Receipts should be offered to clients. The licensing jurisdiction or city may require this. This is particularly important if the client is running an account, insurance is being billed, or a credit card is being used.

Keeping records and receipts for all expenses including supplies, clothes, linen and rent will provide valuable deductions at tax time.

If the therapist has hired other therapists, the decision must be made whether to treat them as employees or independent contractors. Employees require more paperwork, including deductions for income tax, social security and Medicare taxes. Employees may be eligible for workers compensation and unemployment benefits. Independent contractors are simply furnished with a 1099 at year's end. It may come into question whether the designated independent contractor truly fits the criteria. There is an independent contractor guild available.

According to the Internal Revenue Service (IRS), if the hiring therapist has the right to direct or control the worker, the worker is an employee. Indications would include scheduling and training the worker. If the employing therapist has routines the worker is expected to follow, premises the worker is expected to work in, the right to discharge or terminate the worker, or a continuing working relationship with the worker, the worker is probably an employee. Other indications the worker is an employee are when the employing therapist furnishes materials (such as lotion and towels) for the worker to use or pays the worker by the hour, week or month. A wrong decision on the employee/independent contractor question could be expensive if the IRS determines the status differently in an audit. Back taxes and penalties may then be due.

Sometimes big companies make mistakes in this area. Microsoft hired independent contractors who had fewer benefits than employees and wore different colored badges. These differences did not impress the IRS when it looked into the matter. Once the IRS determined the "independent contractors" were really employees, the new employees sued Microsoft for back benefits, which the court awarded.

The IRS will determine whether a worker is an employee or independent contractor if asked. This requires the worker's consent. The form number is SS-8 and it is available at http://www.irs.gov/pub/irs-pdf/fss8.pdf.

If an employing therapist actually has employees, it may be worthwhile to hire an inexpensive payroll service, though payroll software is available.

At some point, it may be desirable to hire an accountant. Talking to others in the industry may be a short cut to finding a good one who has experience in the massage and bodywork field. An accountant who has worked with those in the beauty business could also be a good choice, as the issues are similar.

Records need to be kept for some time. The states and IRS will have rules. The NCBTMB requires they be kept at least four years. (NCBTMB Standard of Practice IV (0).) An accountant will probably suggest keeping them longer than any of these requirements.