Tired of always stressing when tax time rolls around?
Well, I’m sure you didn’t start your fitness business to try to become a full-time accountant or a bookkeeper, right? Let’s face it: taxes are one of the most intimidating tasks involved in running a small business. By far one of the biggest mistakes most small business owners make is they don’t take the time to put an accounting system in place to help them manage their newly found cash flow. So to help you avoid this costly pitfall, here are three quick tips to help keep your fitness business on track.
Get a Plan
Don’t miss the boat when it comes to your tax deductions! With over 300+ potential small business tax deductions, you certainly can’t afford to wait until the end of the year to try and determine what you can or can’t deduct. Most business owners need to go through a paradigm shift of treating their taxes as a once-a-year event into more of a year-round process. This is why having an annual tax strategy to ensure you are maximizing every possible tax deduction is crucial to ensure you are keeping as much money as legally possible.
Know Your Numbers
Having a well thought-out bookkeeping system will do two things for your business. (1) Strictly from an operational standpoint, it will help you save money. Understanding your cash flow is just good business. Each month you should be reviewing your Profit and Loss Statement in addition to your Balance Sheet to keep a finger on the pulse of your business. (2) It will help you stay in compliance. As a business owner, the IRS puts what is called the “Burden of Proof” on you, so basically it is your job to be able to prove your income and expenses. Not to mention good bookkeeping is the best defense against an audit.
Know What and When to File
Your tax requirements largely depend on the legal structure of your fitness business, so whether you operate as a sole proprietor, LLC, S Corporation or C Corporation, your filing requirements will vary. In addition to your personal and business taxes required by the federal government, you will also have to pay some state and local taxes. Take the time to understand what your business is required to file and when. This will help you avoid any costly penalties and interest not only with the IRS but also with your state. The SBA provides a resource here for each state’s tax filing requirements for small business owners.
Interested in learning more about how to make tax season less stressful? Get your free copy of our 7-Step Guide to Tax Season for Fitness Business Owners.