Clearly, I am not a tax professional, and do not claim to be, nor am I impersonating one. You are hereby strongly and lovingly encouraged to talk with a tax professional. That being said, there's some good stuff here . . .
If you live in the United States, there is a date in April that looms on everyone's calendar: April 15.
The tax man cometh.
My friend, you know that taxes are due on April 15. You know that you will probably owe taxes on your piano lesson business.
April 15th comes every year. It is not a surprise. Uncle Sam wants a piece of your piano lesson pie. This is not a surprise.
So, why don't we prepare for it?
I can tell you exactly why: We want to include every dollar we make in our take home pay.
We do "easy" piano teacher math: At $100 per month, with 20 students, I am making $2000 -- wahoo! We like to multiply our monthly fee or our lesson fee by the number of students we have and boom, that's it. That's what we're making.
But, deep down, we know that is not what we are really making. You thought you made $2000, but after taxes -- which, public service announcement, are still due on April 15 - you actually only made $1500. Hmm, we don't like that as much.
So, we put our piano teacher head in the sand, and keep with our easy piano teacher math and don't actually set aside the money. That is a very, very unwise idea.
My dear Piano Teacher Friend, resolve that from this month on, you will set aside at least 25% of your earnings to pay your taxes at the end of the year. If I'm wrong, yahoo, you've got a lot of money saved. If I'm right, believe me, you'll be glad you saved it!
Don't forget. Don't do easy math.
Choose to run your business well right now, and you will be so glad you did come April 15.