Issue link: https://www.massageandbodyworkdigital.com/i/259468
30 m a s s a g e & b o d y w o r k m a r c h / a p r i l 2 0 1 4 BUSINESS SIDE that you know you'll almost always have available, and plan to log all your expenses and receipts. This goes for your personal financial management as well. Rule #1 for financial management: keep your personal and business accounts separate! Make sure you can easily identify business-related expenses; if you deduct them, you might have to identify them for the IRS (not the record label). KC: Having a regularly updated tracking system in place significantly reduces panic come tax time. I've talked to way too many therapists as they're sitting down with a shoebox full of receipts in April, and it's not pretty! When it comes time to do your taxes, all of the different categories of expenses you've kept track of will be placed into the categories on the Schedule C "Profit or Loss From Business, Sole Proprietorship" tax form. You can take a look at the form on the IRS website at www.irs.gov. If you have expenses that don't quite fit into those pre-set categories, you can list them in the Other Expenses section—things like association dues, laundry, and continuing education. Your total business expenses will then be deducted from the gross revenue you earned throughout the year to calculate your taxable income; your tax owed will be a percentage of this figure. If your stress level is rising as you work your way through this column, don't worry, you can always hire an accountant to help you (and claim that expense on next year's taxes). On that note, Lauren B. asks, "How does a massage therapist go about finding an accountant?" What's your advice, Les? LS: My first comment is, "You are not alone." There are almost 22 million firms with no payroll, according to the US Census Bureau. A firm with no payroll essentially means self-employed individuals. So there are lots of folks in the same boat as you trying to find professional assistance. And there are more than 1.7 million accountants (again, thank you Census Bureau) out there as well. I think the key is to look for an accountant who specializes in helping small businesses, and if you can narrow it a bit further, service businesses and/or professional practitioners. It might be too much to ask to find an accountant who has experience working with massage and bodywork professionals, but your odds will increase if you broaden your filter to Some business expenses are straightforward. If you buy massage lotion, the full cost of the lotion is a valid business expense. Here's a guide to a few of the trickier expense categories: Mileage: Keep track of all the miles you drive for business purposes throughout the year—to a continuing education class, to the store to buy supplies, etc. Calculate your deductible cost using the standard mileage rate set each year by the IRS. Driving to and from your office, or to work if you're an employee, is considered commuting and is not deductible, sorry. Laundry: Rather than tracking water use, detergent expense, etc., and dividing costs between business and personal use, many accountants recommend calculating a per- session laundry expense. We've heard a range of $1– $2 per session from various accountants, so check with yours to choose a figure that works for you. Shared items: Some things are used for both business and personal reasons, like your cell phone, Internet connection, and printer. In these cases, estimate how much of the item you use for business and take that percentage of the cost as a business expense.