Tina Azarvand, Esq., offers sound financial saving strategies to beautify the future for you and your team members.

Tina Azarvand, Esq., offers sound financial saving strategies to beautify the future for you and your team members. 

As a salon or spa owner, you're an expert at making others look and feel their best. But have you considered how to give your financial future the same VIP treatment? Just as you carefully choose the right products for your clients, selecting the perfect savings plans for you and your team is crucial. Let's style a financial strategy that will leave your future looking as fabulous as your salon.

401(k) Plans

Think of a 401(k) as the perfect blowout for your retirement savings – it adds volume and lasting power to your financial portfolio. Regardless of whether you’re an S-Corp, LLC, or partnership in the beauty industry, you can establish and contribute to a 401(k) as both employer and employee (where applicable), giving your savings a double boost. Some benefits of 401(k) plans include:

  • Tax-Deferred Growth: Watch your money grow tax-free until withdrawal, like a nourishing hair mask working its magic.
  • High Contribution Limits: For 2024, you can contribute up to $22,500 if you're under 50, with an additional $7,500 catch-up contribution for those over 50.
  • Talent Attraction: A robust 401(k) can be as appealing to potential employees as a celebrity stylist is to clients.

401(k) plans help small employers compete with top employers for top talent. Many job seekers prioritize quality benefit packages, and a robust 401(k) can be a real head-turner. This kind of benefit is also eligible for tax credits or deductions to the employer for administrative costs associated with the plan and any matching contributions.

Individual Retirement Accounts (IRAs)

Individual Retirement Accounts (IRAs) offer a tailored approach to retirement savings, much like a personalized haircut. Whether you choose a Traditional or Roth IRA, you're investing in a look that will age beautifully. Similar to a 401(k), the employer would administer an IRA plan through an outside institution or bank that would then invest the contributed funds. However, these contributions are made after tax, though the earnings on these contributions are tax-deferred. If you are a small employer, this plan may be better suited for you as there are no employee count requirements and

  1. Traditional IRA
  • Tax Deductible Contributions: Contributions may be tax-deductible, which means more money in your pocket today.
  • Tax-Deferred Growth: Like a 401(k), your investments grow tax-free until withdrawal.
  • Contribution Limits Separate from 401(k) Limits: For 2024, the combined limit between Traditional & Roth IRAs allows you to contribute up to $7,000 if you're under 50, with an additional $1,000 catch-up contribution for those over 50.
  1. Roth IRA
  • Tax-Free Withdrawals: Contributions are made with after-tax dollars, but withdrawals during retirement are tax-free. Roth IRAs can be a safe way to ensure you do not have to worry about taxes later on.
  • Contribution Limits Separate from 401(k) Limits: For 2024, the combined limit between Traditional & Roth IRAs allows you to contribute up to $7,000 if you're under 50, with an additional $1,000 catch-up contribution for those over 50.

For smaller salons or independent stylists, IRAs can be easier to manage than 401(k)s, with lower administrative costs – perfect for when you're just starting to build your empire.

HSAs: Health Savings with a Healthy Glow

Health Savings Accounts (HSAs) are another secret to a healthy financial glow-up for salon owners and stylists with high-deductible health plans. These accounts offer a trifecta of tax benefits, including :

  • Tax-Deductible Contributions: Reduce your taxable income, like trimming split ends.
  • Tax-Free Growth: Your money grows undisturbed, like hair nourished by high-quality products.
  • Tax-Free Withdrawals: Use the funds for qualified medical expenses without tax penalties – it's like getting a free touch-up between appointments.
  • Contribution Limits: For 2024, individuals are allowed to contribute up to $4,150, and up to $8,300 for families. Taxpayers over 55 years old are permitted an extra $1,000 per year as a catch-up contribution.

Crafting Your Salon's Financial Masterpiece

Just as you create unique styles for each client, your financial strategy should be tailored to fit your salon's distinctive needs. Consider your business's size, your aspirations, and your team's long-term goals. Like consulting with a client before a bold new look, partnering with a financial advisor can help you design a savings plan that perfectly suits your salon's vision.

Remember, implementing these financial tools isn't just about boosting your bottom line—it's about nurturing an environment where your entire team can thrive. By offering robust benefits, you're showing your staff that you value their future as much as their current expertise. This commitment can transform your salon from a workplace into a career destination, helping you attract and retain the industry's top talent.

Whether you're a fresh face in the beauty world or a seasoned pro with a loyal clientele, proactive tax planning is your secret weapon for long-term success. It's the finishing touch that can reduce your tax burden while creating a cascade of financial benefits for you and your team.

By styling your savings with the same creativity and care you bring to your clients, you're not just running a salon—you're cultivating a space where careers blossom and futures shine. Your salon will stand out in a competitive market not just for its aesthetic expertise but also for its commitment to its people.

Ready to give your salon's finances a transformative makeover? Our tax attorneys and CPAs are here to help you sculpt a tax strategy as personalized and effective as your signature services. Take the first step towards a more radiant financial future for your salon by booking a complimentary consultation today at AzarvandTaxLaw.com or via email at Info@AzarvandTaxLaw.com, and let's work together to ensure your business's financial outlook is as stunning as the transformations you create every day.

 

 

 

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