Sch C Salon renting 1/2 of their chairs. Should a Sch E be involved?

[AZ-Tax]

LLC Salon that files Sch C is renting about 1/2 of its chairs to Hair Stylist (HS) then HS retains 100% of their clients payment for services. Salon does not partake in their (tenants) clients payments but instead receives rent from HS. Seems to me the Salon should file a Sch E to report gross rent but it will be a nightmare to breakdown the expenses (building rent, insurance, utilities etc.) per chair since the other 1/2 of the chairs in Salon are assigned to HS's that are compensated by Salon on a % they earn.

I am looking at this since Sch C net profit is subject to SE tax and rent income on Sch E is not. Seems to me the Salon may have to create a separate entity with it owns TIN and have that entity receive the rent.

Your thoughts.

[MDEA]

Renting out chairs

I think it belongs on C you are providing services water, electric, towels, and other items.

[oceanlovin'ea]

Schedule C

I would put it on the other income line on the schedule C. Gross income would be from her own services to her clients, but there is a line for other income on the Schedule C. I would list chair rental there.
It is all income to her business....not a personal rental.

Linda, EA

[AZ-Tax]

Couldn't TP/Landlord...............

I think it belongs on C you are providing services water, electric, towels, and other items.

Couldn't TP/Landlord sublease a business office and Landlord pay utilities especially in an older structures where they might be only 1 utility meter for several units? I don't think the Salon provides anything for the HS tenant in the way of towels, shampoo etc.

[ATSMAN]

LLC Salon that files Sch C is renting about 1/2 of its chairs to Hair Stylist (HS) then HS retains 100% of their clients payment for services. Salon does not partake in their (tenants) clients payments but instead receives rent from HS. Seems to me the Salon should file a Sch E to report gross rent but it will be a nightmare to breakdown the expenses (building rent, insurance, utilities etc.) per chair since the other 1/2 of the chairs in Salon are assigned to HS's that are compensated by Salon on a % they earn.

I am looking at this since Sch C net profit is subject to SE tax and rent income on Sch E is not. Seems to me the Salon may have to create a separate entity with it owns TIN and have that entity receive the rent.

Your thoughts.

I have a client that rents out a booth and chair to a nail artist and braiding artist. The two girls keep 100% of their own billing. The rent covers utilities and customer parking.

The rent is included in other income on Sch C. Keep it simple. I think you will make it more confusing by doing a Sch E because it really is not a residential or business property rental in the true sense.