Fitness enthusiasts can start a personal-training business and build lucrative careers helping others reach their health goals. The health market is booming, and the right marketing plan can lead to success. Managing the financial side of the business is equally as important, which includes accounting and tax preparation.
Tax planning is an important aspect of running a fitness enterprise. Income taxes largely comprise the difference between how much a business actually makes and how much it gets to keep. Identifying all qualifying business expenses and maximizing deductions helps ensure the difference between the two numbers is small. Inventory costs, legal fees, and marketing expenses represent potential qualifying business expenses for a personal trainer.
Other tax considerations include using a cash versus an accrual accounting method, and whether to use the calendar year as the business’s fiscal year. Cash accounting means the business reports earnings during the period it receives payment, whereas businesses that use the accrual method report earnings when the money is earned, even if the business has not been paid yet.
Forms to Fill Out
Since most fitness professionals are sole proprietors or unincorporated individuals, these kinds of businesses must submit Form T2125 during tax time. It breaks down all of the income earned by the business during its fiscal year, as well as all of the qualifying expenses the business paid.
Fitness professionals who are owners of incorporated businesses must fill out a T2 corporate tax return in addition to their T1 personal income tax return.
How to Use Small-Business Accounting Software
A year is a long time to keep up with income and expenses to be reported during tax time. Recording these figures manually is time-consuming and can lead to inaccuracies. Accounting software for small businesses can simplify the process by taking the bulk of the minutiae involved with tax planning off the business owner’s shoulders. Many small-business accounting programs are sophisticated enough to recognize potential deductions and credits that even seasoned tax professionals might miss.
When to Hire an Accountant or Bookkeeper
Whether to hire an accountant or bookkeeper is a personal decision for a business owner. Some fitness entrepreneurs will like to have an experienced set of human eyes looking over their books, while others prefer to save money and simplify the process by using personal training accounting software instead. An accountant or bookkeeper can be a great asset, particularly if the financial side of the business is complex or nuanced. However, gym accounting software gets more sophisticated every year and can often deal with bookkeeping nuances.
Apps and Technology
New technology represents heretofore untapped revenue opportunities for fitness professionals. For example, mind-body software enables clients to track their fitness progress in real time, with the results relayed automatically to their trainer. Adding such revenue streams can make a business more successful, but it also brings on the need for more sophisticated accounting practices. The right accounting software can ease the stress of managing multiple revenue streams.