Christian Stone Taxes...ugh! They can be confusing, challenging, and even scary. You want to be legit with your Reiki business taxes, and you don't want to go to jail, so I'm sharing with you some important federal tax information you need to know. Of course, I am not a tax professional, accountant, or lawyer, and I advise working with a tax professional on your own Reiki business taxes. This article contains federal tax information for US-based Reiki businesses and not advice. Please seek advice for your own personal taxes from your tax professional. But here are 3 things you need to know about Reiki business taxes... 1. When you earn $400 or more in your Reiki business, you need to include it in your taxes.
Let's say you have a Reiki business that is very low-key. You offer it to a few people here and there, maybe on the weekends every once in a while. If you earn less than $400 in your small Reiki side huste, you don't have to inform the IRS. But once you earn $400 or more, the IRS wants a cut. And that means that once you earn more than $400 in your Reiki business, you're going to need to declare those earnings on your taxes. This is true whether you have a formally declared business, like an LLC or a DBA, or not. And this is also true whether the income is cash, PayPal, Venmo, or some other payment processor. If you received $400 or more in money from Reiki sessions or products from January 1st-December 31st, the IRS wants to know. 2. Your Reiki business earnings (probably) go on your personal 1040 tax form. Your Reiki business probably has pass-through taxation, especially if you're new to Reiki business and are operating it alone. This means that your Reiki business earnings simply go on your personal 1040 tax form, which simplifies the taxing of your Reiki business income. This is the case even if you are an LLC....but not an S-Corp, which is a different kind of LLC in which you are your business' employee. But probably your Reiki business is a sole proprietorship or single-member LLC. And if you're confused about what those terms mean – sole proprietor or LLC – I have plenty of resources for you on that, including the DBA, LLC, OMG! article in the free Reiki Biz Kit. Grab it! It will clear up your confusion. 3. The amount of your Reiki business earnings you pay taxes on is minus your business expenses. When you have Reiki business income, these are your earnings. But you don't pay taxes on all of your Reiki business earnings. The amount that you claim as your earnings as taxable income on your 1040 is minus your business expenses. Let's say that you earned in your Reiki business $10,000 for the year, and your expenses were $2,000. Those expenses might include your office rent, scheduling software, website, and that all added up to $2,000. That $2,000 is subtracted from the $10,000, and so your yearly Reiki business earnings are $8,000. You would pay taxes on the $8,000, not on the $10,000. This means that expenses are very important in your Reiki business. Making sure to track all of your expenses is very important because your Reiki business expenses are the only way that you can reduce that Reiki business income that you would pay taxes on. So please, no matter how much you make in your Reiki business, please catalog all expenses, please keep track of all expenses, please know exactly how much to the penny your expenses are for the year because this is going to reduce the amount of taxes you will pay. Keep track of all expenses and keep all receipts. You may also want to check out this episode of the Build Your Reiki Business podcast on taxes. Taxes can be confusing, overwhelming, and scary. These are three things you need to know about Reiki business taxes for US-based Reiki businesses. But of course there's a lot more to know and to understand. That's why I created the Reiki Business Tax Class. It explains exactly how federal taxes work, walks you through the process, shares what you need to know, including little-known pitfalls and mistakes that can end up costing you thousands of dollars. The Reiki Business Tax Class clarifies and simplifies federal taxes, helps you sleep at night knowing you understand how it works, keeps you out of tax jail, and makes you your tax professional's favorite client. Tackle taxes and don't fear April 15th! Comments are closed.
|
Categories
All
|