Do you run a dance studio and you seek ways to reduce tax? If YES, here are 12 dance studio tax deductions you can write off this tax season. Dance studio tax deductions will depend on a variety of factors, such as whether you’ve structured your business as a Limited Liability Company (LLC) or another entity. Note that the first and best way to capitalize on any potential expense is to keep a record of all of your purchases for the studio.
This includes every single receipt or financial statement which will be very crucial when claiming Deductibles. Remember that staying organized with a simple filing system using financial software and/or physical binders will go a long way to help your cause.
12 Dance Studio Tax Deductions You Can Write – Off This Tax Season
Understanding dance studio tax deductions isn’t quantum physics. But always remember that it is important to work with a tax professional who understands the details of your studio, as each case will be different. Nonetheless, these are the most common dance studio tax deductions that may apply to you:
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1. Charitable donations
It is normal for businesses to make charitable donations, especially around the holidays. Let’s say you donated to a non – profit geared towards dance education or therapy, or a local youth group, it can count for your dance studio as a deductible.
However, always check the status of your charity on the IRS website to make sure your contribution will qualify as a deduction when you file your dance studio taxes. If so, ensure to add a line for this important tax deduction.
In this technology era, dance studio software is very crucial when it comes to keeping your dance studio tuition and finances organized, and it is also a small business tax deduction. This is regarded as an investment that helps you keep your business running smoothly. Other technology costs may include costs for actual hardware (like laptops or new monitors), other software you use to manage your business, and hosting fees for your website.
3. Makeup and costumes
A dance studio can never be complete without yearly recitals and productions for the public. And these productions need attractive costumes and make – up in order to be a hit. Don’t forget other key supplies such as dance shoes, hair clips, hair spray, and sequins.
Note that you can deduct the overall expenses for these items under “supplies.” Howbeit, if you are selling costumes to students, you’ll have to calculate the cost of goods sold. This applies whether you are ordering costumes or paying someone to make them.
4. Dance equipment
Over time, it is imperative that you invest in equipment for your studio. Even if you are a solo dance teacher, you can deduct any dance equipment purchase that is meant to enhance your teaching, such as a new iPad or Bluetooth speakers.
In addition, the equipment doesn’t have to be stored at the place you teach in order to be deductible. A portable stereo you buy to teach at multiple locations is still deductible. But note that if you use the equipment for both business and personal use, you’ll only be able to claim a portion of the expense as a deduction.
Music is without doubt an essential component to any dance class, therefore making its related expenses a proper tax deduction. For music subscriptions that are shared between your business and personal life, do your best to estimate the percentage of use.
For instance if you listen to Spotify while deep – cleaning your kitchen and during non business road trips but you also use it for your dance classes you might decide to claim only 50 percent of the fees as a business expense.
Nonetheless, while entering music into your tax software, use the “other” section, and then enter “subscriptions.” In the case of purchasing CDs, you can enter them under “supplies.”For music equipment, such as stereos, iPods, and speakers, make sure to file them under “equipment.”
Since your studio space is most probably your biggest expense, it makes it an important deduction. Whether you rent or own your space, this is a huge chunk of change that is imperative to the success of your business. Keep thorough records of how much you spent throughout the year to save more during tax season.
Things like your electricity, internet, water, and phone service are all possible dance studio tax Deductions. After all, it is nearly impossible to run your dance studio in the dark! Be sure to keep all of your monthly billing statements.
8. Salaries and wages
Almost every dance studios have a team of dedicated, hard – working staff that helps keep the business running smoothly. Note that all compensation paid to these employees, irrespective of if they’re full – time or contract workers, are deductible.
However, just ensure your employees or contract workers sign the appropriate paperwork before beginning employment. Then, keep on top of payroll taxes to avoid any penalties at the end of the Year. Additionally, all benefits paid to employees are deductible, such as health insurance premiums, liability insurance, or bonus pay.
9. Office supplies
Indeed it takes more than a dance teacher and an empty studio to run your business. Many dance studios have a waiting area, perhaps with a desk and a receptionist where students can sign in or register for classes. You might use various supplies and equipment in this space, most of which can count as business Deductions.
Howbeit, always understand the difference between supplies and equipment. In this case, supplies are items that are purchased for your business and are expected to be used within a year.
Boosting and growing your business is very crucial to the success of your business. From a website to business cards, marketing and advertising costs can add up fast. When considering your dance studio tax deductions in this category, think of any costs for website development, paid digital ads, marketing agency fees, printing, graphic design help, and more.
11. Professional development
As a dance teacher, you know the importance of continuing education. Chances are you probably attended a seminar, conference, or workshops in the last year. In order to keep your studio’s image fresh and exciting, you’ll have to move with the latest styles, moves, and techniques in the dance world.
In addition, you and your team of teachers will most likely enrol in regular training, classes, or workshops. And yes, all of these count as valid business expenses. However, these expenses will only counts as deductible if your studio pays for them.
12. Business gifts
Also note that gifts purchased for your teachers, staff, and students are considered business gifts. However, in the United States, you are generally limited to $25 per recipient in order for this to be deductible. Incidental costs such as engraving, packing, or shipping aren’t included in the $25 limit if they don’t add substantial value to the gift.
Note that the more knowledge you can acquire on taxes, the more ready you’ll be to recognize deductions in your daily transactions. If in doubt, save the receipt anyway! Tax rules in the United States change like the weather, and you’ll be grateful you saved a whole stack of receipts that are now eligible to be claimed.