As a gym owner or fitness instructor, promoting health and wellness for your clients is priority number one. And keeping your clients healthy is a lot easier when your financials are healthy as well. Much like personal health comes down to following proper diet and exercise principles, financial health is accomplished by following the tenets of basic bookkeeping. But don’t just take our word for it, ask the IRS.
Bookkeeping concerns the practice of keeping track of your business’ ongoing financial activities, usually by regularly recording the information in a ledger. So, whether you’re a national fitness center chain or a self-employed personal trainer, it’s vital your financial records are kept up to date and in tip-top shape.
Here are five bookkeeping tips for fitness studio and wellness owners.
1. Keep Everything Organized
You want to stay organized throughout the entire year so when tax time rolls around you won’t be tearing your hair out trying to find everything. Gather up any receipts you have along with documents on big equipment purchases. Not everything comes out perfectly, you’ll want to check your 1099-K forms for accuracy before you report them on your taxes.
2. Keep Any of Your Personal Finances Separate
When you start your gym, you will be responsible for handling your finances. To this end, it’s a good idea to keep your personal finances separate from your business ones. In fact, you want to set up a separate bank account. Separate accounts will keep you from having to sift through expenses later to find out which ones are personal and which are business.
3. Utilize Cloud Technology
We are no longer in the 90’s – upgrade your accounting system to the cloud. Our favorite cloud bookkeeping software is Quickbooks. Not only does moving to the cloud give you access to your financial data at any time, anywhere, it also allows for easy collaboration with your accountant or other parties that need access to your books. You’ll never have to worry about backing up a file, or making sure you have the right computer with you. Another beautiful thing about a cloud software is easy integration with other applications and software, helping to ensure all of your financial information is consistent and available.
4. Keep Your Receipts
In case you ever get audited, you have to be able to justify all of your expenses and revenues. For expenses, you must have the actual receipts – you can’t rely on bank and credit card statements – and if you use cash, a receipt is the only thing that shows what you purchased. I used to be guilty of just using my credit card statements but now we keep all of our documentation. That doesn’t mean we have filing cabinets all over the place. There are several great cloud-based receipts and document organizing solutions out there. Some of them even sync to most accounting systems and will automatically match the expenses from the bank feed.
5. Monitor and Prioritize Cash Flow & Profit
Cash flow is important because it allows you to operate from a position of power and allows you to remain proactive. When you have a negative cash flow or your bank account gets low, it makes you very reactionary and you may make decisions that are not in the best interest of your gym long-term (i.e. lowering prices, not having a business coach, taking bad clients, etc.).
Profit is ultimately why you are in business. Until you are making a profit, you don’t have a business, you have a job.
6. Keep Your Books Current
Having good bookkeeping is not just important for tax time, but it can help you run your business more effectively throughout the year. You may not know it yet, but having a good grasp of your business activity now will help you make better decisions for your fitness studio in the future. However, in order to be able to make those decisions, your bookkeeping has to be up to date. We recommend doing your bookkeeping on a weekly or monthly basis to avoid getting too far behind.
7.Plan for Expenses and Taxes
As you are performing your weekly or monthly bookkeeping sessions, be sure to plan for future expenses and taxes. Create budgets and projections so you can better understand your studio’s cash flow to plan for future expenditures. Now that you are self-employed, it is also important to understand that YOU are now responsible for paying the IRS and State taxes, not someone else. When you are doing your budgeting and projections, factor in cash that will need to be used to help pay for your personal taxes, now that you are the boss.
The Bottom Line
Fitness studio owners need to be aware of the importance of bookkeeping to keep business thriving. If you are a fitness studio with business loans or investors or are looking to get loans and/or investors, it is vital to have well-maintained books prepared by a professional accountant or outsourced bookkeeping services to ensure a smooth process.
Limitless Investment and Capital’s Bookkeeping Services for Fitness and Wellness Owners
Limitless Investment & Capital professional accountants have experience working with multiple fitness studio owners and wellness companies. We understand what it takes to run a successful company in this industry, and want to give you the financial data to succeed. Call us today to get started!