We are in the holiday season and that means we are only a month away from the end of our official tax year.  Now is the time to create a strategic plan so you can make any necessary changes before the year ends.  By preparing your records now, you will be able to affectively minimize your taxes, not to mention gain insight into your dance studio business.

There are several situations you can find yourself in as a studio owner.  You may have had a great year with profits spilling into your bank accounts.  I have my fingers crossed that this is the case for everyone reading.  If you are showing a big profit, you will need to find some strategic places to expense or invest that money.  On the other hand, if you had a rough year in business you still have moves to make in order to get the best return possible.

First, you must catch up on your bookkeeping, if you haven’t already.  You need to be able to look at all of your data in order to make wise decisions for tax planning.  Report all of your income.  Not only is it the law, but the best thing you can do for your business is to look at every cent going in and out.  Properly claiming that 'under-the-table' income will work to your advantage in conversely claiming all of the deductions you are entitled to.  It will also give you the most honest picture of the financial health of your studio.

Your books should break your income and expenses down into detailed categories.  For example, simply tracking tuition income will not tell you which classes are doing best for you.  Instead, you should break tuition down into ballet, tap, jazz, etc.  Your expenses should follow suit.  Break your expenses down so they are allocated to each of the different types of classes.  Then when you compare the numbers, you will see that even though you have students on waiting lists you may not be making a profit because of high costs.  Numbers often reveal truths about our businesses we didn’t even realize. Embracing them is the key to taking your dance studio to the next level.

Now that you have a detailed and accurate picture of your finances, you can look at trends in your business and set appropriate budgets for next year.  Set forth some financial goals for your spring season so you will have the funds in place to parlay the recital excitement into summer income and new student interest in the fall.  Setting money aside for the slow summer months in the studio begins now.

Good records and financial goals are the foundation for your tax plan.  To develop your tax plan, first you want to reduce your income.  The best way to do this is to invest in a retirement account such as a 401k or IRA.  Next, increase your deductions.  Are there any purchases you need to make for the business?  Make those big ticket purchases before the year ends.  Gifts to charity are great deductions, and they can be made by cleaning out the studio storage room or donating money directly.  Be sure you take advantage of the credits available to you such as college expenses and child care.  Finally, make adjustments to withholdings or tax payments.  By looking at your studio profit margin for the year, you can tell if you withheld enough taxes from your paycheck to account for any additional profit or if you need to make estimated tax payments.

You now have detailed books, insight into your business, financial goals, and a tax plan. You know exactly where you stand and the moves to make.

Jessica Scheitler is the owner of Financial Groove, a full-service, financial consulting, tax service and bookkeeping Jessica has extensive expertise handling tax preparation, accounting processes, consulting and bookkeeping for small businesses in many industries. As a graduate with honors from Marymount Manhattan College in New York City, Jessica has parlayed her Bachelor of Fine Arts in Choreography and minors in Arts Administration and Mathematics into a specialized career in arts accounting and business management. For more information visit: FinancialGroove.com