully understand online business. I regularly get asked about accountants and tax preparers that can help with online business.
But the list that I have is very short because I have had a hard time finding accountants that I can recommend my clients and friends to since there seem to be so few who are taking the time to expand their knowledge base to include the online world.
But as a business owner, you can arm yourself with the proper knowledge before you go to an accountant and then you will be able to help yourself and your accountant when you know exactly what you are talking about.
In this guide, my aim is to make sure that beauty bloggers and others with the beauty businesses know what deductions and tax breaks they can take when it comes to their business.
So let's dive in.
What is an expense?
First of all, what is an expense?
An expense for your business, whether you are a blogger or not, is something that is ordinary and necessary for the running of your business.
An ordinary expense, according to the IRS, is an expense that is common and accepted in your type of business. What is common for one business trade is not always accepted for another type of business trade.
A necessary expense, according to the IRS, is an expense that is helpful and appropriate for your business trade.
For example, as a blogger, your email service provider (Active Campaign, Convertkit, Mailchimp, Drip, etc.) is both an ordinary and necessary expense for your business. But car expenses are not ordinary and necessary expenses for a blogger.
There is a detailed list of expenses that apply to most businesses. In this post, we are going to dive into the expense deductions that are specific to bloggers.
You can find travel bloggers expenses here.
You can find photographers expenses here.
You can find home decor/DIY sellers and bloggers here.
You can find crafters and craft bloggers here.
You can find food bloggers here.
You can find online coaches here.
You can find the general blogger's expenses here.
You can find the general list of expenses here.
You can find more information on the home office deduction here.
What expense deductions can beauty bloggers and beauty businesses take?
In my experience, please comment below if this is not correct, there are makeup artists who purchase their makeup and use it on others, and there are those who purchase makeup only for personal use. There are also those who are in MLMs and may have to buy the makeup to have an inventory of it to sell. So those are the 3 angles I am going to take while describing these deductions.
Makeup artists are the people who buy their makeup and supplies to do makeup for other people.
They are not really using the makeup in their kits for themselves. They usually have a separate stash of their own makeup.
Since the makeup and supplies they are buying is being used on their clients, the costs will count as business expenses.
Any makeup purchase they make that is for their own personal makeup collection is not deductible.
Personal Makeup Use
If you are the kind of business owner who buys makeup to use for personal use through demonstrations and live videos and for unboxings, etc, the costs are not deductible.
Sorry to break your bubble. But since the makeup is being used on you and for personal uses, it is not considered a business expense.
This is very similar to the clothing not being deductible. Makeup is something you wear to make you look a certain way. It may make you feel more beautiful. It may cover up your imperfections and you may even show that on your videos. But it’s personal use, not being consumed by someone else, therefore it’s not a deductible expense.
There may be some MLMs out there that require you to keep an inventory of makeup available.
The makeup that is in your inventory, that you are going to resell, is considered an expense, at the cost you paid for it.
If you take any of the makeup out of inventory for personal use, then it needs to be removed from the expense deduction.
Beauty Businesses & Bloggers Expense Deductions
These are the ways the deductions break down specifically for the beauty industry based on your type of business.
A lot of your makeup purchases are going to end up not being deductible because you cross the line of it being personal versus for work.
The best way to do this then is to just not deduct it and take the risk. If you do end up with an audit and have to explain the purchases, they will get thrown out and you will be responsible for the tax on the difference that this raises your net income.