Booth renters are self-employed independent contractors, so they pay taxes differently than employees. You receive no W-2. Instead, you track all income and report it on Schedule C. You owe self-employment tax of 15.3 percent on net profit in addition to income tax. Quarterly estimated payments are due in April, June, September, and January. Miss one and the IRS charges a penalty. The upside: booth renters can deduct booth rent, supplies, education, insurance, and a portion of a home office. Keep every receipt. A stylists deduction checklist can save $3,000 to $8,000 per year. I have rented my own salon suite for 15 years, so I pay these quarterly estimates myself. I recommend setting aside 25 to 30 percent of every deposit the moment it hits your account.
See the full hairstylist tax deduction checklist →
Do booth renters get a 1099?
Usually not from the salon. A booth renter pays the salon for space, so the salon is not paying you and owes you no 1099. You may receive a 1099-K from your card processor if you take card payments above the reporting threshold, and you report all of your income on Schedule C either way, whether a form arrives or not. The salon owner is not your employer, so there is no W-2 and no tax withheld. That is why you file quarterly estimated payments yourself and set aside 25 to 30 percent of every deposit.