Friday, July 22, 2016

Badass Yoga Teachers: Filing Your Taxes

Today in the Badass Yoga Teachers series, I'm talking about a subject that I usually like to avoid thinking about: filing taxes.

All in the same year, I went from working full time and teaching one or two classes a week... and then to teaching up to 12 classes at many different studios. With my unique income situation, I felt overwhelmed by the idea of filing my own tax return.

What did I need to keep track of? What could I count as expenses? How should I differentiate between studios where I was paid as an independent contractor or studios where I was paid as an employee? Was I missing anything?

I quickly decided that I wanted to hire a professional tax consultant to help me file my tax return.

And that's my #1 piece of advice about taxes: if you're feeling over your head, want to focus your time elsewhere, or you just know that you have a complicated tax return, consider hiring a professional to assist you. It's not super expensive; I spent about $150 for the entire process, and was able to ask as many questions as I needed to, meet with my consultant several times, and call her whenever I needed help.

If you are going to hire someone, ask around to your friends who are established yoga teachers to see who they can recommend that specializes in taxes for independent contractors.

I ended up working with a woman who deals mostly with freelancers-- yoga teachers and hair stylists in particular-- and she also does payroll at several local yoga studios, so she's very up-to-date on what the IRS requires, how often they audit, what you'll need to do if you get audited, and what red flags to avoid on your return.

In the meantime, as you're finding someone you'd like to work with, I recommend compiling some data about your yoga classes and the income you're making from teaching, as well as your expenses. (My tax professional gave me an awesome spreadsheet to use to track everything, and it calculates profit and loss based on what's entered in Excel, and having a tool like that has made all the difference!)

Start by tracking this information:
  • the number of classes you teach at each studio
  • what you get paid for each class, as well as how much you bring in with each paycheck
  • mileage you drive to any studios where you teach
  • your expenses:
    • trainings
    • workshops
    • books
    • Spotify or Pandora subscription for your playlists
    • yoga clothing
    • yoga gear, like mats or towels or candles
    • costs to create your website or pay for marketing services
Also be sure to save paystubs or checks you've deposited and receipts for your expenses. I recommend buying a little file folder with a section for each month of the year, and organizing the paperwork that way (you can even write off the cost of the file folder, too!)

If you're interested in tracking your growth and attendance, you can also use tools like Mind Body Online to print reports with your class numbers (how many students showed up, how many were comps, etc).

All these numbers may also come in handy if you're applying for a healthcare coverage plan, and need to report your income, too.

One key to all this tax business is to do a little bit of work each month so that you don't end up with a big pile of work at the end of the year.

If you write down your income and expenses month-by-month, the process becomes streamlined and efficient. And by giving yourself plenty of time to find a tax consultant to help you file your taxes, come April you'll be free from any headaches and able to breathe through the whole process!

Want more info about how to file your taxes as a yoga teacher? Here are some other great articles:

Cheers to a stress-free experience when filing next year! Namaste.

PS Other posts in the Badass Yoga Teachers series:
Holding space for your students.
Books you may not have read in your yoga teacher training.
Advice from real-world yoga teachers on how to sequence a class.


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