Trying to figure out how to save money on your taxes this year? If you’re a self-employed massage therapist, there are a lot of things you can write off to lower your taxable income. In this article, you’ll learn which tax deductions for massage therapists are available to you for the 2022 tax year, best practices around filing, and more!
If you owned a massage therapy business in 2023, this year the 2024 tax filing deadline is April 30, 2024 for individuals and June 17, 2024 for the self-employed. This is true for business owners who file as a sole proprietor or an LLC, which are the most common business structures for massage therapists.
If you are USA based and you received a Form W-2 from your employer, then you will file your taxes as an employee. If you received Form 1099 from an employer, file your taxes as a sole proprietor. If you have your own massage business, file your taxes based on your business structure.
If you are a business owner it should be noted that according to the IRS website "every employer engaged in a trade or business who pays remuneration, (including noncash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee (even if the employee is related to the employer). You can learn more here.
In Canada, if you receive a T4 from your employer you will file as an employee - if you own a sole proprietorship you file as an independent contractor (sole practitioner) If you’re a sole-proprietor, self-employed or a hybrid of such you must fill out your T1 General, that’s your standard personal income tax return.
As a sole practitioner or business owner, you will likely have more deductions available to you than an employee - read on to learn more.
Filing taxes is a daunting task for many massage business owners, but it doesn’t have to be. If you keep good records, it can be as easy as printing off a couple reports and handing them to your accountant.
Aside from identification documentation, there’s two pieces of information you’ll need to file taxes for your massage therapy business.
These two pieces of information will be used to determine what portion of your income is taxable.
First add up all of your income, including massage sales and tips. If you use massage therapy software like ClinicSense, then your massage sales reports are generated automatically. All you have to do is click print. You can also print reports for sales tax collected, if you’re required to do so.
Next, add up all the expenses you incurred related to the cost of running your massage business. Make sure you have receipts from these transactions.
If you’re not sure what counts and what doesn’t, get advice from an accountant.
Does thinking about taxes stress you out. Relax. Here’s a simple breakdown of the numbers. This is how your income and expenses are converted into taxable sales and tax deductions for your massage business.
Imagine that your total sales for the year was $75,000. You also incurred $25,000 in business expenses. This is how that would break down on your tax forms.
Gross Sales: $75,000
Net Sales: $50,000
Do you see how the deductions lower your taxable income (net sales)? That’s how tax deductions save massage therapists money. Without them, you’d pay taxes on your total sales (gross sales).
Now that you understand that you’re only taxed on net sales, you can see how deductions save you money. It’s not usually advisable to spend more money than necessary to run your business. However, you should take advantage of every massage therapy tax deduction available to you.
Here's a list of common massage therapy tax deductions.
One of your biggest tax deductions is the space you rent for your massage business. Rent is 100% tax deductible. Whereas if you own the building, only the interest you pay on the mortgage is tax deductible.
If this was your first year in business, that initial capital you spent to get set up qualifies as massage business startup costs. Startup costs can only be deducted once. You can deduct it all the first year, or deduct a portion the first year and the rest over the next few years.
All the equipment you need to provide massage therapy is a qualifying expense. This includes massage tables, stools, massage chairs, towel warms, hot stone cabinets, and more. You may even be able to deduct the depreciation of your equipment. Check out this depreciation guide from the IRS or talk to you tax advisor to learn more about depreciation.
Items you use every day for massage sessions are business expenses. Massage lubricants like oils, lotions, and creams count. So, do topical analgesics and CBD products. Don’t forget about hot stones, hot and cold packs, and essential oils.
If there’s one thing massage therapists have a lot of, it’s sheets. You can deduct the cost of buying sheets, towels, blankets, and pillow cases from your massage therapy taxes.
Do you pay a service to launder all your linens? Did you buy a new washer and dryer for your clinic? Those expenses are tax deductible.
Your office requires cleaning. A lot of cleaning. Handwashing, laundering linens, sanitizing surfaces and cleaning the floor all require purchasing products. Those items are business expenses you can write off on your taxes.
The clothes you wear exclusively at work are considered a uniform. That even includes the mask you’ve been wearing. Scrubs and branded apparel purchased qualify as tax deductions for massage therapists.
If you own or rent a building/office for your massage business, you can right off your utilities bills. Electric, gas, and water are common deductions for massage therapy businesses.
Do your clients call or text your cell phone? Do you manage a massage schedule using a scheduling app on your phone? Do you process credit card payments using your phone? Does your business have a landline? If you answered yes to any of that, it’s a qualifying business expense.
The Internet is required for most businesses these days. Streaming music, sending email marketing campaigns, checking your online schedule, offering wifi to waiting clients, and managing online sales all require the internet. If you use it, write it off.
Do you accept credit cards in your clinic? Do you sell gift certificates online? Do you use an online booking system that integrates with Square or other POS systems? You pay a fee for every payment that’s processed. All those processing fees qualify as a tax deduction.
Banks make money by charging fees. If your business account is charged services fees by your bank, those qualify as a business expense.
It’s likely you’ll need to hire professional help at some point in your business. If you hire a lawyer, accountant or cleaning service, to assist you with your business, include that in your business expenses.
Operating a business typically requires you to get some sort of business license. Depending on local laws, you might need more than one. Plus, to practice massage therapy, you need a massage therapy license. All these licenses cost money. Those expenses are tax deductible.
If you own a massage clinic or work as an independent contractor, liability insurance is a must. Often massage therapists receive liability insurance by becoming a member of a professional massage organization. Regardless of where you buy your insurance, you can write it off.
If you have a mobile massage business, offering in-home services, all those miles are a major expense to your business. Even if you only treat clients in your clinic, you can write off miles driven to run business errands and to massage events. It’s important to note, you CANNOT write off the miles you drive to and from your clinic every day, just out of the ordinary trips.
The secret to a smoothing running massage practice is clinic management software. Using software to manage scheduling, bookkeeping, marketing, and client files is common practice in the massage industry. Any software you purchase to make running your business easier, is a business expense.
Did you buy a new laptop last year? That’s a big expense. If you use your computer to create email marketing campaigns, write SOAP Notes, or any other business task, it qualifies as a business expense.
Most massage businesses need a website. It’s essential to any business that wants to showcase their services and allow online booking. Widgets for your website, hosting, and even simple profile pages you create on online directories are all massage therapy tax deductions.
Marketing materials are necessary for almost all businesses. If you designed massage business cards, printed a brochure, or created a flyer to advertise your business you can write those expenses off. It doesn’t matter if you paid and printing company or you DIY-ed your projects. If you printed them yourself, the cost of the paper and ink count as expenses too.
There are lots of ways to advertise your massage business. Many of them cost money. Massage marketing software, paid advertisements, in-house promotions, and any other way you advertise is considered a business expense. Write that off on your taxes.
Are massage therapists in your clinic independent contractors? The money you pay them is a qualifying tax deduction for massage therapists. You’ll report the money you paid these providers by issuing them a 1099. If you need more information on reporting the payments you made to independent contractors, check out this IRS guide for filing !099s.
If you have employees, their salaries are tax deductions for your massage therapy business. So, is the software or service you use to manage your payroll. At tax time, issues employees a W-2 to report their earnings. You can learn more about issuing W-2s on the IRS website.
Massage therapists who want to grow their business need to continually grow their skillset. Learning in-demand massage therapy specialties and modalities often requires a significant investment of time and money. Some licensing boards require massage therapy to take regular continuing education. The fees for these classes and seminars are tax deductible.
Did you attend a health and wellness conference this year? What about conferences that were geared toward a segment of the population you serve? If the conference was related to some aspect of your massage business, it’s a qualifying expense.
The cost of traveling to conferences or weekend seminars is also a massage tax deduction. This includes airfare and hotel. If you drove to the conference, you can also report the mileage for this trip as a business expense.
Did you have to buy meals while you were at a conference or seminar? Did you provide your staff a meal for a special event of benefit? Did you have a business meeting over a cup of coffee with an advisor? Business meals are tax deductible.
Ad free music isn’t free anymore. Most therapists play relaxing music in their clinics. Music that you purchase or subscription fees for streaming music in your clinic is a business expense.
Everything you buy to furnish your clinic or create a relaxing massage room is a qualifying expense. This could be the chairs in your waiting area, a new painting you hung on the wall, or a new desk for your office. If you bought it for your clinic, you can deduct it on your taxes.
What do you need help with? Massage therapy software helps with so many administrative tasks. Many of those tasks are directly related to your business taxes!
Do you need help reporting your income? ClinicSense can automatically generate sales reports, as well as send and process invoices.
Would it help if you had software that integrated with quickbooks, so it can be uploaded automatically? ClinicSense does that too!
Would it make life easier if your online booking and scheduling integrated with Square? Done.
Those are all ways ClinicSense can help you navigate your taxes, and get you one step closer to the part where you report all those massage therapy tax deductions.
All this, plus ClinicSense will help you streamline your massage business with easy-to-use online booking; appointment reminders, flexible SOAP notes, invoicing and payment tools and more!