Traditionally, yoga studio owners associate the new year with a wave of new students looking to make good on their New Year’s resolutions. But, once the rush is over, a new less enjoyable time comes into play: tax season.
It’s that necessary evil we pretend doesn’t exist most of the year until it rears its ugly head. However, there are some things you can do as a yoga studio owner to make this time of year much more tolerable.
Utilize Studio Management Software
Step one is to use studio management software. Not only does it make running your business easier, but it also drastically simplifies tax season. Your software will help you keep track of all of your business numbers, and if you pick the right one, it can help you pull some essential reports come tax season, including:
- Gross sales tax report – If you live in a state that imposes a sales tax, you’ll need to pull a summary of your studio’s gross sales tax numbers for the year.
- Taxable amount for services – Because your studio employs teachers, you are providing a service to your students. These services represent their own taxable category and will need to be pulled into a separate report.
- Taxable amounts for retail – If you sell retail items at your studio such as mats, apparel or essential oils, you’ll need to report on these items separately as well.
Using a student management software with robust reporting capabilities will enable you to produce these reports in just a few clicks.
Understand Basic Tax Distinctions
Asking a typical yoga studio owner to articulate nuanced differences in the tax code would be like asking an accountant to differentiate between Vinyasa and Kundalini. But, just because you don’t have an accounting degree, doesn’t mean you shouldn’t understand some basic tax distinctions that could make an impact on your studio.
One of these basic distinctions is the difference between deductions and capitalized costs. You can deduct many of the costs incurred during the normal operations of your business, but there are some things that fall into the category of capitalized expenses. These are typically included in your business expenses over a period of a couple of years and can include things like start-up costs, business assets or improvements to your studio.
Get the Most Out of Your Deductions
The final and potentially most important way to alleviate the pain of tax season is deductions. There are over 300 deductions small businesses can utilize to alleviate their tax burden. Among the most common deductions for studio owners are:
- Marketing expenses
- Internet and Phone
There are many more you can utilize, but the important thing is to be diligent in recording these expenses and to ensure they are strictly for business purposes.
Tax season will never be fun, but it can be tolerable so long as you are organized, diligent about your bookkeeping and invest in the right products and services for your studio.