Ep 413 – Why Should I Care About Bookkeeping?: “Business or Pressure” with Allissa Haines

0:00:00.1 Allissa Haines: HobaCare Jojoba is 100% pure, high quality jojoba and it's ideal for massage and body work professionals. The closest product to the natural sebum our skin produces, HobaCare provides a deeply nourishing massage medium that will not clog pores. HobaCare is non-allergenic, so you can use it on every client and not worry about allergic reactions. HobaCare is shelf-stable and it will not stain your natural fiber sheets, making it an excellent choice for professional use and saving you money. Hint, you won't have to replace your linen so often. With HobaCare Jojoba, you can offer your clients a superior experience that benefits both skin health and overall well-being. Our listeners can receive 20% off their order with code ABMP. Learn more at hobacare.com. That's H-O-B-A-C-A-R-E.com. 

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0:01:14.1 AH: Welcome to Business or Pressure, taking the pain out of massage business with me, Allissa Haines. This is your no-nonsense guide to building a happy, sustainable massage therapy business. It is our mission to make sure that every massage therapist and bodyworker has the tools to make a living wage in a thriving business. Let's jump in. 

0:01:36.0 AH: Today is the first of five-ish, probably money episodes. We are going to start this new year while you're in the middle of all your organizing and tax prep with all the money topics you need to get your business organized and reliable and easy to track and know your income and expenses. If you have business money questions, please send them to me. I love these questions, businessorpressure@abmp.com is the email address to send that to, and you can also find me on Instagram at deepbreathcommunity. So this first money episode is bookkeeping. A little bit boring, superdy-duper important. What even is bookkeeping? Bookkeeping is recording the income and the expenses in your massage business. That's it. It's not budgeting, it's not anything fancier than that, it is simply knowing how much money you accept from people to do massage and bodywork and how much money you give people for the expenses in your business. One of those expenses is paying yourself, and we'll get to that in a future episode. So why? Why do I even care about bookkeeping? Can't I just put all of my paper receipts in a shoebox and hand that to my tax preparer?  

0:02:57.6 AH: No. No, you can't do that. We need to keep meticulous track of our income and expenses for a few reasons, one, so that we can file and pay proper taxes. I will always encourage and advocate for the use of a tax preparer if you are running a business, and it is much easier to work with a tax preparer. They can do their job much faster and probably more affordably on your end if these income and expenses are tracked well. We need to track our income because we need to claim our income on tax forms. We are an industry that has a lot of cash payments and a lot of tips, and therefore there are many, many practitioners who are not claiming all their income. So I wanna use this little side bar as a chance to express why if you are not tracking and claiming all of your income on your taxes, you might want to. So first, it's illegal to hide your income, to not tell the government that you have made it and pay appropriate taxes on it. Audits and fines and penalties are no fun. You're gonna lose a lot of money paying an attorney and a tax preparer to deal with your audit and then pay fines and penalties if they find that you have accepted income and not told the government about it via your tax forms. 

0:04:13.4 AH: Also, you want to have a good income showing legitimately on all of your forms because you need to show you have an income. If you need a car loan or a mortgage or any kind of credit line that you might need in your personal or business life, you need to have a tax form that says you actually made money doing the job in your business. And I wanna note that in 2020, a lot of people found that their unemployment benefits were much lower because they hid income in the past. There was a huge aid package and all kinds of forgivable loans that were offered to very small businesses like us, one-person businesses that filed their business taxes via a Schedule C attached to their personal form, and we got offered unemployment benefits and all kinds of other aid. And all of that aid was based on the last couple of years of taxes. So if you pocketed all your tips or all of your cash payments and didn't report them on your tax forms, you got a much lower unemployment benefit than people who recorded all of the money that they actually made. And that was a rough kick in the butt at a very hard time in our industry. That is a very recent example of how it cannot benefit you to hide your income. And I'll just wrap it up with saying, if you want to run a legitimate business as an ethical practitioner, those ethics extend to the business side of your business, to the business practices outside of your massage room. 

0:05:44.8 AH: So if you think of yourself as an ethical practitioner but you are not recording parts of your income, you have to rethink that. End of the lecture on claiming your income. The root is that you wanna do it so that you can file and pay proper taxes. We also wanna record our income and expenses so that we can pay ourselves in a regular manner. These are businesses, we have to take home a paycheck. And you can't do that and you can't do that well or in an organized at all kind of manner if you don't know how much money you're taking in doing massage and paying out for expenses. We also need to have some basic bookkeeping in place just to be able to project our income and make business and life decisions. If you don't know on average how much money you're taking home every week or month or year, it's really hard to decide if you can buy that car or you can afford to send your kid to private school or you can go on that vacation. There needs to be a record. Okay. So how do we bookkeep? You use a program or some kind of system. I am a fan of using software, and there's a lot of different kinds of software. And if you are going to use some kind of computer program, web-based software, I advocate that you ask your tax preparer what they prefer, because preparing your taxes is gonna be a lot easier if they can just log into the system that you're using and ask you a few questions and calculate all your tax stuff. 

0:07:10.3 AH: There are programs like QuickBooks, which is probably the biggest and most popular one. There is a program called Xero, X-E-R-O. There is FreshBooks, which is a lot like QuickBooks. There are many, many web-based bookkeeping systems. Again, ask your tax preparer what they like, check out the fees and costs and what's involved, and then choose one. There is also a free program called Wave Apps that is not quite as robust as QuickBooks but is fancier than just using a spreadsheet. And again, it's free and it does allow a tax preparer or accountant to log into that account and manipulate things, see what's there. You can use a spreadsheet. If you're good at spreadsheets, you can use a spreadsheet. You can download transactions from your bank and paste them into the spreadsheet. You can manually handle every single transaction, which is a wonderful way to get real friendly with the numbers in your massage business when you're manually entering all your deposits and all your withdrawals. You can use an old school paper ledger. You can use a notebook or one of those like you can go to the office supply store and actually get a financial ledger book, they're awesome. And you can manually record with your pen and the ledger book every deposit and withdrawal from your business accounts. And if you are in a position and you want to, you can delegate a lot of this out. 

0:08:37.2 AH: If you're using a software system, one, even if you're gonna manage that software on your own, I encourage you to have a professional set it up for you and then teach you, get a lesson on how to handle, categorizing all of the transactions and running reports on your own. But if you're gonna use something like QuickBooks or Xero or FreshBooks, maybe even Wave Apps, have a professional set that up for you, it's worth the couple hundred dollars to start off right. You can also pay a bookkeeper to handle all of the day-to-day, month-to-month bookkeeping for you. And that usually involves learning all of the different things you spend money on and categorizing all of those transactions and running reports monthly or quarterly to just let you know where you're at, so you know the numbers of your massage business, even though somebody else is handling all the record-keeping. You can and should delegate out tax prep. Unless you have experience with business taxes and filings, I will always advocate for delegating out your tax prep because a professional is gonna know what's new and what's current with regard to business deductions and all kinds of other things related to your business taxes, and ultimately, it's gonna save you a lot of time and a lot of hassle and probably a lot of audit stress. 

0:09:51.3 AH: Regardless of what system you choose, you should always be able to log in and give a bookkeeper or accountant or tax preparer access and remove their access from your account. You should always be able to log in and make sure on a monthly basis that your balances and your transactions match up with your bank statements and that everything looks the way it should. So this is your invitation, your nudge. If you are not happy with your bookkeeping system or the lack of a bookkeeping system, what can you explore to improve that? Can you test-drive some kind of software? Can you learn some kind of spreadsheet system? But if you're not happy with what you're using or you're not using anything, how can you improve that? And if you do have a system that you're cozy with, is there anything that you can do to make it easier? I love the system that I use, but I have been challenged with uploading all of my paper and email receipts and attaching them to each transaction within my bookkeeping system. And I figured out a system last week that makes it a lot easier for me to keep track of those receipts. If you're interested in that, you can go see me on Instagram at deepbreathcommunity where I just shared a reel about saving receipts, but I am officially nudging you and giving you your action item. 

0:11:12.3 AH: Is there anything you can do to improve your bookkeeping for this 2024 in your business? And again, I welcome your business questions at businessorpressure@abmp.com. If you send me a question in the next few weeks, you will absolutely get an answer from me and/or an answer via this podcast. This week's high five goes to Kapwing, Kapwing with a K dot com. Kapwing is a video editing service that I happened upon a couple of years ago when it was actually just subtitling and caption services. Kapwing has expanded their web-based program to do all kinds of video editing. I have started to use my Instagram more, hence, you've heard we mention it a few times in this episode, and Kapwing is amazing. There's a free version that lets you do plenty of things. I have the paid upgrade, which is under $200 a year, and the ease of making videos for my business, it's amazing. You can make a video, edit it, caption it, and then have it automatically duplicate into the size you might need it for a different medium. So if I'm making a video for Instagram in a reel, it can super easy change that video into the right format for YouTube. Superdy-duper easy mini learning curve. My kid even uses it for his video production, so it's totally learnable. And that's kept Kapwing with a K dot com. So high five to Kapwing for expanding their services and making running my business a little bit easier. 

0:12:44.3 AH: If you have questions about running your business, money stuff or otherwise, again, reach out via email, businessorpressure@abmp.com. You can also find me building websites and playing with my community of massage therapists over at deepbreathdigital.com. And I'm on Instagram at deepbreathcommunity where I share all kinds of fast business tips. Make sure that you are subscribed to ABMP's Podcast so you don't miss a beat. 2024 is gonna be an amazing podcast year for ABMP. There is so much to learn about building and maintaining a massage business, we're gonna help you cover the business and marketing side, the communication skills, all the things to help you be successful. I will meet you right back here for the next episode. I can't wait.