TAX HELP...

[AmyV]

Hi there,

I became "official" today. I finally received my license! I work at a chiropractic clinic; I am an employee and paid as such for the hours that I am the chiro. assistant. Now that I am licensed, I will be an independent contractor for my massage hours. It's a 70/30 split, I supply all of my equipment and the 30% goes towards the room, utilities, use of the phone for booking, etc... My school very briefly covered taxes, and I'm a little lost My boss suggested that I have some extra money taken out of my regular employee paycheck to set aside for taxes for my massage time. I'm not even sure how much to set aside. Do you guys always end up owing at the end of the year? Do you file jointly if married, or is it best to file single? Before I was licensed I was paid a higher hourly rate for my massage time. Now I'm nervous that I will be making even less money than before. Any advice would be much appreciated. I wish they spent more time on this in school!
Thank you

 

[Tyrone]

Congratulations!!

I traded a massage with an accountant client of mine before I took a job where I was an IC. That is how I learned at first what to do.

My boss suggested that I have some extra money taken out of my regular employee paycheck to set aside for taxes for my massage time. I'm not even sure how much to set aside.

I would certainly check into an accountant, at least to help figure out your estimated taxes. It is best to take your tax money out regularly (and save it for your estimated payments) that way you pay everything on time and don't end up owning money at tax time.

Do you guys always end up owing at the end of the year?

No. As long as your estimations are close. You have to estimate your adjusted gross income (after all deductions).

Do you file jointly if married, or is it best to file single?

I file joint with my husband - it is better for us this way.

I do my own taxes pretty much. I use Turbo Tax and then have my accountant check them over (my accountant now is not the one from the beginning). I like doing them this way because I understand things more and I can keep better track of what I need to all year long.

Before I was licensed I was paid a higher hourly rate for my massage time. Now I'm nervous that I will be making even less money than before.

Why it is this way? Doesn't sound right to me?
With my past jobs, I was paid less to be an employee ($15hr - had to work all day - assisted with other things that needed to be done if not massaging) than to be an IC (50% split=$30 per hour massage).

I could understand making more in general if before you worked more hours and now you only get paid per massage. But to make more per hour being an employee...

 

[Sleepy]

I should have worded that differently. Before I had my license, I was paid $X for my chiro assisting hours, and a higher rate per hour when I was giving massages. I was considered a full time employee, but was compensated at a higher rate for my massage services.

I guess my first goal is to figure out my expected income and go from there :!: :shock: :?:

Thanks for the advice

 

[Ayameko]

I should have worded that differently. Before I had my license, I was paid $X for my chiro assisting hours, and a higher rate per hour when I was giving massages. I was considered a full time employee, but was compensated at a higher rate for my massage services.

Ok. So you are saying you were paid one rate for being the CA and then another pay rate for actual massage time.
But, when you start as an IC will you still be making the same for your massage time?
If you are going to be making less per massage as an IC than you were as an employee - that is where I see the problem.
If you are going to still be at the same level or higher, then (IMO) that's ok.

Glad to help.

 

[JUMPMASTER]

Higher. I will be making more as an IC.

 

[justmeh1987]

Higher. I will be making more as an IC.

Great! Thanks for clarifying. Just watching your back...

And yes, you will need to know what your estimated income will be and what you estimate your money out (supplies, licenses, insurance, ect) will be.

Also learning what acceptable deductions are out there is a good starting point too.

Here is a link that might help you more:
http://www.massageplanet.com/forum/viewtopic.php?t=1227&highlight=tax+deductions

There was a great thread that Texas-Gal gave great advice in, but it must have gotten deleted while on the old board.

 

[Zerexiam]

Thanks for all of your help Michelle! My boss wanted me to have an answer to all of this by Friday :shock: I guess she'll just have to wait until I research this and find myself a good accountant! I will not rush through this and end up paying for it - literally! - in the end :wink:

I know one massage therapist in town (just moved here; makes things a little more difficult) so I'll give her a call and see who she uses.

Thanks again!!!

 

[Kaitlin]

I think you may be thinking of this post, though I also recall one where I gave a pretty decent list of expected start-up costs that I can't locate currently.

Hope this helps for some receipt placing:

I wrote this a while back. I would suggest when you get a few hundred dollars, setting up on Quick Books Pro. It will make your life a lot easier!


- For receipts: 12 small brown envelopes so there was a Jan./Feb., etc. ... along the way, I would tally up a paper which was formatted like the following for each month's receipt envelope and put the cost of expenses behind whatever section I had spent $$ on (so you'd see Association Dues -- $45.00 in Jan. but maybe not in February):

PROFESSIONAL FEES & DUES
Association Dues
Credentials
License
Professional Associations
Union Dues
Other:

CONTINUING EDUCATION
Correspondence Course Fees
Course Registration
Lab Fees
Materials & Supplies
Photocopy Expense
Reference Material
Research Expenses
Seminar Fees
Textbooks
Other:

TELEPHONE EXPENSES
FAX Transmissions
Paging Service
Pay Phone
Toll Calls
Cellular Calls
Other:

AUTO TRAVEL
Between Jobs or Job Locations (mi)
Client Meetings (mi)
Continuing Education (mi)
Job Seeking (mi)
Out of Town Business Trips (mi)
Purchasing Job Supplies & Materials (mi)
Parking Fees ($)
Tolls ($)
Other:

MISCELLANEOUS EXPENSES
Liability Insurance - Business Subscriptions
Resume
Other:

SUPPLIES & EXPENSES
Briefcase
Business Meals
Business Cards
Clerical Service
Computer Software
Computer Supplies
Customer Lists
Entertainment
Equipment Repair
FAX Supplies
Gifts
Greeting Cards
Legal & Professional Services
Office Expenses
Poseforum.xxxe
Shipping
Stationary
Technical Publications
Other:

EQUIPMENT PURCHASES
Answering Machine
Calculator
Copy Machine
FAX Machine
Pager
Recorder
Telephone
Other:

TRAVEL OUT OF TOWN
Airfare
Car Rental
Parking
Taxi
Train
Bus & Subway
Lodging (do not combine with meals)
Meals (do not combine with lodging)
Porter, Bell Captain
Laundry
Bridge & Highway Tolls Telephone Calls (including home)
Other:

When all of that was done, I'd make up one for the final end of the year, so that all 12 months information was accumulated onto one page. I would actually tally up the expenses per item and per section and a final total for the whole year. It was a bit of an overkill, but I wanted to make sure the accountant had all the info and would not have to call me after I dropped everything off. I also color coded a lot of that stuff. The less work for him, meant the smaller cost for me.

 

[sidekickhero]

Maybe this is the other one you were thinking about. It is the one on start up costs I was looking for:

From:
Fuzzy on starting private practice
http://www.massageplanet.com/forum/viewtopic.php?t=1295&start=0

How much money is needed to start up?

A fair estimate so you are not in a huge pinch would be somewhere in the neighborhood of ~$10,000.00 (but this highly depends on where you are and what you want to do - you would have to sit down and make your own evaluation of your pocketbook, needs and wishes).

On a serious budget, it will all depend on if you rent, if you use your home, if you pay a split fee, things like that.

Let's look at some generalized costs and then you can see where you fit in.

Office space: $900/mo. You will need first and last months rent.

Business owners insurance: $50/mo.- You'll need this if you rent space.

Malpractice: $200/year

Flood Insurance: $350/year If you are in a flood plane.

Phones: $40 - 120/month Depending on if you use cell or straight office phones.

Air/Heat: $250/month

Supplies: $1,500 Things like - table, lotions, sheets, lamp, pens, pencils, appointment book, folders, computer program (if you use a comp), etc.

Laundry Detergent $15.00/month - hard to say on that one, I buy "Sun" detergent at Wal-mart for really cheap and it does a great job and lasts a long time, longer than a month I know... so hey, you can save a few bucks there and eat out!

Water for clients: $30/month

A few chairs for your clients to sit in: $60

Desk: $100

Don't forget about Seminars & Licence Renewals.
~~~~~~~~~~~~~~~~~

And of course, you can do all of this a lot less expensive, if you just don't have the money - especially by looking at the thrift stores and whatnot.

Hope that helps.

 

[Double Bubble]

I would say the 2 most important things to do are

1. get a seperate bank account for your work monies. only use this for business. you'll want to keep the money seperate. it makes things so so so much easier.

2. find yourself a good accountant. ask around. when someone tells you that they lile their accountant, ask them "why" do you like them or "what is it that you like about them" because that will tell you a little something about them. sometimes, the reasons someone likes an accoutant will be a reason you may NOT like them. it's always good to get some input from others and who they use and like.

congrats and have fun! the financial part really isn't all that bad. just make sure you keep track of everything. or least put things where you'll be able to find them when you need them.

 

[Thistle]

Thank you to all who replied. I spoke with my brother-in-law who is also an IC. He gave me the name of his accountant who he swears by and has used for years. And he gives free consultations I'm sure it will all work out. It's just a bit confusing when you haven't done this before.

Thanks again

 

[LuvInLust]

Definitely take the accountant up on the consultation. I just did that with a recommended person from H&R Block"s Small Biz folk. It was a very empowering meeting. That guy definitely has my business at the turn of the new year. He has already followed up with a thank you note & an answer to one of my loose threads. He always responds quickly & courteously to my emails. I think I would be lost now, not knowing the stuff he shared with me. My whole paper trail has changed considerably, now that I own a business instead of being a booth renter/sole proprietor. Turbo Tax used to make it sooooo easy. Now I really WANT to pay this guy to do my taxes & 1099s, etc for me!

Jill/Sagetherapist

 

[Macky]

I would also highly suggest investing in Quick Books. I do my own books but even if you use an accountant its so much easier, steamline and will cost you less accountant time if you are organized. Quick Books is easy to set up and use and it forces you to enter all your reciepts. You can print wonderful reports and really keep track. Costco has it.