So...first off...I am not an accountant, tax expert, money-manager, or any other financial service professional. None of this is intended to be comprehensive financial advice, and there are probably some things (especially related to taxes) that could bear more explanation from such a person. I am only sharing what I have learned based on my own experience and what has seemed to work for me so far. But here it is...the discussion about money as it pertains to being a professional voice teacher.
First, you need to figure out what to charge. If you are working in a school district, the district might set the rate you are allowed to charge. If not, you need to determine that. One of the biggest determining factors is the “going rate” in the area where you are setting up your studio. You don’t want to be vastly more expensive than the other teachers in your area, or you probably won’t attract too many students (unless you happen to be famous already). Conversely, if you undercut the competition you might attract more students, but you could also find yourself overworked and underpaid. Aside from that, it is important that you are accurately valuing your own work and training–even as a new teacher, your knowledge and expertise is not worthless. As mentioned previously, you also need to figure out how much money you need to make from your voice studio. That may sound a bit too “business-y” for the creative type, but the bottom line here is you ARE creating a business. You may love what you do, and you may be excited every day to inspire your students and help them grow, but the bills don’t pay themselves. The more you can approach the financial side of this like any other business, the easier it is to enjoy the teaching part. Because there are so many factors that go into price, I can’t give a specific dollar amount as a recommendation. That being said, I think it’s far more common for beginning (and even more experienced) teachers to undervalue their work and not charge enough. As long as you are within the general market value for your area (assuming you aren’t working from a school district pay scale), that’s a good place to start. Over time you can (and should) raise your rate as the economy changes, but you just have to have a place to start.
One of the hardest parts of running a studio can be the back end. That includes invoicing, taxes, tracking expenses...you know, the really fun stuff. The problem we all tend to have upon graduating with our voice degrees is that we didn’t really study anything about running a voice studio as a business. This is not a criticism of the music schools out there–it’s just something that there isn’t time to add to the coursework. There are many great resources out there, including The Private Voice Studio Handbook (Joan Frey Boytim). That has some great information, although I admit I disagree with some items in there too. There are also different ways you can handle the organization and bookkeeping of your studio–here is what I use. It should be noted that while many of the products and services I use are from the Intuit company, this is not a sponsored post (although...if they want to sponsor me, I wouldn’t say no!).
For invoicing and payments, I use Paypal. This has definitely helped me streamline my invoice process, which used to take me a whole lot longer. You can do batch invoices, easily send reminders, keep track of payments, allow people to make partial payments as needed...it’s a great system in my opinion. Most people pay online from the Paypal invoice, but of course I still accept checks, bank transfers, Zelle, Venmo, etc. You can still track payment on an invoice even if they don’t pay through Paypal. There is a small fee for each payment, which can add up, but those are tax-deductible. Originally I tried to just add a “service fee” to the invoice to cover that, but it never quite added up, so I just went with the deduction route. The amount of time this saves me in both invoice creation and tracking is well worth the fee, in my opinion. Tax note: when you process a certain amount of money through Paypal, they will issue you a Schedule-K document for tax time–don’t forget to include that when you do your taxes!
For tracking my overall income and business expenses, I use QuickBooks Self-Employed. This is a great program (can be used on a computer AND as a phone app) for tracking your expenses as they happen and categorizing them. You can even scan in receipts to attach to charges, and make rules for recurring payments so you don’t have to manually track everything. It is an excellent tool for us self-employed types who have a lot of overlap between personal and professional money usage. That way you can really keep those deductible expenses organized and get as much benefit come tax time. It is so much less stressful to keep track as you go, rather than waiting until the end of the year. You can also use this to track business mileage and make quarterly tax payments (more on that in a bit). Now, this program even as an invoice feature–it didn’t when I first began using it, so I have stuck with Paypal. I imagine this operates very similarly. Once you have gotten all of your transactions figured out for a tax year, you can even export the data to TurboTax so you can streamline your tax filing.
One of the most important things to track in your studio is the lessons themselves. You may think you will remember everything, but...you won’t. Especially once your studio grows beyond 20-25 students. With 50+ students in any given year, there is no way I can possibly keep track without help. I use a simple Excel spreadsheet and I mark off each scheduled lesson as it happens. That way, I can quickly glance through and see who is owed a makeup lesson, who has unexcused absences, etc. Staying on top of this makes it very easy should you ever have to answer questions about students needing to make up lessons, and it also gives you one place to check it all out, rather than flipping back through your calendar or planner (yes, I still use an actual paper planner–and I love it). Spreadsheets are also great for tracking repertoire, event entries, or even notes about upcoming payments that might deviate from the norm (lesson credits, extra lessons to add, etc.).
One quick note on studio management software: I know there are different programs out there designed to help with all of these things, like Music Teacher’s Helper (I’m sure there are others too). Since I haven’t personally used any of these, I can’t speak to their effectiveness, or even pros and cons. If you want to give them a try, go for it!
Next up: TAXES. Everyone’s favorite topic. Again, I’m not a financial professional of any kind, so I can only speak to what I do that seems to work so far. The first year I began my voice studio, I was completely lost. Up until then, I had always just sat down with my dad over spring break and done my taxes–the paperwork was simple (as simple as tax paperwork could get, anyway), and it only took part of an evening. But once I started my business, I had no idea exactly what paperwork I needed to fill out, how to categorize things, and it had already consumed several weekends of my life trying to figure it out. Enter TurboTax. This was an absolute life-saver that first year, and I’ve used it ever since. I admit, we have something of a love-hate relationship. Sometimes it seems to be flawless and easy, and then sometimes it keeps telling me something needs to be filled out or something is missing, then it takes me back to that item but doesn’t EXACTLY tell me which line item is wrong or how. Last year there was even some difficulty with processing the imported info from QuickBooks, so I had to amend the return. Granted, that was annoying when I got that email from them, but it meant that I actually got some money back so it worked out all right in the end. Overall, I’ve been happy with this one, and it always works out in the end. Furthermore, while it is an added fee, you can have the return reviewed by a real human if you want, and you can also add the “Audit Defense” option, which will help you out if you ever get audited (luckily I haven’t had to use that service so far, although I always pay for it). As long as you have your tax info organized (keep all those 1099-MISC and related forms), you can tackle this without too much trouble. It also doesn’t hurt to make some notes for yourself if there is a particular issue from one year that you want to remember the next year.
The most important thing to remember is that you do have to pay self-employment tax as a part of being...you guessed it...self-employed. This means that while you personally might not owe much in taxes, you as a business are having to pay both the employer and employee contribution to Social Security on the federal level, and of course if your state has income tax you owe that too. I’m sure a tax pro could go into more detail, but just make sure you are saving money to cover those taxes. If you make a certain amount of money, TurboTax (or your tax professional of choice) will probably recommend making estimated quarterly payments. If you don’t do this, you might be assessed a small penalty come tax time. I still haven’t figured out how it’s fair for the IRS to force you to pay quarterly (if they get the total amount all at once or quarterly, who cares, right?), but they do. So if you can, I do recommend doing this. When you file your taxes, your return will have 4 “Estimated Payment Vouchers” where they tell you what you should pay each quarter. QuickBooks Self-Employed will also show you a recommended amount–this number tends to be higher than the IRS recommendation. Either way, if you make the quarterly payments, it does give you the illusion of owing less at tax time because it’s already paid in. Otherwise, make sure you are saving enough money aside so you can pay the full bill when taxes are due!
One final note about taxes: deductions are so important to help reduce your taxable income. You just want to be sure that you are following the correct rules for what you can and can’t deduct! This is where QuickBooks Self-Employed can really help. They have a ton of categories when you are tracking business expenses, and can provide info on what sorts of things can be put in each category. Aside from using their info, a quick internet search can provide you info whenever you are wondering the age-old question, “Can I deduct this?”
At the end of the day, you want a system for managing your finances, organizing your schedule, and keeping track of the back end of your business. Whatever that looks like, it will make you a whole lot less stressed on the front end if this is taken care of. It doesn’t have to be exactly what I use (or what anyone else uses), as long as it works for you and saves you time. It’s not always fun, and I will be the first to admit I drag my feet sometimes when I think of the invoices I have to send or the taxes I have to file, but building a healthy business for yourself is the goal, and this is a necessary part of that. Of course, if you happen to have enough in the budget to pay someone else to do some of this stuff, that’s another option, but it is certainly doable on your own.
12/22/2022 08:24:40 pm
This was so useful and well thought out! Thank you for spending time on this important topic.
12/22/2022 08:58:38 pm
You have learned so much about the business side of things too. Impressive. Well written and helpful.
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