There’s a secret that no one tells you about running a fitness business: being an instructor and being a business owner are actually two very different roles, requiring different hats, skill sets, and hours in the day. Or should I say, extra hours in the day.
I get it – your schedule is filled with sessions and classes with clients. When you have a break in the day, or some free time, you want to workout, take a nap, run some errands, spend time with your family… anything BUT dealing with the operations of your business, updating contracts, or reassessing how that money is flowing in and out of your accounts.
The good news is, you only need to nail down a few of these strategies to run a business that is operationally efficient, financially smart, and covers your (well-toned) behind in the event of an accident or issue. Make sure you can check each box off the below list to make sure you’re not making running your fitness business any harder than it needs to be.
1. Work with a legal and/or tax professional to determine if you should form an entity (like an LLC or SCorp) and decide which one is best for you: Business entities like LLCs and corporations provide a layer of legal protection between your business and your personal assets – yay! But did you know they also allow you to take advantage of more tax incentives, allow you to write off expenses differently, and make you eligible for different financial resources? Don’t let the annual registration fee, or the legwork of opening an entity, scare you away without having the conversation first and weighing the benefits.
2. Separate all business monies from your personal money by opening a separate business bank account and credit card. In addition to being illegal, mixing business and personal money (also known as commingling) creates a huge headache come tax season. Who has time to go through every account statement for the past year, tagging transactions and counting revenue? Not me, and definitely not you. Save yourself the time, headache and regret; head straight to the bank and open a new account for your business only if you don’t have one yet.
While all money coming in and out of your business should be moving through a business bank account, you will need a business tax ID number (called an EIN) to open a business bank account. If you’re an LLC or corporation owner, your entity should get this when you register with the state. If you’re a sole proprietor you have the option to open a regular bank account, or obtain a tax ID number and open a business bank account.
No more letting clients Venmo you, and you transferring money directly into your personal checking account; it’s a huge red flag to Venmo and banks to freeze the funds!
3. Know what you can (and CAN’T) deduct from your business expenses and keep track of them. My philosophy on tax deductions is simple – know exactly what, and how much, you can deduct, and do just that. Clients come to me on all ends of the spectrum regarding their deductions: some are afraid to write-off their travel expenses (of course you should be!) while others are talking to me about writing off their family’s grocery bill each month (seriously, don’t!).
Your eligible deductions are based on your business entity (that again!) and can include payroll taxes, contractor wages, equipment, marketing expenses, networking events, business coaching (like your membership in AGENCY, or coaching sessions with me)… the list is actually pretty substantial so make sure you’re not leaving money on the table, or worse, taking something you shouldn’t be!
All financial and service-based transactions in your business should be in writing so you can be explicit in your expectations, policies and requirements. Not only do you want to ensure you’re never losing money with late-cancels and no-shows, your clients need to know what’s expected of them (don’t chew gum while working out, no cell-phones on the reformers), and how their information is being managed. If you offer teacher training programs or workshops it’s not enough to say “no refunds” on the registration page. If you have an independent contractor who rents space, you need to clearly state, and they need to agree to, your studio policies.
Agreements are just that – an agreement between the parties to follow the rules stated. Putting it in writing ensures that everyone’s on the same page.
5. Invest in your success and enlist help. The biggest mistake I’ve made in my own fitness business is deciding that I can do it all myself. Spoiler alert – I can’t, and I shouldn’t. Me trying to do it all alone meant that there were a lot of unnecessary holes in my business that easily could’ve been filled. For me, my email newsletters weren’t as great as they could be, and my website didn’t look as professional as the work I was doing. Because these are my marketing materials, I realized I was losing out on converting viewers to subscribers and subscribers to clients. Yes, I was losing money, but I was also doing the world a disservice by not doing a better job at sharing my message and magic, which I know needs to be shared.
When you decide you can do it all alone, you put yourself in a vacuum, and you create unnecessary and unreasonable pressure on yourself. Does help cost money? Yes. But money is great, because you can always earn more. The time you spend? The hours you lose stressing for not having a Liability Waiver or efficient business best-practices? You’ll never get that time back. Sometimes covering your assets means enlisting the help of those who know how to do exactly that, and will make your investment worthwhile.
If you’re looking to learn more about:
– why you should consider forming an LLC for your business;
– best practices for managing your business’ money;
– maximizing deductible expenses;
– paying yourself and your instructors;
– what you business’ agreements should say;
– and how to generally run a more efficient and legit business;
Then make sure to check out my course: Covering Your Ass(ets), where I’ll teach you the basics of creating and growing an operationally efficient, legally sound and financially thriving business through basic operating procedures. With course viewer-only content like my “14 Tax Deductions that You Might Be Missing” checklist and “Compare: Do You Need to Update Your Agreements” quiz, the course will pay for itself tenfold and give you the peace of mind that you’ve been searching for.