I have a question:
I keep track of all the discounts I give customers for example: when I put a product on sale, birthday discounts, family discounts. etc. Can you write that off on your taxes?
Thanks,
janette
Janette, your question is one that I receive quite often. I have a lot of salon people that ask if the discounts can give them an additional tax deduction. The short answer to this question is “No.” You cannot actually deduct things twice.
Let me explain. For example, let’s assume that you have a product that you normally sell for $40. You put the product on sale and you sell it for $30. When you ring the product up and deposit the money, you deposit $30. This is what you pay tax on. Even though you were to sell it for $40, the actual amount you received was $30. Therefore, you already have reduced your income by the amount of the discount so there is no additional deduction.
I do feel that it is important to keep track of discounts. Knowing how many dollars you are discounting and if you have staff, knowing how much they are discounting (if they have the discretion to do so) can help you operate your business. Salons work on such a low profit margin to start with, that if we start offering to many discounts, it can really eat into the bottom line.
Please let me know if you have any other questions.
