Is he for real???

Just a question...

I have a few piano students that come to my house for lessons. My friend said if someone in my apartment (or neighborhood when I get a house) complains I could get a fine because my apartment isn't zoned for business.

This sounds a bit ridiculous. I am teaching private lessons, I don't have an official company or anything, and I'm not selling any retail items out of my home where I have a store front as my front door.

I realize that you can't open a bakery or a restaurant or a Target or a shoe store in your apartment.

Is he just trying to push my buttons or is this something I should be careful about?

You are selling a service. Piano lessons for money, that's a home based small business and so far as I know doesn't require a commercial zoning of the property.

Lots of people conduct "business" out of their homes without a business license or having their home or apartment rezoned to "commercial".

Just make sure you claim the income on your income tax. You should also be entitled to claim a portion of your mortgage/rent, insurance, utilities, property taxes and 1 room of your home for business purposes.

I agree..you may need a business licence to continue if you are doing the lessons in your own home and getting money through. It's better to be safe!

The laws might change from place to place but here (in Quebec, Canada), I heard the rule is that you can use up to 30% of a residential space for business activities. The percentage might vary, but I'm sure if your piano isn't too big (or your apartment too small), you should be fine.

I've never heard of anything so silly
my mom teaches students in our home Art and Chinese Language private lessons/tutoring-
as far as I know you don't need to report it unless your income on teaching private lessons surpasses a certain amount -- I'd second and say you better be safe than sorry, however I've never heard of anything like this.
I've always taken piano lessons out of someone's Apartment or Condo, and I've always had a piano and lived in an Apartment until recently and I've banged on that thing all day and no one ever complained...and none of my piano teachers had to have any business license (I mean they all had music degrees, etc)

I think your neighbor's just being annoying - but Just In Case you should check w/ an accountant maybe --- but as far as I know it either needs to be a certain % of income to count as a real business where you're making any real profit.

I'm certainly no expert, but I don't think you're breaking any 'laws', either. Plenty of people run their own internet businesses, and as far as I know, don't need any license or anything to do so. I do think that you would need to report the income at tax time, however..

I think your neighbor is just being a nosey busy-body.

~KK~

I used to operate my own communications business out of my apartment, and I did claim the tax deduction for one room's rent and a percentage of utilities, etc. I had to file the business name with the county (which entailed a small fee) and pay quarterly state sales tax on my earnings.

But since I was creating printable artwork and text, my product was more tangible than yours. It's hard to imagine they'd require you to create a business entity just to give a few piano lessons! But it's easy enough to check with your local tax authorities to make sure.

I will check all of that out. For the record, it's my friend, not neighbor, that's saying these things. I looked at the ordinance, and I am well within all of the guidelines. I don't think I should have to create a business entity to do what I do either.

Thanks for all of everyone's advice! I realize that my friend is just trying to push my buttons and be a-retentive.

Originally Posted by greenvillegal

I will check all of that out. For the record, it's my friend, not neighbor, that's saying these things. I looked at the ordinance, and I am well within all of the guidelines. I don't think I should have to create a business entity to do what I do either.

Thanks for all of everyone's advice! I realize that my friend is just trying to push my buttons and be a-retentive.

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I don't think you need to create a "business entity" either. You can work as a "sole practitioner". I used to run an accounting and income tax business from my home. I didn't create a business. I was the business. I claimed my income and a portion of my rent, utilities, and a percentage of my apartment space IE: my apartment had 4 rooms (not including the bathroom), so I claimed 1/4 of the space as an office.

But if you are making money, you have to claim it. If you don't and the government finds out you can get into serious trouble.

Here if you have more than a certain number of garage sales per year, that's considered a business and you have to claim the money on your income tax return. Now whether people do or not is another matter.

Yeah, you're right. If I am claiming the income (which I was planning to do next year anyway bc I will be mostly teaching) don't I need to file quarterly taxes and stuff?

Originally Posted by greenvillegal

Yeah, you're right. If I am claiming the income (which I was planning to do next year anyway bc I will be mostly teaching) don't I need to file quarterly taxes and stuff?

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I guess it all depends on how much you make. You can make arrangements to file quarterly or you can wait to see what you owe at the end of the tax year and then submit anything you owe then.

But chances are that if you are claiming a percentage of household expenses for the business, I doubt very much that you will owe any taxes on your income for the first few years. Unless of course you make thousands of dollars a year. Usually a business doesn't begin to make a profit for the first 3 years it's in business. If you aren't making a profit by then, the tax man gets suspicious and starts to eyeball you as someone who set up a business to avoid paying taxes.

The best thing to do is contact your state tax department and ask them how it's done. If you are only going to be teaching a few students a month, chances are you won't need to file any taxes in advance because they will just be giving it back to you in the end. And personally I'd rather have those few dollars in my bank account earning interest for me, instead of in the government's coffers earning interest for their already bloated bottom line.

I found an article that helps explain whether or not you can use the room as a deduction. http://www.polyphonic.org/article.php?id=115

Regular use means that the area used for business must be used on a continuing basis; occasional or incidental use does not meet the regular use test even if the area is used for no other purpose. Exclusive use means that the area is used for business purposes only. Exceptions to the exclusive use test are made for storage of inventory or product samples, and day care facilities.

Private music teaching studios
A musician who is self-employed teaching private music lessons in his/her home will be able to claim a home office deduction as long as the room (or portion of a room) satisfies the regular and exclusive use tests. If the room is also used to entertain guests, watch the television, or for any purpose that is not related to teaching the private lessons, the home office deduction will be disallowed. This is an example of a fairly straight-forward home office deduction.

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