One of the biggest mistakes a yoga teacher can make, is neglecting to declare their cash income to the tax office. Particularly when starting out, if you do outdoor classes or have a lot of casual payments, you may be lured into a false economy, where cash payments don’t end up making it onto your books.
Why is it so important to declare your income? As yoga teachers we live, breath and teach the yamas and niyamas, “right living” or ethical rules, such as truthfulness (satya), and asteya (non-stealing). We are not more important than others within our community, nor desire or demand special treatment, excluded from abiding by the laws of society. We are equal with others, and contribute equally. We are non-possessive (aparigraha) of our earnings, allowing the flow and energy of money to circulate in our business.
I have heard yoga teachers justify themselves saying things like, “but I keep my class prices down or offer donation based classes so students can afford to come”. In Australia, our taxes support students with access to Austudy or income support payments, as well as the HECS loan schemes. Often these same students choose to spend their money elsewhere, not on yoga classes, they are happy to spend $11 on a pint of beer instead. Keep track of your own money issues, not others!
From a practical nature, while it might not seem important when you are first starting up, in a few years when you are making a living solely from teaching yoga, you may find yourself in a situation where you need to borrow money, to buy a house or take out a business loan. If you haven’t accurately recorded your past earnings, you may get caught out not being able to show your true earnings. Or if you have a yoga studio, while it might not be on your mind now to sell your business, if you ever do, you will also need to show your past earnings, profits and losses.
How to make it work for you. Charge the market rate for classes. There is usually a reason there is a market rate, this is because it is the true cost of a class, after rent or hire, teachers fee, advertising and other overheads, and GST and income tax. Often there are tax deductions for our expenses, speak to an accountant to be clear what receipts you need to retain to enable you can claim against your income each year. The good news is, if you are paying a lot in tax, you are earning a lot of money, enjoy this abundant energy!
For more information about tax, visit the Australian Taxation Office (ATO) website and speak to your accountant to find the information relevant to you. Always keep accurate records of your earnings for every class either manually in a cash book, have a separate bank account for your income and expenses. I strongly recommend investing in a simple book keeping program such as Xero. This software is fantastic for helping you to track your “profit” and “loss”, so you know and understand clearly what your financial position is all of the time. There is no point teaching if you are losing money! Knowledge is power.
Keep the yoga industry honest and meet a higher standard and expectation of yourself and the industry we work in. Good energy comes from honest declaration of your income, and hopefully will serve you well in the future.