Ep 40 – ABMP SUMMIT WEEK! Financially Surviving COVID-19 with Massage Business Blueprint

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00:52 Darren Buford: Hello, this is Darren Buford, and thanks for joining us for the ABMP Podcast. Before we begin, I just wanna say that you're in for a special treat this week. It's ABMP's 2020 CE summit, and for this week, we've recorded three podcasts, one with Anne Williams, Angie Parris-Raney, and Massage Business Blueprint; each of which will roll out on Monday, Tuesday and Wednesday. You could also catch the full video version of these podcasts by registering online and attending the summit at abmp.com/summit. We hope you enjoy.

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01:33 DB: Welcome to The ABMP Podcast. My name is Darren Buford, I'm the Editor-in-Chief of Massage & Bodywork magazine and Senior Director of Communications for ABMP. I'm joined by my co-host, Kristin Coverly, licensed massage therapist and Director of Professional Education for ABMP. Our goal is to connect with luminaries and experts in and around the massage, bodywork and wellness profession in order to talk about the topics, trends and techniques that affect our listeners' practices. Our guests today are Allissa Haines and Michael Reynolds. These two are the wonder duo behind Massage Business Blueprint. Allissa is a practicing massage therapist for 15 years, and Michael is a former massage therapist, financial advisor and tech entrepreneur. Both happened to be columnists for Massage & Bodywork magazine with their column, Blueprint for Success. And for more information about them, please visit their site at massagebusinessblueprint.com.

02:19 DB: Hello, friends.

02:20 Michael Reynolds: Hey, Darren. Hey, Kristin. Thanks so much for having us.

02:21 Kristin Coverly: Hello, welcome.

02:23 DB: I wanted to jump in... We've worked together over the past year during 2020 in your column and online with your, Mind Your Money 2020 series, and all of that was a course planned pre-COVID. So we continued with that theme throughout the year, but you did jump in and do an extra special column for us in this special edition of Massage & Bodywork magazine that was COVID related, and your piece was called, Financially Surviving COVID-19. We wanna continue with that theme today and just chat with you about the money lessons coming out of COVID.

02:54 KC: Yes, and I wanna jump right in. Through Massage Business Blueprint, you interact regularly with massage therapists about finances, so you hear all of the stories, good, bad, and other. What have you heard lately? What has the pandemic exposed about what practitioners were doing right and wrong before the mandatory stay-at-home order started and therapists were forced to close their businesses?

03:15 Allissa Haines: Yeah, and this pandemic was just a magnifying glass for all of the good and the bad, and it really... Like every other aspect of our society has really created a bigger divide between who's doing great and who is not. For us, we really saw that people who treated their business like a business, people who were tracking their income and expenses, people who file their taxes in a timely manner, they were able to get all of the assistance quickly that was available, but for people who weren't handling everything in a timely manner, who couldn't very clearly say, 'This was what Line 31 on my schedule C was last year, this was my net income from my business,' they missed out or they got further behind because it was harder to deal with the paperwork needed by unemployment insurance or the pandemic unemployment assistance, or the PPP loan or the EIDL loan.

04:09 AH: You could very easily see how easy or hard stuff was gonna be for someone based on their previous ability and structure in record-keeping. I was actually really impressed by how many massage therapists did have it together, I think I came into creating the Mind Your Money 2020 with this thought that 90% of massage therapists do not know what's going on in their money with their business, which is such a spoiled way to come into it. But I was really impressed with how many people did have it together, and when this hit in March, how many people had already reconciled 2019 and filed their taxes. But there's always that divide, and we definitely saw how people who didn't track their money well missed out on a lot of options, just like in the past, they might have missed out on a lot of tax deductions 'cause they weren't organized or not gotten a great car loan or mortgage because they hadn't tracked their money really well within their business, so it definitely magnified who was super organized and who wasn't.

05:07 DB: How may have MT's actions pre-pandemic really specifically might have affected their grants and loans and government assistance options?

05:15 AH: Yes, so people who hadn't filed their taxes for 2018, people who were a year behind, they didn't get that $1200 check from the feds. They might get it eventually, but they had to wait another year, they're gonna have to wait till they file their 2020 taxes to get that $1200. People who were slow to file 2019 taxes, they couldn't quickly and efficiently say how much money their business earned, which was really relevant in calculating unemployment insurance and pandemic unemployment assistance, how much you were eligible for an EIDL loan. If they couldn't apply for that, they couldn't get the EIDL grant, which was a $3000. If they didn't have those numbers, they couldn't accurately calculate how much they were eligible for the PPP loan, which is forgivable. Again, free money. There are people who missed out on tens of thousands of dollars of free money because they hadn't filed their taxes for 2019 yet.

06:09 DB: Do you recommend filing annually or quarterly for massage therapists?

06:13 AH: Well, it's two different things, so you file your annual taxes for the previous year, that's your records of everything that you've made and everything that you spent on your business, and part of that filing is the records of your quarterly estimated taxes, which is an estimated payment based on what you'll owe at the end of the year. Like, when you have an employer, they just take it out every week or every pay period. When you work for yourself, you have to be your own best employer and your own best payroll system. You have to take that out and pay it to government quarterly. The government doesn't wanna wait until the following April to get the taxes of the income you earned in January, February, March of that previous year. They want it on April 15, and then they want it on June 15th, then September 15th, then January 15th. You get penalized if you don't pay enough throughout the year to cover most of what you'll owe by the end of year calculations, they're not gonna give you a free loan.

07:09 MR: And I'll say this is the number one thing that trips up massage therapists over and over and over is not paying your quarterly estimates, they just don't get around to it. I'll say all business owners in general have this problem a lot of times, but you just don't get around to it, it piles up, you've got a huge tax bill surprise, you get behind. I've seen so many massage therapists that are years behind on their taxes because they didn't keep up on their quarterly estimate. So see, you're not really filing every quarter, you're paying every quarter and then filing annually, but you wanna keep up on those quarterly payments, and I always like to also add one caveat is that should be paid out of a personal account. A lot of massage therapists will pay their quarterly estimates from their business account, but your business is not being taxed, it passes through as personal income if you're an LLC, sole proprietorship or S corp, which is very common for everybody. So, you wanna make sure you're paying that from a personal account and keeping that really, really separate.

08:00 AH: I wanna go off book a little bit here too, because one of the things I realize is that there's a lot of massage therapists who have no desire to stay connected with the massage world, like they just wanna do their work in their massage room, in their own little business, in their little town or whatever. And one of the huge problems I saw was that so many therapists who had not built community were really people who hadn't read their magazines, people who hadn't read the blog posts or the emails that come from ABMP or anyone else or any other massage-related stuff really got left behind. And it was amazing to me to see people finally getting online, getting involved with massage communities in August and not having heard about pandemic unemployment assistance. Like, "Dude, you could have been collecting since like March." Like, you're overdue.

08:51 MR: Many people in July are saying what's PPP? [chuckle] What is this stuff? I've heard about this stuff, but...

08:55 AH: There's a real head in the sand that happens for everyone, not just in massage, but that made itself very apparent and I found... Friends, I have people who had free premium memberships to Massage Business Blueprint for like five years, texting me and being like, "Hey, what's the PPP?" And I will be like, "We've literally recorded seven podcasts about that." [chuckle] It's fine, like my grandmother listens to the podcast, but it's okay if massage therapists don't. But like you have chosen to disconnect from 1] the general news, business information and what's going on in your profession, I don't wanna get your text message in September about, 'What should I ask?' 'Oh, I have a client who had COVID in March, what do I do?' Girl, Ruth Warner has told you like seven times in five different media what to do, go find it. Well, just so, you know, obviously, I do feel for people who have disconnected for reasons, it's just too stressful for them, and at the same time, I wanna meet people where they're at, so I happily send them links, but if people chose to be disconnected, of course, they're gonna be behind. And I hope that this encourages a lot of people, not just to get their money together but to get their community together so they have better resources when the second wave hits or the next pandemic hits or the next natural disaster, 'cause it's gonna happen.

10:15 KC: Yeah, and I think one of the themes of this podcast and a lot of the communication that's happening right now is this is a wake-up call, we're learning some lessons and those lessons will be applied during this time, but also going forward. I think this is just, like you were saying at the beginning, this just exposed things that we could be doing differently all along the way.

10:36 DB: Yeah. The same things that have come up now are the same things that are gonna make your business strong no matter what the timing is.

10:41 KC: Yeah, and I wanna touch on something too, Michael, you brought up earlier about paying quarterly taxes from your personal account versus your business. So, for people who aren't sure about what to do with their money, how to separate it, how not to separate it, what do I do? Why is it important to keep business and personal money separate?

10:57 MR: Yeah, big pet peeve in mind. So separating your business and personal money has a lot of advantages and it's really important because 1] it's just raw organization. When you blend your business and your personal money together, you are saying, 'Hey, this is not a business, this is some hobby I do, and it's just part of me in my life,' and you're not really treating it like an asset. So I'm really big on treating your business like an asset. You don't have to be super formal or crazy about it, but you wanna think of it as, 'Hey, this is a business that I manage, it's not my whole identity or everything about me, it's something I do that I love, but it's an asset that I need to manage, I need to keep isolated in a business in a financial context, I need to help it grow, and I use it to produce an income for me, it should produce an income and a return for me.' And when you think of it like that, it's a lot more healthy, I think just mentally.

11:46 MR: And then 2] when you blend business in person, like if you buy personal things with business accounts and business things of personal accounts, you start to... The more you do that, the more you open yourself up to risk of your personal finances being audited if the IRS wants to investigate your business account. So if you're being audited, you wanna have that separation or that liability veil, for example, if you have some liability issue in your business, you don't want that to bleed into your personal assets and have someone coming after your house. So, by keeping your business and your personal finances separate, you are doing your best to maintain that corporate veil, so to speak, or that business veil, that is ideally between you and your business so that you keep your personal assets more protected.

12:31 MR: And like Allissa mentioned before, also, it's just good reporting. If you're messing with money flowing back and forth, it's not really... If it's blending stuff that should be separated, then you're gonna have inaccurate financial statements and that's gonna affect your ability for things like government aid during a pandemic, like this. Tax reporting, all sorts of things. So, a lot of really good reasons to keep things separated.

12:52 KC: Yeah, and what do you... Do you have a recommendation for people, how often they "pay themselves" or move money from their business account into their personal? Should it be on a regular basis or just when needed? Or, what do you recommend?

13:04 MR: Yeah, we talk about this in the webinar, we're gonna talk about as well, but there's a couple of ways that we recommend, so I think, Allissa, you like to say, either on a regular basis or a percentage of income.

13:14 AH: Or both.

13:15 MR: I am a big fan of regular. But yeah, both. Yeah.

13:17 AH: Well, whether you pay yourself a flat amount or a percentage of your gross, it needs to be structured, it needs to be either weekly or every other week or once a month, but you, I think it's important to take a regular draw from your business. The timing doesn't matter so much to me as long as it's consistent.

13:36 MR: Yeah, don't make it an afterthought, pay yourself as if you were paying an employee.

13:40 DB: I think it's something really important, and I've seen you write about it as well before, but it's treating your business like a business, and that goes back to so many massage therapists potentially treating it like a hobby.

13:51 AH: And if it's a hobby, that's okay, but do the brain work, do the thinking, and do the deciding so whichever it is, it's intentional. If your massage practice is a hobby, that's great, you just need to make sure you're covering your costs and you're happy about the amount of time you're working. What a lovely position to work from. That's wonderful. I want to do that one day, that's what I want my semi-retirement to be. But if you want your business to be a business, which is to say you want it to financially support you, then you gotta do some of the foundational work so that you know how much you're making, how to increase or decrease that depending on your own needs and wants and what your expenses are, and how to increase and decrease those depending on your wants and your needs, and your schedule and your life as it evolves. My practice does not look like what it looked like 15 years ago, and it shouldn't. I have learned by making a lot of mistakes how to change how much I'm working, how to change how much I'm charging, how to change my expenses. It's okay either way, but those approaches should be intentional.

15:00 DB: One of the other areas that we see massage therapists trip over sometimes is how important it is to track and claim cash income. Can you tell us a little bit about that?

15:11 AH: Oh, man.

15:11 KC: How much time do you have?

[laughter]

15:11 AH: Yeah. You know, this is a thing. 1] it's really important to track your tips and any other cash income, one, because you're legally obligated to. So if you're not, when you sign your tax return, you're lying. Cash and tips or income, and it matters, and it matters because people who didn't report their cash, they didn't get as much benefit. So if a client hands you cash and you pocket it, and you don't claim that, great, you're not paying taxes on it. But you also got a lot less in your unemployment award and your POA award, you got a lot less offered to you with your PPP loan, which again, forgivable, free money. If you use it the right way, it becomes a grant. So people who didn't claim their income, they got far lower benefits, and we wouldn't think that's a big deal, because normally we don't get unemployment benefits as small business owners and independent contractors, but we did.

16:07 AH: And there were a lot of people whose awards were half of what they could have been had they been truthful about their income in the past. A lot of people don't realize they have to claim that, so I don't wanna tell anybody how horrible they are for doing it wrong. A lot of people didn't know. We weren't taught this, I thought it was okay to pocket my tips the first couple of years I was working. I've definitely given a family member a massage who gave me cash for it, and I charged him half price and put it in my pocket before I realized that that was not okay. We've all done this and not everybody comes into owning a massage business with a financial background, but now you know, let's move forward with that.

16:44 KC: Yeah, and actually, when you're talking about like we weren't taught that. I, for years, taught business classes in core programs, and I would literally teach this lesson how important it was to claim all your cash tips and receipts and everything for all the purposes, mortgages, da da da da da da, the whole list, I literally had people laugh out loud at me in class. [chuckle] So I think that that... It's telling, but it's something that people really need. This is, again, one of those wake-up calls maybe now, where people will realize how important it is, this is like the moment where that lesson hits home.

17:19 MR: Oh, and to add one thing under that, it's also all these things we're talking about, are... They lead up to leading a clean business or running a clean business, and there's something so empowering about running a clean business. When your finances are organized, when you're claiming all your income, cash included, when everything's by the book, when your books are clean and your taxes are on time, like when you're running a clean business, you just sleep better at night. So it's good health-wise and well-being wise as well to do all these things we're talking about, because you just have a more peaceful sense about yourself when you're running a clean business.

17:54 KC: Agreed, absolutely. So we know COVID served as a wake-up call for the profession, what are a few things massage therapists can do moving forward to get it right this time, not only before another crisis hits, finger cross, please no, but just in general?

18:11 AH: Alright, so I follow this Homeland Security specialist out of Boston, Julia Kayyem, and one of the things she said right at the beginning was a crisis hits a community as it finds it, so if this crisis hit your business, and you found that you weren't able to quickly figure out how much money you made last year, if you weren't able to quickly know where to find Schedule C, line 31 or 32, I forget, and know how much your net income was from your business. You gotta look at your own business and find the weaknesses, find where you were at and how that helped you or hurt you, and fix those things. For me, it was that I had to spend a lot of time in the middle of March catching my year up. 2019 was fine but I had done nothing with 2020, which was fine. We were like, 10 weeks into it, what you gonna do?

19:01 AH: That pushed me to do a better weekly accounting, not that I've made a penny since March 12. But that really helped me put things together in a more organized manner. So, look at what you struggled with, maybe it was communicating with your clients, maybe you realized you didn't have a master list of email addresses or phone numbers for your clients, or addresses to send an I miss you card. Whatever that weakness was that was magnified, hone in on it and fix it, and if you can only fix one thing of five problems that you had, baby steps, man, we're all doing the best we can. What do you got, Michael?

19:34 MR: I would add all that. And don't be afraid to ask for help. So much of the time we get stuck, we're like, "Oh, I don't understand accounting, I don't understand taxes, I don't understand investing." All this stuff, or "I don't understand just basic cash flow stuff." Ask for help, a good accountant is not that expensive, and they will pay for themselves 10 times over in the grief you will avoid and the benefit you will get, so hire a good accountant to teach you things or to do the books for you or to help you with things like this. Join a community like ABMP's community or our community. Ask for help from professionals or from peers who can help you with this stuff. If you feel stuck, you don't have to DIY, you don't have to do it all yourself. Get the help you need and don't be afraid to reach out.

20:15 KC: And we know this was just the tip of the financial iceberg. Luckily though, podcast listeners and viewers of the special video version that we're filming for the ABMP CE Summit, we just added a new 90-minute CE course from Allissa and Michael in the ABMP Education Center called, Mind Your Money, based off of the content from their Massage & Bodywork column. So, if you're interested, check it out at abmp.com/ce, it's great content and it just takes this conversation and builds and builds and builds.

20:45 DB: You could find out their year-long column at abmp.com/mindyourmoney. Money at abmp.com/money, look at that.

20:56 AH: It's not just like boring print, we actually video demo the stuff we're talking about.

[chuckle]

21:02 DB: And both of you have been producing videos in the digital edition of Massage & Bodywork for each issue that's available on massageandbodywork.com. Thank you so much, Allissa and Michael, for joining us today and where can listeners find out more information about you specifically?

21:16 MR: Massagebusinessblueprint.com.

21:16 AH: Massagebusinessblueprint.com.

21:19 MR: Oh, there you go.

[laughter]

21:20 MR: Well, you say it again, Allissa. Somebody's supposed to do this.

21:22 AH: Massagebusinessblueprint.com.

21:23 KC: I feel like we should all say it.

21:26 S?: Massagebusinessblueprint.com.

21:32 DB: Thank you, everyone.

21:32 MR: Thanks.

21:32 KC: Thank you so much. Take good care.

21:35 MR: Bye-bye.

21:35 DB: We hope you enjoyed this special summit week version of The ABMP Podcast. Remember to join us online at the 2020 ABMP CE Summit to view the video version of this episode. Learn more at abmp.com/summit.

21:52 Speaker 6: This has been a production of Associated Bodywork & Massage Professionals. ABMP is the leading association for massage therapists and bodywork professionals in the United States, and beyond. From liability insurance to professional advocacy, award-winning publications to the world's largest continuing education library for massage, to this podcast, no organization provides more for its members and the profession than ABMP. ABMP works for you.