Accounting 101
How to Manage Finances Successfully
Reproduced from the A.B.M.P. Knead to Know
Student Newsletter
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Accounting does not usually rate very high on a massage practitioners list when asked why they entered the profession. But successful therapists would also tell you that managing this facet of their practice is extremely important. They would also probably tell you that the reality of accounting is not nearly as difficult as perceived.
There are some important things that you nee to know regarding finance management, but learning sound business and accounting practices is not any different than learning effleurage or tapotement. Accounting is a natural application of facts that you already know. If you intend to follow your heart into this profession, consider accounting one of the rules by which you have to play.
START SIMPLY
You probably have a checkbook and personal checking account. If so, you're
already familiar with the most important function you'll need to do - keeping
track of your expenses (where your money is going) and income (where it came in
from). If you balance your checkbook each month to your bank statement,
Congratulations! You have already mastered the basic accounting skill that
you need. Accurate record keeping is critical when starting your own
practice.
THE SEPARATION OF PROFESSIONAL AND PERSONAL
Creating a separate bank account for your practice is key. No matter how
deep you intend to get into your massage practice, get a separate bank account.
It'll be a lot easier to keep track of your expenses and income if they are not
mixed up with your trips to the grocery store and utility bills. It will
also make tax time much easier.
BOOKKEEPING COUNTS
There are some option available to you when considering your bookkeeping.
If you have a personal computer, there are software programs (Quicken and
Microsoft Money for example) that can help you track expenses and balance your
accounts. There are also bookkeeping services that will manage your
accounts for you. If you're not even remotely interested in bookkeeping,
hiring such a service provide may be your best bet. You receive monthly or
quarterly statements, and these firms can usually prepare your tax return at the
years-end and advise you on making estimated tax deposits. For many
massage therapists, this is a worthwhile expense because it frees your time to
think about building your business. However, if you're starting on a show
string budget, it may be more practical to do the accounting yourself.
Either way, staying organized is critical. Consider making a folder for
each month of the year containing paid bills and creating a pathway for tracking
your expenses.
THE ART OF FORECASTING
Our last suggestion is to plan your expenses and income. You will incur
more expenses when establishing your practice - purchasing a table and/or chair,
printing business cards, and buying linens, just to name a few. After your
initial expenses, however, forecasting for the next several months will help you
set your expectations, determine how many sessions you'll need to schedule o
cover your expenses, and earn a reasonable amount for your effort, along with
giving you a "big picture" view of your progress.
This may seem like a lot to consider, but you may be able to trade some advice for a session or two, or even work out a barter for bookkeeping services. Use your hands to help you get started on the right foot with your practice.