Prepping for Tax Time: Tax Tips for Massage Therapists
This time of year can be particularly complicated and stressful for self-employed professionals like massage therapists. As a massage therapist in business for yourself, whether you are a sole proprietor or independent contractor, you are consider to be self-employed and need to file a Schedule C or C-EZ, as well as a Schedule SE for required self-employment taxes.
Start here to understand where you stand with filing taxes for the 2015 business year. The following tips and guidelines should help massage therapists navigate tax time with more ease and confidence.
Keep detailed records. Hold onto all business receipts, regardless of whether you know they are deductible or not. Keep track of every check and credit or debit card payment made to you for massage services. Maintain all of the receipts for purchases you made for your education, school supplies, and your ‘massage uniform’, i.e. scrubs, khakis, and polo shirts. Use a pocket folder with 12-15 slots to keep your receipts in order each year.
Take inventory. In addition to keeping the records of your purchases, you should maintain an inventory of all of your products, furniture, accessories, and tools. Take photos of the high-priced items in particular. This inventory is important for recording your assets, but it’s also useful in the case of a fire or other instance where you would file an insurance claim.
Itemize expenses correctly. Not only do you need to keep all receipts for your business expenses; you need to be sure to record them correctly. Personal expenses should not be included on your business expense account. If you purchase something that will be used for both, calculate the percentage that will be used for business and only itemize that partial amount.
Pay quarterly on your estimated income. Most self-employed massage businesses pass the threshold of estimated annual income that requires therapists to make quarterly pre-payments on that estimated income. To avoid penalties and fees, you need to make these quarterly payments through the IRS’ EFTPS system. These quarterly payments would be made in April, June, and September of the current tax year, and the final quarterly payment is due in mid-January of the following year. These pre-payments generally mea your income tax has been paid in full when April 15th rolls around, and you may even get a return on the taxes if you over-estimated the annual income.
Click here for a detailed rundown of what to expect and how to manage your taxes as a massage therapist (Note: this article is from 2009, so keep in mind that you should apply your thinking to filing your 2015 taxes, and planning for 2016 estimated payments). Still feeling overwhelmed? You may want to purchase a copy of the Annual Tax Mess Organizer for Massage Therapists, Estheticians & Spa Owners.
Featured photo source: Pixabay.com