1099 Tax Forms for Reiki

Christian Stone | Standing Stones Healing Co.

I just started accepting money for my Reiki sessions. I have a PayPal account and am getting paid for my Reiki sessions through that, but I don't know how it works for taxes. I heard something about a 1099 form. Do I need to have an LLC for that? I just signed up for a spiritual business program and am hoping they address it, but it hasn't yet come up in the program. Can you help?

When it comes to taxes, I first want to state that I am not an accountant, tax lawyer, or tax professional and encourage you to consult your own tax professional for your personal situation. But yes, I can help.

Probably your spiritual business course won't address your questions about 1099s and LLC because courses like this never do. The Build Your Reiki Business program does, and it's very unique in this regard. First, yes, you can set up an LLC for your Reiki business. I have a lot of information about LLCs, including a Build Your Reiki Business podcast episode and the DBA? LLC? OMG! article in the free Reiki Biz Kit on how LLCs and helping you determine if you want to set one up. 

Whether your Reiki business is an LLC or not, you can still receive 1099s. That's because, if you're a single-member LLC (it's just you), IRS taxation is pass-through, meaning that you put the amount you make from your sessions on your individual tax return. This is the same if you are a sole proprietor, or someone operating a business without an LLC, and both LLCs and sole proprietors (like gig workers) can receive 1099s. A 1099 is an earnings statement that shows how much income you earned from a particular source for a tax year. It's like a W-2, only for different ways of earning income rather than a standard job. Ways you might be issued a 1099 in your Reiki business are through offering Reiki for a wellness center, hospital, or workshop in which you're paid by another company. Gig workers and consultants typically receive 1099s for their income rather than W-2s. If you do any kind of work for a business that results in $600 or more of income, that business should issue you a 1099.

But even if you don't get a 1099, you're still required to keep track of and include that income on your taxes. For instance, PayPal may or may not generate a 1099 for your year's PayPal income earnings. But whether they do or not, you still have to pay taxes on the amount you earned in your Reiki business through PayPal. Many payment processors, like PayPal, Stripe, or Square, won't issue a 1099, but that doesn't mean you're off the hook to pay the amount you earned through these processors throughout the tax year. You still need to pay taxes on your earnings (if they are $400 or more total from all sources combined) because it's still income that the IRS wants to tax.

But don't worry: it's very easy to generate a report in your payment processors for the amount you received throughout the year in order to account for all income and accurately file your taxes. I encourage you to consult with your own tax professional for your personal situation, but you're responsible for declaring that income. The Build Your Reiki Business program explains federal taxes in-depth so you understand how it all works (and your accountant will love you), but most conscious business courses and mentorships don't address it at all. 

These episodes of the Build Your Reiki Business podcast on LLCs and taxes will be helpful for you. This is way more information on these topics than you'll get in your conscious business course...guaranteed. You may also want to grab the free Reiki Biz Kit with additional information and support.