Financial Business

Are your studio policies where you want them? Do you have policies?

If you run a school of music, a studio, or teach in your home, then you are a professional. You are an independent music instructor. A business person. You offer a vital service to your community. Your policies should reflect a level of respect for yourself as such. As a result, others will respect you. They will appreciate that your policies protect their interests as well.

How I came to believe in policies

I taught out of my home studio successfully for fourteen years with no written policies in place. I took a five-year break while my sons were young. When I started up again, it was with a greater need to help our family’s finances. I was surprised to find the landscape had changed. After-school activities had mushroomed, making the competition fierce for time and commitment. Parents or sitters taxied children from one activity to the next, barely having time to grab a bite to eat.

With increasing frequency, I’d wait for students who never showed. Sometimes I’d get a call earlier in the day. If we couldn’t find time to schedule a makeup lesson, I lost the income. The rare times we did reschedule, it always cut into our family time. How frustrating. I sent out notes asserting the importance of consistency. It did not help. My income was cut nearly in half!

One day as I waited for a talented young lady to arrive, her mother called, flustered.

“She has an extra dance rehearsal tonight, to prepare for the recital.” Then the mother flipped the switch that lit my understanding for good. “We really have to be there. We paid for all the lessons in advance, and there are no makeups.”

Wow. Why should I sit here in an empty studio while these other organizations, earning money from a few hundred students compared to my thirty, tapped my source of income?

I turned to other teachers online for counsel. In the process, I learned about running a business in a professional manner. This changed how I pictured and valued myself. I hadn’t given myself a raise in years. I was nervous about launching policies and a pay-raise, fearing I’d lose clients. But my fellow teachers encouraged and bolstered me.

I took a few months to sift through and study others’ policies. I chose the ones that fit me best. When I finally sent them out to families, holding my breath, the response was tremendous. Parents called to congratulate and thank me. They sent their registration fees and first tuition checks promptly. Only one backed out, and honestly, I think the family would not have continued anyway.

Benefits of instituting policies

Immediately and increasingly, my families and the community viewed me as a local studio as opposed to someone “who taught music to a few students.” If a child took lessons with me, it was something they could add to their portfolios with pride. Parents referred others to me. Many paid the full semester in advance, but some gratefully paid the tuition in four equal monthy installments. No more counting and billing one, two or five lessons in the month, every family different. Within a few months my waiting list grew. Gradually other teachers came to me for counsel.

I grew more serious about myself as an educator as a result of my policies. I attended more continuing education courses. I found ways to offer students more. I reviewed my past experiences as a musician, and included them in what I offered.

Now I teach knowing that if a student doesn’t show up, I’m covered. I don’t get bent out of shape with the family. But truthfully, they seldom miss a lesson anymore.

What items should policies cover?

Each private music instructor’s policies are as individual as fingerprints. So I encourage you to do your homework. Read others’ policies. If you associate with teachers who don’t post theirs publicly, ask to see them. Private music teachers are, by and large, a giving bunch, willing to offer a hand up. If you worry that parents will feel your policies are too strict, this might help.

Here’s what I include 

What I offer in lessons

I place this near the front, because it illustrates what makes me unique among my local colleagues. I always start with a mention of the lifelong benefits of music instruction. Then I tell them what lessons with Steinweg Studio of Music will include.

Tuition concerns

I explain that students enroll in a course of study similar to a school, with a semester tuition as opposed to a per-hour rate. The tuition ensures that their lesson time is reserved for them each week.

In addition to regularly scheduled weekly lessons, they have opportunities to attend at least two Master Classes per semester, and to perform in one recital per semester. Other performing opportunities may arise but are also not mandatory.

There is no credit for missed lessons. However, I offer a swap list to make it easier to switch lesson times with other students if conflicts arise. I ask them to try to avoid scheduling other appointments during their lesson time. If a true emergency or contagious sickness arises, they can be put on a 3-week cancellation list. If someone cancels during those weeks, they will have opportunity to take that time.

Payment Options

By giving families options, fewer feel excluded, even if my rates are higher than some in my town. They have seen that I offer more than many others.

I teach 30, 45 and 60-minute lessons. I reserve the final say as to whether students are ready for longer lessons. I wouldn’t want to end up babysitting a 5-year-old student with a 5-minute attention span for a full hour. Students can pay the full semester of x lessons per semester in advance, or make four equal monthly installments. Tuition is due no later than the s

econd scheduled lesson of the semester. Payment after that point will include a 10% per week late fee.

You can decide whether to accept cash or check. Alternatively, if you have an online bookkeeping service such as Music Teachers Helper, families can pay online. They can also be sent email reminders of scheduled lessons or recitals, birthday greetings, and so much more.

Using Music Teachers Helper means families can pay online.

Registration fee

I debated long about whether to charge an additional fee and how much. After I added up the amount I spent on extra items, I realized I wasn’t earning anywhere near what I hoped. I list some of these extras in my policies so families can  see how reasonable it is.

I have raised the fee a couple of times, and am considering raising it again this year. I make sure that if I do, I provide added value for the student in some way.

This fee is once per school year per student. This is the only time I give a discount for more than one student in a family, since it’s partly to cover bookkeeping, and I do that by family. The fee is due along with the first tuition payment. It remains the same whether or not they start lessons in September.

I explain that it is a nonrefundable fee to help defray the cost of such studio expenses as legal photocopies, Master Class materials, computer software, incentives, instrument maintenance, bookkeeping, recital programs, refreshments and supplies, travel and/or time spent searching for music and materials.

Next month’s policy article, Part II

Next month here on the Music Teacher’s Helper blog I’ll discuss such things as makeup lessons, practice expectations, swap lists, communication and creating registration forms.

If you have further questions or would like to share how you handle your teaching policies, I welcome your comments.

Our policies can provide protection and relief for all concerned.

Happy teaching!

 

 

 

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Tax time! If you’re like me, you do it yourself but wait till the last minute!

Partly, no doubt, because it’s a pain and because it’s hard to know sometimes what you’re required to do. Here are some tips that I hope will help out. I’ve tried to tailor it to what’s most relevant to musicians.

I will say one good thing about taxes.  Most small businesses that fail do so because of poor planning, and it’s my belief that because the IRS requires businesses to keep track of income and expenses, and analyze them regularly, many American businesses are far more successful than they would have been without being forced to do that work!  Okay, on to the task at hand!

Keep in mind that tax laws have been changing right and left, so the best way to file taxes is probably to use one of the free online tax software programs approved by the IRS – just visit this link and click on one of the two blue buttons – one if you make less than $66,000 and the other if you make more than that. You’ll see which free software is available for you or you can use their “wizard” to determine the best software for you.

The reason that software is so helpful is that the makers incorporate all the latest tax law changes and walk you through any questions you need to answer.  What they don’t necessarily help you do is categorize your income and expenses as a music teacher/performer. That’s what we’ll take a look at here.

If you are employed by a school, you can use your W2 form to handle your taxes easily, through the online software.

Most music teachers and performers, however, are at least partly self-employed, and this income needs to be filed on a Schedule C form, where you can list your income, your assets (such as CD inventory), and your expenses, which end up being deducted from your income before it is reported on Form 1040 to calculate your taxes. The bottom line is also reported on your self-employment tax, which is often the larger portion of your tax. This is reported on Form SE, which is filled out for you if you use tax software. The self-employment tax includes both the employer portion (you) and the employee portion (also you!) and can add up to about 30% of your income after deductions. It’s a really good idea to set aside 1/3 of your income for this tax, preferably in a special business account, so you don’t get blindsided at tax time. Nowadays you can work out a payment plan or credit card payments for your taxes, but boy, credit card interest will cost you big time, so it’s best to plan ahead. Start now for next year!

If you have owed over $1,000 for taxes, you need to plan to pay 25% of what you are likely to owe in estimated tax payments on April 15, June 15, September 15, and January 15. It’s a pain but you will be assessed a penalty and interest if you don’t do it.

All the information below is assuming you are filing a Schedule C to report income and expenses from your own business. Before even collecting your financial information, check out the categories you’ll need to split them into, by looking at or printout a Schedule C and by reading the instructions for it, which can be very helpful.

 


INCOME

Your income can be easily tracked by Music Teachers Helper. Just run a financial report showing your income and expenses for the full calendar year. You may well have other sources of income as well. You can simplify things by entering those all along in your Music Teachers Helper account, or keep track of it on a spreadsheet or account book of your own. One solution for simplifying this is to have all your business income be deposited or transferred (from PayPal, etc.) to a business account. Then you can use statements from that one account to track all of your income.

EXPENSES

It’s helpful to collect your information based on the actual lines on Schedule C where you have to report this information, so that’s how this section is organized. Your business expenses are deductble if they are considered ordinary and necessary for you to do your business. This part requires the most work to keep track of – you’re supposed to keep your business receipts as proof of expenses, which is a little trickier these days when the only evidence is often an online charge. If you want to make things easier on yourself at tax time, put your receipts into folders or envelopes by month, or better yet, enter them into a spreadsheet at some point each month. This makes it a lot easier to even know which expenses were for business because they’re fresher in your mind – for example, did you buy office supplies at CVS, or was it toothpaste? A credit card charge won’t tell you this. There are also software and apps out there to help you, by letting you scan and keep track of your receipts, though their learning curve and the amount of regular work they require might affect whether you find them truly useful. One obvious place to store your expenses is in Music Teacher Helper, where you can enter and catalog your expenses, and have it all show up in your annual financial report of income and expense.

 


 

ADVERTISING:

Schedule C, line 8. Take a look at these examples, to get a good idea of what the IRS considers “advertising” suitable for your business expenses:

  • promotional photos and videos
  • brochures, mailers, flyers
  • newspaper, magazine, TV, radio ads
  • fees for listing services, PR services
  • website creation and hosting expenses (Music Teachers Helper can fit in here or see below under Supplies)
  • promotional giveaways such as CDs (deduct your cost)
  • signs, banners, bumper stickers
  • stationery
  • ads on the web, in Yellow Pages
  • marketing emails or direct mail
  • costs for promotional events
  • business cards

 

CAR EXPENSES:

Schedule C, Line 9. If you keep a log of your miles driven, dates and destinations, you can get a “standard deduction” based on that mileage, which the IRS figures will cover your gas and maintenance for the car – over 50 cents per mile (the exact amount changes each year). You probably drive to gigs or to places where you teach. If you teach at a school, you can’t deduct the mileage commuting to and from the school, but if you teach at two locations you can deduct the miles going from one to the other. If you teach mostly at home, you can deduct the cost of driving elsewhere to teach, and of course performers can deduct mileage for going to rehearsals, gigs, and any travel expenses other than personal travel (visiting a friend or doing a personal chore) while you are on tour. Don’t forget to track your tolls and parking costs. Maintenance and gas is included in the standard deduction. If you rent a car, the cost is deducted under Equipment (see Line 20), but the gas for a rental car can be deducted separately. This information can be listed on Schedule C, but some information may need to be placed on Form 4562, and again, your tax software (remember, it’s free now online!) will determine this and fill it out for you.

 

PAYING OTHER MUSICIANS:

If you book a gig and pay other musicians, you’ll list their fees on line 10 for “commissions and fees.”

 

INSTRUMENT INSURANCE:

If you pay for instrument insurance or liability insurance for your studio, this expense can go on line 15 for insurance (other than health).

 

PAYING PROFESSIONALS:

If you hire lighting, sound, recording, piano tuning, legal, or accounting help, etc., you can list these expenses in line 17 for Legal and Professional Services.

 

OFFICE EXPENSES:

Line 18. Many expenses you would think are office expenses are actually supposed to be listed under “Supplies” so check that paragraph below (line 22) to spot the deductions that apply to you.

  • postage
  • business membership fees to office supply stores like Costco & Sam’s Club
  • pickup and delivery services
  • bottled water delivery
  • costs for backing up data
  • office decorating expenses
  • cable or phone line if separate for your office

 

RENT:

If you rent a car, you can list the expense in Schedule C, line 20a. If you rent teaching studio space, or space to hold recitals, you can list these expenses on the Schedule C in line 20b.

 

INSTRUMENT REPAIRS:

If you pay for rehairing your bow or fixing a ding in your trumpet or keys for your piano, for example, or have other maintenance costs, you can list these on line 21. If your piano tuner also repairs something you can list it here or under Professional Services.

 

SUPPLIES:

Line 22. You might presume some of these expenses fit in the “Office expense” category, so take a look at these examples of “Supplies”:

  • music stands, cases, gig bags, transportation carts
  • reeds, picks, oil, strings
  • sheet music, music paper, notebooks
  • tuners, effects pedals, metronomes
  • mutes, mouthpieces, microphones
  • books for a curriculum
  • monitors, amplifiers, speakers
  • blank media, CDs, tapes, recorders, memory cards
  • performance wardrobe
  • cords, cables
  • music filing envelopes and boxes
  • bottled water for performances
  • reference books, study guides
  • GPS systems, map guides
  • pens, pencils, paper, paper clips, tape, staples, staplers
  • printer supplies
  • whiteboard, markers
  • stamps, labels, envelopes, mailers
  • software for keeping track of billing and expenses (Music Teachers Helper could fit in here or see above under Advertising — as long as you don’t duplicate your expense, either category is justifiable)

 

DUES, LICENSES AND FEES: line 23

  • copyright fees
  • union dues
  • social security, medicare and unemployment taxes
  • professional license fees
  • dues and fees for professional organizations

 

TRAVEL:

Deduct airfares, buses, trains, hotels, and other travel expenses on line 24a.

 

MEALS AND ENTERTAINMENT:

Line 24b lets you list your meals. If you eat while on tour or meeting, for example with an interview subject, agent, editor, agent, manager, lawyer, accountant, or with colleagues at an event or retreat to do with your work, you can deduct 50% of your food expenses – the tax software will calculate this. You can also deduct tickets to performances that relate to your work, because that is research in your field.

 

HOME OFFICE:

Line 30 and Form 8829 (your software will handle that!) If you regularly use your home for teaching, office work, and inventory, this deduction is an accurate reflection of some of the necessary expenses that should be deducted from your income. Because some have abused this deduction, it can be a red flag for IRS audits, so it’s not worth claiming if you don’t gain much from it, not to mention that it can be a pain to gather the information you need for it. You’ll need to know the square footage of your business area and the square footage of your entire living space; you’ll need to collect utilities bills and other home expenses for the year that are partially used by your business. You have a much clearer case for a home office if the space you use for work is exclusively used for that purpose, especially if, for example, your teaching studio has its own entrance. You can also deduct the value of office equipment, although the value of big items like computers are supposed to be spread out over multiple years, and there are IRS calculators for how these items lose value over time. You should look up the “section 179” exception, however, which allows you to take a deduction for the full cost of equipment (including musical instruments) in the year you purchased them, though this doesn’t help you if that amount more than wipes out your income for that year – in that case,, you might want to spread out the deduction so it can help you in future years as well, by using the formulas for depreciation of those items. This is all a part of the tax software. The tax software will ask you questions about your home office and take you through what information you need to supply, and will use that information to fill out Form 8829.

 

Part III Cost of Goods Sold: 

A little complicated and I’m not going get into too much detail here, but this applies if you make CDs, store and sell them. You don’t get to deduct the cost of making the CDs because the CDs themselves are valued at the cost you paid for them, so theoretically you didn’t spend that money, you still have it in the form of the CDs! The Cost of Goods Sold section requires that you start with the value of your inventory (cost paid for it) at the beginning of the year (must be the same as ending inventory from last year), and add any purchases, and by deducting the value at the end of the year, it calculates the cost of the difference, which represents the cost of the CDs that you sold that year. You report the income from selling those CDs, and this form deducts the cost you paid to make just the ones you sold. Line 36 lets you deduct the value of any CDs you sent out for review or used as comps or for personal gifts.

 


 

I hope all this helps!  Keep in mind that I’m not an accountant and am only sharing my years of experience in doing my own taxes as a musician and as owner or director of several related organizations.  As I mentioned above, tax laws keep changing, so if you have questions, be sure to check with the IRS (they can be very helpful!) or an accountant.

Best of luck!

 

Photo by rawpixel.com on Unsplash

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Want to multiply your time and your earnings? If so, you might enjoy teaching a group of several students—or a crowd of them—all at once. Instead of teaching one student at a time for eight hours a day, you could teach those eight students for one hour!

This article is part of a series for new teachers. Or for seasoned ones.

In addition to monetary benefits, group classes are a wonderful way to turn an otherwise solitary pastime into a team effort. If you’ve ever felt competition from activities such as dance, soccer or hockey, you realize the draw of groups. So let’s look into it further!

Details to consider

Ages

  • What age range will I teach?
  • Will I include children with adults, or keep specific ages grouped together?
  • How many am I willing or able to teach at one time?
  • If students are elementary age, can I handle the wiggles of a group of them? Real Simple offers eleven tips from teachers for managing groups of children, some of which can be adapted to a group guitar setting.
  • If students are teen-aged, will they feel more inhibited in a group?
    • I have found that a mix of ages is desirable—the students help one another, they don’t have as many age-related hang-ups, and appear to relax and have more fun.
    • I love to have adults in the group—especially seniors. It’s a fun dynamic!
    • Unlike so many activities which are geared for people of the same age, it is noteworthy that group lessons can bring generations together.

Where to teach

  • How much space do I have?
  • Will I rent a room? How much will it cost? Is it comfortable? Furthermore, is it air-conditioned, ventilated or heated? Also sound-proofed enough? Is there convenient parking? And is there a waiting space for parents or drivers?
  • Can I do this at home? If I do, will it disrupt my family? Or my neighbors?
  • Do I need to be concerned about insurance? Here are one teacher’s thoughts.

Group dynamics

  • How much individual attention can I give in a group setting?
  • If potential and natural abilities vary widely, how can I keep faster-advancing players challenged while not discouraging struggling ones? (Join me next month for ideas on both of these.)

Materials

  • What materials accommodate a group?
    • Because it’s difficult for me to find a one-size-fits-all curriculum, I create my own courses. I give students binders and hand out each week’s lesson sheets, 3-hole punched. I include a variety of information, chords, rhythm, and a touch of note reading. Every week there will be new songs on which to practice chords and strums. To make it attractive, I use public-domain clip art and my own graphics so I don’t run into copyright issues.
    • I send each student mp3s of the songs so they can listen and learn them if they don’t already know them. These are good practice tools, too.
    • No matter the time of year, I like to teach them at least one Christmas song. Some have just three or four chords, and what a boost for a student to be able to pull off a beautiful piece come December!

How long and what to charge

  • How long will each class last?
    • I have found that 45-50 minutes is about right. It allows for questions after class, and for one group to leave while the next arrives. Tender fingertips don’t last much longer anyway, at first!
    • I’ve tried thirty minutes. We barely get tuned and play last week’s lesson. Not enough time.
  • Will this be a semester class, or a certain number of weeks?
    • I have tried four, eight and ten-week sessions as well as semesters. Four seems pointless. Even at eight weeks many youngsters are just getting their fingers toughened up enough to enjoy it, and switch chords quickly enough to keep the rhythm going. But ten weeks or a full semester proves successful.
  • What will I charge per student?
    • Since it’s not one-on-one, I don’t charge as much as for private. However, groups take a great deal of planning and energy. Don’t under-charge!
    • Charging too little may encourage less serious students.
    • Find out what other groups charge. Like dance or martial arts.

Policy making

  • What policies will I create?
    • First of all, will I offer makeups?
    • What will I do if the weather is bad and class can’t be held? And what if I must cancel for some reason?
    • Will I teach more than one group class per week and invite students to attend any or all of them? And will that be in lieu of makeups?
    • How will I handle purchase of materials or students needing new strings?
    • Will I allow electric guitars in class, or just acoustic?
      • I only allow acoustics. Dealing with amps or with volume is a headache I can do without in a group setting.
    • Will students be required to pay in advance?
      • In my studio, yes. I hate chasing payments. Also, I don’t want to spend precious class time dealing with money. So they pay the full amount ahead of time.
    • How much time will I expect students to practice?

Questionable lyrics

  • Finally, what if students request songs with inappropriate lyrics?
    • This is a big deal to me. I’m very concerned about the words my students see or sing. Yes, I know they probably hear a lot worse on the radio or in the halls at school. But that does not mean it’s acceptable! In addition to specific words, age-appropriate subjects are important to me, too.
    • Because of my convictions about lyrics, I either use white-out, swap in acceptable words, or say “Sorry, I don’t teach that one. Let’s find another you like.” After all, both my reputation and my conscience are involved.

In next month’s post, I’ll share about the lessons themselves. Planning for how to make the group work. And equally important, what information to cover. Ideas that have worked for me. Join me then!

A group of enthused musicians creates buzz for your studio. Are you ready to give it a try?

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