Thriving Stylist Podcast: Episode #422

Title: Money & Tax Stuff You Should Know as a Stylist
Host: Britt Seva
Date: January 26, 2026

Episode Overview

In this episode, Britt Seva tackles one of the beauty industry's least discussed but most crucial topics: financial literacy for stylists. The episode is designed as a comprehensive primer on handling money—making more of it, properly tracking it, understanding taxes, and building true wealth as a stylist, whether you’re an employee, independent contractor, or salon owner. Britt offers both practical frameworks and mindset shifts, aiming to empower stylists to take control of their finances, avoid common pitfalls, and secure lasting, sustainable wealth within the beauty industry.

Key Discussion Points & Insights

The Importance of Financial Knowledge in the Beauty Industry

• High Turnover Due to Financial Illiteracy: Many stylists leave the industry not because of skill, but due to poor financial management.

  “This industry has one of the highest rates of turnover. And honestly, most of it boils down to lack of financial understanding.” (07:00)

• Emphasizing Professionalism: Making a living is a core reason for joining the field. You need business knowledge to survive and thrive.
• Emotional vs. Logical Financial Decisions: Many stylists make money decisions to please clients or from a place of emotion, which hurts long-term success.

Understanding Revenue vs. Income (08:30)

• Definitions
  • Revenue: The total money received from clients for services/retail.
  • Income: What you actually keep after expenses.
• Applies differently for employees vs. independents; knowing the difference is essential for understanding your financial health.

Taxes: Withholding, Refunds, and Quarterly Payments

• Employees:
  • Must fill out a W-4; you control your withholdings, not your employer. (10:30)
  • The goal is to have minimal refund/amount owed at year-end—big refunds mean you’ve given the government a free loan.

    “Getting a big refund if you’re an employee is not a flex. It’s a sign of financial mismanagement.” (13:50)

• Independents & Salon Owners:
  • Required to pay quarterly estimated taxes if you expect to owe $1,000+.
  • Not knowing is not an excuse with the IRS!

    “You can’t claim, ‘I didn’t know.’ You can’t claim financial illiteracy.” (18:30)

• Tools & Resources:
  • IRS Tax Withholding Estimator – helpful for setting withholdings.
  • IRS Form 1040-ES – for calculating estimated payments.

The Profit First Method for Organizing Your Money (19:50)

• Overview: Based on Mike Michalowicz’s Profit First—allocate income into separate accounts for better visibility and control.
• Recommended Accounts: Income, Expenses, Tax, Profit, Paycheck (plus “Team” for salon owners).
• Process:
  • All revenue goes into a business income account, never your personal.
  • At regular intervals, allocate funds to other designated accounts.

    “It is not your personal bank account. I cannot emphasize that enough.” (22:45)

Example Account Funding (23:40)

• Traditional guideline: 5% profit, 15% tax, 50% owner’s pay, 30% ops (to be adjusted per business realities)
• In reality, most stylists will need to allocate:
  • 25–30% of net income for federal tax
  • Add 5–10% for state tax (if applicable)
  • 5% buffer recommended by financial advisors

  “At the high end, we’re looking at a 45% savings of our net income for taxes. Yikes.” (27:40)

The Reality of Paying Taxes as a Business Owner

• Perspective Shift: Paying high taxes = high revenue. Don’t demonize taxes; they are a mark of growth.

  “Somebody who pays a lot in taxes is doing a lot of revenue in business. There are people who would kill to have a tax bill like that.” (32:53)

Maximizing Tax Deductions (34:10)

• Key deductible expenses often overlooked:
  • Booking software
  • Digital ads, promotional gifts
  • Inventory, back bar products
  • Equipment, tools, robes, towels
  • Tech (computers, music streaming)
  • Cell phone (portion used for business)
  • Parking fees, business travel, education
• Caution: Only take legitimate deductions. Audits are more likely with AI at the IRS.

  “With the adoption of AI by the IRS, audits are going to happen more frequently. Like, risky finances just are not worth it.” (36:55)

Increasing Your Income: It’s Not Just About Raising Prices (38:00)

• Utilization Over Price: High prices don’t automatically equal high income—being in demand and filling your chair is more critical.
• Illustrative Example:
  • Stylist A: $400 avg ticket, low utilization
  • Stylist B: $150 avg ticket, high utilization
  • Both make similar revenue if utilization is higher due to more client flow.

    “It’s not always who charges the most wins the race. It’s the person who’s running the smarter business.” (41:21)

• Key Takeaway: Increase demand with marketing before raising prices.

Passive Income & Building Wealth (45:00)

• “Passive income” as sold online is mostly a myth; real passive income comes from investment.

  “Anybody who is smart in business will tell you—the only way to make passive income is to invest.” (45:19)

• $500 initial investment and $50/mo for 40 years, at average market return = $288,000+
• The earlier and more consistently you invest, the more you build long-term wealth.

Business Credit Cards (48:45)

• Benefits of a Business Credit Card:
  • Points for business rewards (e.g. travel)
  • Increased fraud protection
  • Separates business from personal expenses
  • Pays off card in full to avoid interest
  • Helps manage cash flow in slower weeks
• Warning: Impacts personal credit for most—establish discipline first.

  “Once you have a grip on your finances, the perks, benefits, and security of it are pretty significant.” (50:10)

The Necessity of Bookkeeping (52:10)

• Most independents neglect bookkeeping software—this leads to lost money and tax issues.
  • Recommends QuickBooks Self-Employed for ease and P&L insights.

  “Please don’t use a Google Sheet, please don’t use an Excel spreadsheet… seriously, use the software. It makes all the difference in my opinion.” (53:40)

• Proper bookkeeping helps you maximize deductions and survive audits painlessly.

Notable Quotes & Memorable Moments

• “If you don’t want to make money as a hairstylist, please mark all of your services at $0 and just do community service.”
  (05:43)
• “A lot of employees pray for a big refund at the end of the year… If you get a big tax refund, you’ve spent an entire year giving the government a short-term loan.”
  (12:50)
• “The stylist with the highest prices is not always the one making the most money… Demand is what matters the most.”
  (39:10)
• “If you’re looking to increase your income, do not raise your prices. Seriously, please don't. Increase your demand first.”
  (40:25)
• “Anybody who is smart in business will tell you: the only way to make passive income is to invest.”
  (45:19)
• “Let this be the year that we really get it all in order. I promise you’ll save money, you’ll have more deductions, your taxes will be easier.”
  (54:45)

Timestamps for Key Segments

• 07:00 — The real reason for high industry turnover
• 08:30 — Revenue vs. Income explained
• 10:30 — Tax forms and withholdings for employees
• 13:50 — The myth of the big tax refund
• 18:30 — Quarterly taxes for independents & salon owners
• 19:50 — The Profit First method for organizing finances
• 27:40 — Savings percentages for taxes—how much to set aside
• 32:53 — The privilege of high tax bills
• 34:10 — Deductions most stylists miss
• 38:00 — High prices vs. high demand: where real money is made
• 45:00 — How to build passive income through investments
• 48:45 — When and why to get a business credit card
• 52:10 — The importance of bookkeeping (and why you can't neglect it)
• 54:45 — Final call to action: make this the year you get financially organized

Britt’s Parting Advice & Resources

• Make financial literacy a priority—it’s critical for survival and thriving in the beauty industry.
• Recommended Resources:
  • IRS Tax Withholding Estimator
  • IRS Form 1040-ES
  • QuickBooks Self-Employed or similar bookkeeping software
  • Profit First by Mike Michalowicz
  • Michelle Cook, CPA (@smallbusinesscpa on Instagram)
• Keep learning: Reach out via ratings/reviews to request deep dives on financial topics.

For listeners:

This episode serves as a one-stop guide for all the “money & tax stuff” stylists need to know, blending practical steps, industry-specific advice, and honest mindset shifts to help you thrive both behind the chair and in your bank account.