In the world of barbering, cash has long been king. But as the industry spirals deeper into the digital age, third-party payment processors like CashApp, Venmo, Zelle, and PayPal have become the new royalty. However, this convenient tool comes with a catch – one that's making financial management and tax filings a lot trickier for shop owners, school instructors, booth renters and suite leasers.

Third-party payment processors are becoming more and more strict on requiring users to provide either an Employer Identification Number (EIN) or Social Security Number (SSN) to create or maintain an account. This isn't just a formality – it's the IRS tightening its grip on the digital economy.

These payment processors are required by law to report your earnings to the IRS via Form 1099-K. This form is like a tattoo on your financial arm – permanent and very visible to the taxman.

How does it work? Let's break it down:

1. You accept payments through a digital platform.
2. The platform keeps track of your transactions.
3. If you meet certain thresholds (more on that later), the platform sends a 1099-K to both you and the IRS.
4. The IRS now has a record of your income, whether you report it or not.

It's like having a reality tv show of your finances and the IRS tunes in every night at 8:00pm.

Now, you might be thinking, "So what if they know? I'll just... not file taxes." Hold that thought.

When your SSN or EIN is linked to an account, it's like leaving a trail of hair clippings right to your door. The IRS's algorithms are getting smarter by the day, and they're excellent at connecting dots.

*If You Don't Know Now You Know: The IRS generally has three years from the date you file your return to audit you. But don't get too comfortable – this period can be extended to six years in certain cases. For instance, if you underreport your income by more than 25% of the gross income shown on your return, the IRS gets an extra three years to take a closer look at your finances.

And if you think you can outsmart the system by not filing at all? Think again. For non-filers, there's no time limit. The IRS can come knocking at any time, and trust us, they're patient - allowing interest and penalties to pile up, so by the time they come knocking, that unpaid tax bill could look more like a small mortgage.

The point is this: While you might not see immediate consequences, remember that the IRS plays the long game. Those unpaid taxes could be silently accruing interest and penalties, turning a manageable sum into a financial nightmare down the road.

It's like letting a bad haircut grow out – it only gets worse with time.

For those who use booking platforms, it's even easier for the IRS to track your income. Most booking platforms like Squire, TheCut, Booksy, Vagaro, StyleSeat, Gloss Genius, and Square are built on third-party payment processors (most commonly Stripe). So if you're using these to book clients and accept payments, you're already in the system. The IRS doesn't need to be Sherlock Holmes to figure out your income – it's all there in black and white.

Lastly, as if federal reporting wasn't enough, states are getting in on the action too. The thresholds are constantly changing per state and is usually lower than the federal threshold which is $5,000. This means if you make more than $5,000 per year using these third-party payment processors – you're either in the system or will be soon enough.

*For a full state-by-state table breakdown text "table" to 888.572.2017.

Picture this: a classroom at Wake Tech Community College, filled with the energy of aspiring barbers. It's presentation day for their business model canvas projects. The twist? All but one student chose to present ideas outside the barbering industry. Why? Who truly knows? But word on the street - fear. Fear that their barbershop ideas might be "stolen" by classmates.

I've been emphasizing a crucial lesson throughout our eight-session program: collaboration is key in business. "If you're scared to present an idea," I told them, "it likely means you don't truly believe you'll implement it."

I wanted to instill in them the confidence to share their ideas, knowing that their unique perspective and drive are what truly set them apart.

Then came the moment that changed everything.

One brave student decided to present their business model canvas on a barbershop. As the class provided feedback, something magical happened. The room transformed into a think tank of innovation. Questions about barber travel led to head instructor, William Graham, sparking a discussion about cross-country barbering. Ideas bounced back and forth. One student coined the term "chair hopping," and suddenly, we were all creating together.

I stopped the class right there. "This," I said, "is why collaboration is key. This is why focusing on your actual business - the barbershop you want to create - is so important. You're getting real-world application, real-world advice, and assistance from people who genuinely care about your success."

It was a lightbulb moment for everyone. They realized that once they step into the real world, it would be incredibly rare to have 20+ business-minded individuals giving honest, caring feedback - people who aren't just friends or family, but peers invested in their success.

The "Chair Hopping" concept, although familiar to some – has not been executed on a mainstream level, but has the potential to be a revolutionary approach to barbering that's not just about the cut, but about the journey.

Not Just In the Barbering Industry

This collaborative creation process isn't unique to the barber industry though. In fact, many successful businesses and innovations have emerged from similar collective brainstorming sessions. > Read or listen to the blog for this full section <

What happened in the classroom that day was a perfect example of this collaborative magic in action. It showed these aspiring barbers the power of open dialogue, the value of diverse perspectives, and the potential for innovation when minds come together without fear or reservation.

I rewarded them by promising that I would create a RhodeMap for this business model and we have done just that! We won't dive too deeply into the concept in our blog, but in Part 2 we'll break it down a little to give you a sneak peek - stay tuned!

So, to all barbers, remember this: Your ideas gain strength when shared. They grow when exposed to different perspectives. And sometimes, the most revolutionary concepts are born not from solitary genius, but from the beautiful construct of collective creativity.

Are you ready to collaborate? Your move boss.

15 million, 540.8 million and 6.8 BILLION – those are the amount of glasses given away by, the annual revenue from and valuation of Warby Parker a purpose-driven, revenue-generating glasses retailer. Their "Buy a Pair, Give a Pair" program isn't just clever marketing—it's a masterclass in business impact and income...

...see it for yourself.

• Brand Differentiation: In a crowded eyewear market, this program helped Warby Parker stand out.
• Customer Acquisition: The social mission attracted socially conscious consumers, particularly millennials and Gen Z.
• Customer Loyalty: Customers feel good about their purchase, encouraging repeat business.
• Employee Engagement: The program boosted employee morale and attracted talent who wanted to work for a purpose-driven company.
• Media Attention: The initiative garnered significant positive press, providing free marketing.
• Business Growth: Warby Parker's valuation reached $6 billion, mainly attributed to their strong brand identity.

What's the lesson? Understanding and addressing community needs sets you apart from barbers who are solely focused on service delivery – it provides a competitive advantage.

"That's great for Warby Parker, but I'm not running a big company." ...think again. Whether you're a student just starting out, a seasoned professional, an educator shaping the next generation, or an influencer with a platform, you have the power to create ripples of positive change. Your barbershop has more potential for impact than you realize.

The Psychology Behind the Impact

According to a study by Cone Communications, 87% of consumers will purchase a product or spend with a service provider because they advocated for an issue they cared about. In other words, your impact strategy isn't just good for the community—it's good for business.

This directly aligns with the "warm glow" effect. Coined by economist James Andreoni in 1990.

His revelation gave language to the below consumer behaviors

• Emotional Reward
• Self-Interest in Altruism
• Intrinsic Motivation

The above behaviors that consumers felt resulted in:

• Dopamine Release
• Self-Image Enhancement
• Stress Reduction

So, how do you implement this in your barber business?

• Think Inside the Box: Begin with one community initiative based on your known/current knowledge.
• Integrate Data Collection: Implement systems to gather and analyze customer data ethically - use tools like short surveys, conversation notes, or digital check-in systems.
• Eat From the Feeding Hands: Listen for community needs during client interactions - Involve them in brainstorming and implementing community initiatives.
• Communicate Your Impact: You’re not bragging, you’re inspiring others to make a change.
• Partner Strategically: Collaborate with local organizations to amplify your impact.
• Measure & Adjust: Set clear, measurable goals for your initiatives - Regularly review the data and adjust your approach as needed.

It's time to think beyond the fade and consider how your skills can contribute to a greater good. Ready to make an impact and dive deeper into business impact strategies tailored for your industry? Text "strategy" to 888.572.2017.

Let your impact be the driving force of your income. Your move, boss.