Great questions! Starting a sole proprietorship requires different tax treatment than being an employee.
First of all I would like to clarify your question on whether your wife will have to file taxes quarterly. The answer is NO that she will only file an income tax return - Form 1040 once a year. She will use the Self Employed version of TurboTax and this will include a schedule C in her tax return.
In the Self employed version of Turbo Tax she will be asked questions on what type of business she has. She will enter the income from her salon and Turbo tax will suggest various expenses normally associated with her type of business. Rent and deposit fees can be included as expenses. However if the deposit fees are refundable , they would not be an expense.
In regards to filing taxes quarterly, this is referring to making quarterly estimated tax payments. The IRS requires you to pay your taxes throughout the year as income is earned. As an employee, this is done through withholding of taxes on her paychecks. However as a sole proprietor, she will have to make quarterly estimated tax payments on her income.
I have included a link to more information on making estimated tax payments:
https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-p...
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