NutriScape’s mission is to support independent dietitian businesses including setting up your nutrition counseling business and digital product offerings. While nothing written here should be taken as legal or tax advice, this article is offered as a first step towards getting your business set up so that you can see clients.
Choose a Business Structure:
The Small Business Development Center (SBDC) is an organization that can answer basic business questions that you may have about the legal requirements of doing business in your state and city. Here’s a link to find your local SBDC.
Your first steps to forming a business are choosing a name, and choosing whether the business will be a Sole Proprietorship vs LLC.
This is the simplest form of business. Buy a business license and specify that it is a sole proprietorship, and it’s done. The main disadvantage is that all liabilities against the business are legally your personal liabilities.
Creating an LLC is creating a legally separate entity to do business. It’s considered a separate “person” legally even if you are the only member. Depending on what state you set up your LLC in, it may be as simple as filing a few online forms on your state’s business and corporations website. Cost and complexity will vary by state and you can talk with someone at your local Small Business Development Center to find out more.
Employer Identification Number (EIN) or Tax ID Number
Opening a business bank accounts may require an EIN. You also may not want to give out your social security number on tax forms, so an EIN can take its place. Apply for one online and get it issued immediately.
Business Bank Account
First, know that banks charge much higher fees than credit unions, which are non-profit and offer the same services.
A separate business account is important for tax purposes because an IRS audit may look at your personal bank deposits and question whether or not they were counted properly towards your self-employment income. Keep business separate to avoid this.
Business Credit Card Account
Choose a credit card with no fees that gives you cash back and set it up to pay the balance from your business bank account each month. It may function just as well if it is taken out in your personal name rather than in the name of the business.
The purpose of a separate business credit card is to simplify tax record keeping. When you operate a business , you have to report self-employment income. More on taxes later, but it’s important to know that you will save ~ 30 cents in taxes for every one dollar you collect in business receipts, and that adds up quickly.
Unless you are organized, tracking down every one of those receipts can be very difficult. The task is a lot easier if you have a simple checklist to work with. Your business credit card statement can act as that checklist if you make it a point to buy each business related item using that business card.
Disclaimer: The following is not to be taken as tax or legal advice.
Your Self-employed (basically social security) tax rate is 15.5%. In addition to this, you also will have to pay the IRS your general income tax rate on whatever income your nutrition business generates.
Quarterly Estimated Taxes
Save and Plan to pay at least 30% of your income to the IRS. Self-employed people generally send in a check for their estimated taxes to the IRS on a quarterly basis. Since it is so difficult to estimate your self-employment income in the first year of private practice, the IRS often will waive penalties if you don’t pay the correct amount on a quarterly basis in the first year. Once you file your first year’s taxes, your tax preparer or business tax program will calculate the amount of estimated quarterly taxes and print vouchers with the dates that they are due next year.
Anything related to operating your nutrition business is deductible, meaning it should be subtracted from your business’s total income. This is why it is so critical that you account for all your receipts. These expenses are reported in Part 2 on the 1040 Schedule C. You don’t have to be intimidated, knowing that any of the business tax programs will fill the form out for you.
Here are some common nutrition business deductions:
- Your home internet costs if you are using it for your business
- Cell phone expenses are deductible if you use it for business
- Your business license and professional licenses
- Any professional fees for business coaching, tax prep, computer repair
- Your telehealth platform fees for Kalix, Healthie, Doxy.me, etc.
- NutriScape.NET fees would be considered an advertising expense
- Your website expenses if you have a website
- Printer/ink expenses
- Registration fees and travel expenses for any professional education activity
- Academy membership and CDR registration fees
- Reference materials, Nutrition magazines
- Home office expenses.
Saving For Retirement
You can also choose to deduct up to 25% of your income in a self-employed retirement account.
Hire an Accountant-or Not
Hire an Accountant
“Best practice” absolutely is to spend the money to hire an accountant. If you are going to be investing significant amounts of money in a nutrition business, you would be foolish to skip this professional help.
When Hiring an Accountant & Bookkeeper is Not Cost-Effective
In small part-time nutrition businesses, “best practice” can become the ivory tower philosophy that prevents dietitians from offering real world services. Keep reading knowing this: it is fully acknowledged that following minimalist bookkeeping philosophy would be considered a hack by any professional bookkeeping standards.
Bookkeeping and taxes are the least pleasant parts of being an entrepreneur. First, define ‘adequacy’. Professional grade bookkeeping requires detail. Detail takes time. Time is money. But, if you take an absolutely minimalist view, your accounting program may only need to accurately add up your income totals and expense totals and keep them carefully sorted according to the income and expense categories on the Schedule C. So, if you get enough information to file your taxes correctly, maybe that’s adequate.
Accounting Systems Can be Excessively Complicated
Every accounting system will come with all the extra functionality to electronically download and keep track of every conceivable account down to the penny. This serves the purpose of auditing to make sure money doesn’t go missing in an organization.
If that’s not an issue and you are doing your own books, you could elect to ignore all those “great” functions for electronic downloading of bank and credit card information and reconciling of account balances. In other words, this minimalist philosophy recognizes that as these functions are not critical to the creation income and expense reports needed for taxes.
Quickbooks and Paid Alternatives
Although QuickBooks is one of the best known accounting programs on the market and many dietitians say they use it, the cost is $25/month. There are also plenty of other choices.
A Free Bookkeeping Alternative
Wave accounting is easy to learn and does everything needed for a small business including everything. It is free.
Keeping track of receipts is the biggest pain point. Wave has smartphone app that allows you snap a photo of each receipt and import it directly into the online program for easy categorization. With Wave, you can empty the receipts from your wallet, snap a copy of each, file the receipt by month, and have all your expense data ready to categorize. You might want to set up your Wave expense categories exactly the same as those on the Schedule C. Then, you’ll be able to run an “income statement” report that should have all the numbers you need for your tax preparation software.
Set up Files for Your Business Paperwork
All this paperwork is going to get messy unless you are serious about keeping it organized from the start. You will need to find your business papers again and again over the course of your business, so make it easy on yourself.
More Help Setting up Your Nutrition Business
Again, for general business questions for your state and locality, here’s a link to find your local Small Business Development Center. If you are unsure of the best ways to set up your nutrition business, it can be really helpful have find a collaborator. You can find one by googling “dietitian business coach”.