Whether you are a personal trainer, fitness coach, fitness instructor, zumba or yoga instructor, sports therapist, physiotherapist, holistic or alternative therapy practitioner the wellness and health of your clients is paramount and should also be for your business.
For businesses in the fitness and leisure sector, whether you are self-employed, in a partnership or limited company, keeping your financials healthy is fundamental to your success. Proper records, keeping a handle on costs and expenses, managing member subscriptions, paying your staff, understanding your tax and regulatory obligations can cause undue stress for many.
Here are our ‘Top Tips’ to help keep you keep a handle on your figures and your financials in good shape.
1. Keep your records organised all year-round
It may seem simple advice but by keeping all your daily transactional records as organised as possible throughout the entire year will pay benefits. In the not too distant future the Government / HMRC is planning on requiring tax returns, quarterly or even monthly, not Annually anymore! At the moment, when year-end arrives and the tax man is calling, you won’t be trying to find everything.
Take the necessary steps now to put a process in place to collect your receipts and records for both your expenses and revenue and keep them bundled together either weekly or monthly so that everything is to hand. Typically your accountant can help you put the process in place to organise this electronically and can even produce monthly or quarterly accounts so you always know where you stand.
2. Set your personal expenses apart from your business’s finances
Clearly differentiate your business from your personal bank accounts. It is in your business’s (and your own) best interest to maintain separate bank accounts. The most important reason is for tax purposes and by doing so ensures you have a clear paper trail of expenses, revenue and payments relating to your business. It also can avoid having an unnecessary HMRC audit of your own personal account as well as your business. Check out what business advice your accountant can provide to you.
3. Understand your cash flow and future financial forecast and planning
When it comes to bookkeeping, keeping track of the money that flows in and out of your business each month is about as basic as it gets. For any business in the fitness or leisure sector it’s crucial to monitor cash flow, so that you can maintain oversight and consistency, as potential seasonal churn may impact your business. This helps with financial reviews, applying for loans, funding, such as mortgages and any form of borrowing needed to help the business expand, or your personal wealth.
4. Manage your inventory through regular stocktaking
If you sell products to members (i.e. food, drinks, nutrition supplements or branded merchandise) regular stocktaking where you count and match against your records should be undertaken. You might have, for example, equipment and accessories you buy that have a future worth. These need independently assessing and appropriately claiming through your accounts for tax relief or retaining a worth on the Balance Sheet so the business can prove it has assets of value to loan against, running a Fixed Assets Register claiming depreciation.
Maintaining your inventory records helps you keep track of any theft or merchandise that has gone missing and can also help you identify what products your members are purchasing to help you with future buying decisions.
5. Meet your tax and pension obligations through Payroll
If you have employees, you will need to pay their salaries either weekly or monthly and ensure you fulfil all associated tax and pension obligations through the payroll account. Be aware that new IR35 rules coming into effect April 2022 are likely to impact how you pay ‘sub-contractors’. The Controlled Employment rules indicate that once the business has staff on payroll everyone, no matter how they are classified, needs to be on this method. It’s becoming a complex tax area and if you have sub-contractors it may be prudent to conduct a review to ensure you remain within the confines of the current, not past, legislation. The exercise should also help to avoid or limit tax assessments and penalties. This support ensures you account for everything correctly and are up to date with your obligations to comply with the tax reporting requirements. If you need advice and support on processing payroll, pensions, accounting for all your business entitlements and knowing your RTI (Real Time Obligations) a payroll bureau will be able to assist.
6. Record your purchases
Saving and keeping track of the materials or supplies you’ve bought for your business, such as towels or floor mats, will help with calculating an accurate profit. You should also save all purchase receipts as they provide proof of eligibility on potential tax reliefs and deductions. There is also claims and relief your business as self-employed, a partnership or company may not be processing as an entitlement to reduce profit and therefore tax. Are you claiming mileage for use of your own vehicle, reclaiming train and bus fares, travel to workshops and seminars or functions, whether in the UK or overseas and are there other expenses in the fitness and leisure sector that you can offset against income but perhaps you do not currently?
7. Consider cloud software
Cloud software can automate a significant amount of your bookkeeping which takes the stress away from you. It also allows you to see your finances in real time. Whilst cloud software is efficient you will still require a qualified and trained senior bookkeeper or accountant to review the figures at monthly or quarterly periods, or at the year-end. The advantage of this is a saving on your own resource and the ability to access a holistic view on how your accounts look and your business is performing at any point in time.
8. Set up recurring billing
For medium to larger gyms and those with more and more subscription-based memberships, it makes sense to introduce this feature to your business if feasible. This has a double advantage in that your members are billed the same amount each month and for forecasting purposes you can plan ahead as you will always get your money unless the member’s card gets declined and which notice can be immediate if you have the right technology infrastructure linked and built into your accounts software.
9. Outsource your bookkeeping
If tackling your bookkeeping needs is a bit too much to bear or you don’t have the time or necessary in-house skills to keep it all under control perhaps the most cost effective option is to outsource this service. Everett King have a dedicated in-house bookkeeping team, with expertise in the fitness and leisure sector and every client is managed by an experienced accountant who brings oversight, controls and strategic focus which means you received your bookkeeping and accounts to an accredited high standard.
How can Everett King help?
At Everett King we understand that running a self-employed, sole trader or even small to medium size business can become complex with the never-ending change of regulation and compliance rules by which we are all bound to abide based on government legislation. Your financials shouldn’t be an added burden for you. Outsourcing your bookkeeping and records to Everett King may make it a whole lot easier to keep up-to-date with everything. Whether you need help;
- Assisting with the initial company set up and save on self-employed / sole trader tax
- Conducting a review on your current operation and establishing controls and processes
- Producing monthly financial statements and receiving pointers and advice relating to cost savings
- Delivering year-end accounts and tax computations and tax returns, with advisories to save your business money
- Mapping out specific financial goals that will help your business grow and achieve its strategic targets
- Paying staff on payroll and using our bureau service for grants and entitlements
- Understanding your tax obligations to HMRC and applying appropriate tax cost reductions
- Stocktaking merchandise, or equipment, accessories or assets and using our consultancy to ensure you maximise inventory and identify appropriate controls
Contact us today to find out more about how we can support you to stay on track with your finances and let us get your finances in shape – Contact Us today and book an hour’s free consultation.