Seen and Heard at the Dance Teacher Summit: Jessica Scheitler
If you have questions about the financial side of running your own business, you might benefit from attending some of the business seminars offered at our Dance Teacher Summit this August. DT recently spoke with Summit ambassador Jessica Scheitler, founder of financial consulting and bookkeeping firm Financial Groove, about studio owner taxes. (Be sure to catch some of Scheitler’s seminars this year—last year, her topics included “Dance Studio Business 101,” “Take Your Taxes to the Max!” and “Is the Price Right?”)
Dance Teacher: What made you decide to go into this line of work?
Jessica Scheitler: As an independent choreographer after college, I did a lot of research for myself on bookkeeping, because when I got my tax return done I found I had to make a major case for myself. It became obvious to me that studio owners, artists and entertainers need an advocate. They seemed to be skipped over, because accountants weren’t speaking their language. I had the background in math and experience bookkeeping, so I decided to help people out. Since I was able to speak both languages, it all fell into place.
DT: When you spoke at the DT Summit, you mentioned that it works to a studio owner’s advantage to do things by the book—for instance, to bite the bullet and define a teacher as an employee, rather than an independent contractor, if there is any doubt about the status. Why?
JS: The general consensus among small-business owners is that they want to fly under the radar whenever possible. They think if they’re paying cash under the table they’re helping their business, but really that strategy is working against them.
People tend to be afraid of payroll because they have to pay employment taxes. And it’s a bit of a headache, of course. There’s more paperwork, there’s an extra 12 percent, approximately—depending on your state—that’s coming out of your pocket, and that feels like a burden. Ultimately, however, by defining a teacher as an employee (if she really is an employee and not an independent contractor), you can claim her earnings as a business expense. That will often help you out more. Also, the word is that this issue is something the IRS is going to start cracking down on soon.
DT: What is the number-one thing studio owners can do to improve their tax preparation practices?
JS: It starts with the bookkeeping. Many studio owners are not keeping complete books. I encourage them to be as detailed as possible when bookkeeping, to really go through their day and keep track of everything they do for their business so they don’t miss out on deductions.
They should also do a reality check now and then. People forget that something they justify as a tax write-off is still money being spent. So link reality to what you see in the numbers. Then it will all make more sense once you get to tax time. Things will fall into place much more easily if all the information is there. —Andrea Marks
Photo courtesy of Financial Groove