8/29/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"Is teaching piano considered a business?"

Dear Dave,

Would teaching six to 10 piano lessons a week be considered a business? If so, how would I go about paying taxes?

Jennifer in Toledo, OH

Dear Jennifer,

If you’re getting paid for it, then yes, it is considered a business. If you’re earning more than $650 per quarter you are required to pay a quarterly estimate on your business, or an estimated tax. It would probably be a good idea to set aside one-fourth of what you’re earning for taxes.

I probably would open a small checking account listed with the business’s name and your Social Security number. I would deposit all my income from that business into the account, and any expenses I have would come out of it. What’s left over is called profit, and that’s taxable.

Good question, Jennifer!

- Dave

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