Simple Tax Tips For Yoga Instructors
There’s nothing quite like getting that first paycheck after becoming a yoga instructor. It can be an incredibly validating experience to be paid for doing what you love. But, unfortunately, with every bit of income earned comes one of life’s great certainties: taxes. While doing business taxes may seem daunting at first, with a little knowledge and preparation you should be able to handle this obligation without too much stress. Here are a few tips to keep in mind:
- Keep Track – Today there are free options for recording transactions if you don’t want to go the paid Quickbooks route. Wave is an excellent option, or you can simply use an Excel spreadsheet. The key is to track all income coming in and expenses going out. Hold on to physical and digital receipts and stay as organized as possible, it will pay off later.
- Estimate Payments – Being self-employed comes with a lot of perks, but is also has its share of responsibilities. If you are used to having your taxes automatically deducted from your paycheck, you must remember that this doesn’t happen when you work for yourself. If you forget or ignore this reality, you could be hit with a substantial tax bill at the end of the year that you are not in a position to pay. Setting aside smaller amounts during the year is a better option, and it is important to note that if you owe at least $1000 to the IRS, you must make quarterly payments.
- Other Taxes – If you sell any tangible items (such as apparel) you would be responsible for remitting the sales tax on these goods. Also, if you formed your business as a Limited Liability Company (LLC) you may be responsible for a minimum franchise tax. In California, for example, this tax is $800 even if you do not earn any income. For that reason, it is important to consider what type of business formation is right for you.
- Deductions – Now comes the fun part. Under the tax code, you are allowed to subtract expenses that are deemed “ordinary and necessary” for your business. As a yoga instructor, this would typically include office space (or a percentage of your home used as an office), professional memberships, trainings and certifications, health insurance, website maintenance fees, business software (CRM, Quickbooks), supplies used for class (blocks, mats, straps), mileage between private clients, insurance, other training (such as CPR), legal and professional services, as well as music and music subscriptions. Yoga apparel would also be included, but it is important that you be reasonable with your deduction. A new Lululemon outfit every week would probably not be considered by the IRS as a necessary business expense.
One of the great things about being a yoga instructor is that the tax preparation is generally not as complicated as with other businesses. However, it does require that you stay on top of your income and expenses and keep organized. Although it may not be the funnest aspect of running your own business, it is a necessity. And with a little bit of planning and knowledge of the tax code you can put yourself in the best position to maximize your earnings while doing what you enjoy.
If you are interested in low-cost business coaching tailored for yoga instructors, Stretchtopia is a great resource. In addition, they offer a free Corporate Yoga Workflow to help you get started on your yoga teaching journey.