As a booth renter, you're self-employed—and that changes everything about your taxes. No employer withholds taxes for you, so you're responsible for paying them yourself. You'll pay self-employment tax on top of income tax, but you also get access to deductions that employees don't. Understanding the system helps you keep more of what you earn and avoid nasty surprises.
Understanding Self-Employment Tax
This is the biggest surprise for new booth renters. It's in addition to your regular income tax.
- Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare)
- This covers what an employer would normally pay for you
- Applies to net self-employment income over $400/year
- You can deduct half of self-employment tax from income
- This is on top of your regular income tax
- Combined with income tax, expect 25-40% total tax rate
Pro tip: Set aside 25-30% of every payment you receive for taxes. Don't spend it—it's not yours.
Quarterly Estimated Taxes
You can't just pay taxes once a year. The IRS expects payments throughout the year.
- Estimated taxes due: April 15, June 15, September 15, January 15
- Penalties apply if you don't pay enough quarterly
- Use IRS Form 1040-ES to calculate and pay
- Aim to pay at least 100% of last year's tax liability
- State estimated taxes may also be required
- Set up automatic transfers to a tax savings account
Common Tax Deductions
Deductions reduce your taxable income. Track every legitimate business expense.
- Booth/chair rent: Your largest deduction
- Products and supplies used for clients
- Tools and equipment (scissors, dryers, capes)
- Professional liability insurance
- Business phone and internet portion
- Continuing education and training
- Professional association dues and license fees
- Marketing and advertising costs
- Business cards and promotional materials
- Mileage for business travel
Equipment & Tools
Your tools are tax-deductible, but how you deduct them depends on cost.
- Items under $2,500: Deduct full cost in the year purchased
- Items over $2,500: May need to depreciate over time
- Section 179 allows immediate deduction of many equipment purchases
- Keep receipts for all equipment purchases
- Repairs and maintenance are fully deductible
- Replace tools regularly? Track replacement costs
Mileage & Travel
If you travel for work beyond commuting to your booth, you can deduct it.
- 2024 standard mileage rate: 67 cents per mile
- Track miles for: client home visits, supply runs, education
- Regular commute to your booth is NOT deductible
- Travel to industry events and education is deductible
- Keep a mileage log with dates and business purpose
- Use an app like MileIQ or Everlance for easy tracking
Record-Keeping Essentials
Good records make tax time easier and protect you in an audit.
- Keep all receipts (digital photos are fine)
- Use a separate business bank account
- Track income and expenses monthly, not yearly
- Use accounting software or a simple spreadsheet
- Keep records for at least 7 years
- Document the business purpose of each expense
Pro tip: Snap a photo of every receipt immediately. Paper fades and gets lost. Digital doesn't.
Business Structure Considerations
Most booth renters are sole proprietors, but other structures may benefit you.
- Sole proprietor: Simplest, most common for booth renters
- LLC: Provides liability protection, still taxed as sole proprietor
- S-Corp: May save self-employment tax at higher income levels
- S-Corp typically makes sense above $50-60K net income
- Consult a tax professional before changing structure
- Each state has different LLC requirements and fees
Common Tax Mistakes
Avoid these errors that cost booth renters money or trigger problems.
- Not saving for taxes throughout the year
- Missing quarterly payment deadlines
- Failing to track deductible expenses
- Mixing personal and business finances
- Not keeping receipts and documentation
- Overlooking legitimate deductions
- DIY when complexity warrants a professional
- Underreporting cash payments
Frequently Asked Questions
If your situation is simple (one booth, straightforward expenses), tax software may suffice. But an accountant often pays for themselves through deductions you'd miss and mistakes you'd avoid. At minimum, consult one your first year as a booth renter.
You'll file both your W-2 income and self-employment income on the same tax return. The self-employment income is reported on Schedule C, and self-employment tax is calculated on Schedule SE. Your W-2 income isn't subject to self-employment tax.
Generally, no. Clothing that can be worn outside of work isn't deductible, even if you only wear it to work. Same for personal grooming. However, branded uniforms or items with salon logos may be deductible.