Use these quick tips to get the most from your equipment investment.
Your Pilates equipment costs you money, and it also makes you money. In the midst of tax season, when you are finally ready to consider your assets, take some time to get organized. The following questions and answers relate to Pilates equipment purchased for use in a studio and are by no means comprehensive. Rely on the advice of a trained and trusted financial adviser before filing your taxes.
Equipment cost is simply the amount you paid for it. The cost of new equipment gives you a tax deduction in the form of depreciation, an often overlooked advantage.
What Is Depreciation?
Depreciation is a decrease in the value and usefulness of an item over a determinable length of time. To be eligible for a tax deduction, the item needs to be owned and used in the business and have an estimated usefulness of over 1 year. Independent contractors’ income tax returns show depreciation as a deduction within Schedule C (Profit or Loss From Business). Once you’ve fully depreciated the equipment, you can claim no further deductions unless you replace your equipment. Think of it the same way you would a new car. You can deduct a car’s value for a number of years as a business expense, but after the vehicle’s useful life you lose the deduction and it might be better to buy a new car.
“Most studio owners can turn the expense over to their clients by selling the equipment and taking that money and putting it toward new equipment,” says Jayson O’Donahue, account manager for Balanced Body®.
The cost of repairing your apparatus for use or sale is also tax deductible. “I just placed an order for replacement parts on a 20-year-old reformer worth maybe $1,500,” says Vil Shaynurov, a Los Angeles–based “Pilates mechanic.” “But after I replace the vinyl, recondition the wood and metal, and put on brand-new springs for a few hundred dollars, I can sell it for $1,000 more.” Service maintenance fees are tax deductible too. Keep a trail of your paperwork, as well as a bill of sale, even on used items. Include the purchase date, a description of the goods and the sale price.
It’s easy to sell a Gratz reformer in New York City but hard to sell anything in Montana. In today’s market, plan on waiting 30, 60 or 90 days to sell an item if you want to get the highest value—unless you price it at a screaming deal on craigslist. If you’re in a bind and need to get rid of some of your assets, contact teachers and certification programs affiliated with the equipment brand. You’ll be more likely to get higher offers.
Be prepared to put a lot of time into selling, unless you find a broker who will liquidate everything for you at a percentage. The Pilates Tech (www.thepilatestech.com) will pack your equipment for storage (tax deductible) or ship your equipment to a buyer in another state. If you expand, liquidate or place your equipment in storage, the moving costs—truck, men, shrink-wrap, dollies, etc.—can all be listed as expenses, so keep receipts.
We are often in denial about the two things a person can count on—death and taxes. At least face your taxes, which should be declared on any money that goes into your pocket. Find out exactly where you are financially by making an appointment with a tax accountant and exploring your options.
The author wishes to thank senior Pilates student and accountant Arthur Fishman, who works in Laguna Beach, California, and New York, for his help with this article.