Financial Management, Records Keeping, and Taxes (Video Notes)

Vocabulary flashcards covering budgeting, record-keeping practices, business income, deductions, and practical considerations for a massage practice.

Budgeting

The process of planning how to allocate income to expenses, savings, and debt payments, typically by creating a monthly budget to track where money goes.

Pie chart budgeting

A visual representation of spending categories as pieces of a pie to show what portion of total expenditures goes to each category.

Banking app

A mobile or online tool that lets you view transactions and often generate visual summaries (like a pie chart) of spending.

Digital records

Financial records kept electronically rather than on paper, stored in banks, computers, or cloud storage for easy access.

Separate business identity

Keeping business finances distinct from personal finances by using separate accounts and records for the business.

Business checking account

A dedicated bank account used exclusively for business income and expenses.

Business credit card

A credit card used solely for business purchases to simplify tracking and bookkeeping.

Business income

All money received by the business from its activities, including cash, checks, credit card payments, barter, and tips.

Barter

Trading goods or services without cash; legally considered income and an expense for tax purposes.

Tips

Gratuities received; generally taxable income; may have specific rules or exemptions depending on the profession.

Gift certificates income

Income recognized at the time of sale of a gift certificate; redemption does not generate additional income.

Home-use space deduction

A tax deduction for the portion of home expenses attributable to the area used exclusively for business.

Square footage method

Calculation of home-based business deductions based on the percentage of home space used for the business.

Fully deductible business expenses

Business costs that can be fully deducted when they exceed the standard deduction, such as continuing education, professional fees, and marketing.

Continuing education

Educational costs related to maintaining or improving professional skills that are fully deductible as a business expense.

Professional fees and licenses

Costs for licensure, professional dues, and related insurance that are deductible business expenses.

Advertising/Marketing

Costs to promote the business; deductible as ordinary and necessary business expenses.

Decorating your space

Costs to furnish or improve the business space (furnishings, paint, carpeting, supplies) deductible if used for the business.

Start-up costs

Initial expenditures to establish a massage business; used to assess profitability and when breakeven occurs.

Profitability / Break-even

The level of sales at which revenue equals expenses; indicates when the business becomes profitable.

Hourly rate vs per-massage rate

Evaluating earnings by hourly income versus income per massage, considering scheduling, duration, and turnaround time.

Venmo / PayPal

Digital payment apps that facilitate client payments, often with lower processing fees than card processing.

Standard deduction vs itemized deductions

Standard deduction is a fixed amount you can deduct; itemized deductions are individual expenses that may exceed the standard amount.