Massage & Bodywork

JANUARY | FEBRUARY 2020

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Ta k e 5 a n d t r y A B M P F i v e - M i n u t e M u s c l e s a t w w w. a b m p . c o m / f i v e - m i n u t e - m u s c l e s . 19 Most of the information we'll provide is based on a one-person massage practice. This applies to a practitioner who operates a sole-proprietorship or an LLC that files taxes with a Schedule C (included with a 1040 personal tax form). This is probably you, but if you are not sure, look at your last federal tax filing or check in with your tax preparer. If you have a larger business with contractors, employees, or renters, most of this information still applies! Your recordkeeping may be more in depth than what we cover, but the structure and routines should stay the same. If you've been in business a while, some of this information may seem simplistic at first. If so, you have a choice. You can skim over the beginner stuff or dive in fully and absorb some tips and ideas that might improve your system. I'm a fan of the latter. We can all use efficiency updates. If you have never intentionally thought through your processes, or if you are defaulting to a years- old system you have never reconsidered and updated, now is a great time to refine your routines. So let's jump in! GET YOUR BANK ACCOUNTS IN ORDER Having the right bank accounts set up is super helpful when creating a strong financial foundation for your business. You should choose a bank or credit union that is convenient for you to visit for making cash deposits when needed, and it should have a good website and mobile app to make it easy for you to access information and remotely deposit checks. Depending on your business type, your bank or credit union may offer you a business account or a personal account with a DBA. DBA stands for "doing business as," and it's a document used to connect Financial literacy is essential to moving from being a hobbyist who does massage for fun to becoming a professional business owner who performs bodywork to earn a living. your real name to your business name. For example, if Jane Smith owns Zentastic Massage, her document would read, "Jane Smith DBA Zentastic Massage." Having a bank account with the DBA attached means you can deposit payments made to Jane Smith and to Zentastic Massage. Usually you get a DBA certificate at your town or city clerk office. Some localities consider a DBA and a business license the same thing. Check with your clerk's office for the correct protocol for your locality. It's worth looking around for a credit union with no fees in your area, if available. You probably don't need a fancy business account. A personal account with a DBA will do just fine and usually have lower or no fees. It can be helpful to ask some other small business owners in your area for recommendations as well. Start with a basic checking account. Every penny you make in your business will get deposited into this checking account (we'll talk more about this shortly), and you will pay bills from this account. Also, there are a few separate savings accounts you may want to open to keep your money well organized and out of temptation's reach. Here are a few examples: • Tax savings. This savings account is a safe place to hold a portion of your gross income to pay estimated quarterly and annual taxes. • Short-term savings. This account is a great place to keep funds for the next big equipment purchase and emergency savings. In a perfect world, you would have 3–6 months of business expenses in this account for emergencies. But, don't let that goal freak you out. This is about baby steps, and the first step is opening that savings account. • Gift certificate savings. If you sell gift certificates or packages, you may choose to have a separate savings account to hold that income until the services are redeemed. It is wise to check with your state regulations regarding gift certificate sales. Some states require that gift certificate income be set aside, and they have strict rules about how the funds are handled if the business closes while gift certificates are still in date. You may find that these account suggestions are more or less than what you need, but they are a good starting point. GROSS INCOME How do we handle money that comes into our business? In this month's column, let's start at the very beginning and discuss gross income. In a small business, gross income is the amount of money you receive for services rendered. On your Schedule C, it's Line 1, called "Gross receipts or sales." Quite simply, gross income is every penny you make in your business. Every penny. Here are some examples: Financial Literacy Series www.abmp.com/money M i n d Y o u r M o ney 2 020

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