Question: Do you have a CPA or financial adviser who helps with your business?
I have run several different-sized health and fitness businesses in New Zealand, Europe and the United States. No matter how big or small the operation, I have always used a qualified accountant to assist me with my accounts and prepare my end-of-year tax returns. Using an accountant has many benefits and, in my opinion, they far outweigh the costs.
First and foremost, having a qualified accountant on board removes some of the anxiety that surrounds filing an accurate tax return. Employing an accountant’s professional services in essence “passes the buck” in the rare event that you get audited. Furthermore, having a third party to whom you must submit your income and expenses by a certain date provides the accountability to ensure you keep reliable records and hand them over on time. (Keeping reliable records also helps you structure and plan your finances, which makes it a lot easier to forecast for the future.)
A good accountant will help you understand which business expenses (e.g., educational materials, trade conferences, travel, etc.) you can write off against your income. What’s more, if you are unsure of any financial matters or have accounting concerns at any time, you have someone to call and ask. Your accountant (or any business professional whom you employ) can also become a source of referrals to your business!
Justin Price, MA
Creator, The BioMechanics Method
San Diego, California
I have worked with accountants from almost the beginning of Solo Fitness & Wellness. For more than 20 years, I have looked to my accountants for guidance, QuickBooks® tutorials and budgeting. Most important, they are my sounding board whenever a financial issue or big business decision comes up. They put it in perspective and weigh the pros and cons—which helps me make a better-informed decision that works for both me and the business.
My business is incorporated, and the tax laws are complicated. Federal, state and city tax payments are due quarterly. The tax laws are always changing, and CPAs keep up on them. My job is to drive the business to greatness, and my CPA’s job is to help get us to greatness lawfully and with healthy finances.
For the Solo specialists who work with my company, we hold a Training the Trainers workshop every 2 months or so. The goal of this internal meeting is to have face-to-face time and learn from an invited speaker. Many topics tend to be about exercise, fitness, nutrition and other supportive health modalities. Most recently, we have started to bring in more business professionals to guide us in areas we probably didn’t cover in our health degrees. Once I invited my staff to a meeting with my accountant. She went over the many nuances of being an independent contractor and gave suggestions for organizing 1099 tax forms.
Lisa Hoffman, MA
President, Solo Fitness & Wellness
New York, New York
While personal trainers will certainly benefit from using the services of CPAs or financial advisers, I’m going to share a cautionary tale with you. It’s about what can happen when you don’t seek qualified and experienced financial advice and you fail to stay on top of the numbers in your business.
Most fitness professionals are technicians. They are great at getting people fit and motivating them to come back. However, balancing the books and diving headfirst into spreadsheets, balance sheets, income statements and other financial reports is not what they consider fun.
In my business, as in many small businesses, money was tight. One of my cost-cutting measures, at least initially, was to do my own books. I soon realized that my business would go under if I continued along that path. That’s when I decided to hire a “professional.” Since money was tight, I found a local bookkeeping company to do my books for a reasonable price. Not really knowing (or caring) about the financial structure of the company put me in trouble from the beginning (but I didn’t know it yet). Because the bookkeeper didn’t know my business and was really just entering receipts into the accounting software, mistakes and structural errors continued to pile up for longer than I care to admit (more than 2 tax years).
I wondered why I kept losing money each month and was maxing out my line of credit and my credit card. It wasn’t until recently that I started digging deeper into the numbers and reports produced by our accounting software. Ugh! It turns out that my previous bookkeeper hadn’t been doing many of the tasks I assigned to her, despite her saying that everything had been done. I was so focused on working in the business that I didn’t follow up to double-check her work.
I decided I needed a real professional, and I began taking a much more active interest in the financial health of my business. I hired an accountant who was also a small-business owner and had years of experience managing the financial side of small businesses. I needed someone who understood the numbers and structure of my business instead of being only a “bean counter.” (Here is one perfect example of how my previous bookkeeper just reported numbers and didn’t understand the big picture: she made a clerical error and entered as the monthly revenue for one reporting period a number that was actually a third of our annual revenue. This mistake didn’t trigger a red flag because she was simply entering numbers without looking at the overall business context.)
When your financial person doesn’t understand the intricacies of your industry and your business, it’s a recipe for disaster. Over the past 4 months, my new, competent accountant has accomplished the following:
- completed an internal audit of the past 2 tax years
- found over $60,000 in accounts receivables for me (some more than 18 months old)
- sent statements of accounts and followed up with clients to collect much of this outstanding money
- restructured our chart of accounts and office processes to reduce complexity and administrative hours while providing clear, concise financial reports
- implemented a series of regular, informative reporting standards from our accounting software that allow me to understand my numbers at any moment
- streamlined our invoicing and billing systems
- informed me of payroll and business structures that are saving both staff and the company significant amounts of money in taxes each month
- put the business on track to be debt-free in the next 3 months
If I had hired the right professional in the first place and kept on top of the numbers, I would have saved tens of thousands of dollars over the past few years. Now that would be nice on the bottom line right now!
So what is my advice to trainers regarding money and working with an accountant?
- Learn about the basics of financial management and accounting (as painful as it may be in the beginning).
- Hire an adviser who can help you set up the optimal structure for your business. Do it right the first time!
- Hire a bookkeeper/accountant who understands your business structure and the fitness industry, asks smart questions, provides suggestions and gives ongoing feedback to help your bottom line.
- Stay up-to-date with your numbers, ask questions and require your hired professionals to provide clear data for you at regular intervals.
CEO, FRESH! Fitness
I’m fortunate in that my husband owns a family business and has always been my CPA. Given that he’s family, he always keeps a close eye on areas of the business that need attention. Further, he gives me great insights because of his experience with a small business. He obviously has a strong interest in my business. He’s able to help me with numbers based on my strengths so that I can make manageable changes that ultimately kick up my bottom line.
President, Reality Fitness Inc.
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