10 Common Tax Deductions for Fitness Businesses
By Cameron McCool
As a business owner, you're likely aware that you have access to standard small business tax deductions, but did you know there’s a good chance you also can claim a handful of tax deductions specific to your fitness business?
Spend a few minutes with this list, and make sure you haven’t overlooked anything before you file your taxes for the year.
1. Equipment and gear
Any equipment and gear used exclusively by your clients qualify as a business expense. This could include standard gear such as mats, weights, and machines, but also sound systems or water bottle refill stations. So long as these items are exclusively for the use of your clients, you can deduct them on your tax return.
2. Music and exercise videos
If you play music while you work with clients—for example, during a cycling class, or a personal training session—you can deduct the cost of your CDs, paid downloads, or streaming service.
In addition, the cost of instructional videos you purchase and play to teach clients are tax deductible. Hold on to any receipts that prove the videos or music you are deducting were used for business purposes during the normal operation of your business.
3. Home office expenses
If you run your business from a home office, it’s likely that you can claim the home office deduction. To claim this deduction, your home office has to be used regularly and exclusively for business purposes. It should also be the principal place of your business. Having a dedicated office space in your home that you only use for work purposes, with a door that you can close, is ideal. Even a corner of your living room that is used exclusively for business activities will pass the test.
On the other hand, if you use the space for work and personal purposes, you should think twice before claiming the deduction. For example, if you do your bookkeeping at the kitchen table, you can’t deduct the square footage of the kitchen—or the price of the table—as a business expense. Or if you have a training room attached to your house, and you and your friends spend as much time working out there as your clients do, it probably won’t qualify for a deduction, as it isn’t a dedicated home-based workspace.
To claim the home office deduction, you can either use the regular method or the simplified method. Work with your CPA to decide which deduction method is best for your needs.
4. Professional services
If you hire a lawyer, accountant, a bookkeeper or online bookkeeping service, or another professional whose service is both necessary and directly related to running your business—you can deduct the cost of their services on your tax return.
For example, if you hire Bench to do your bookkeeping (full disclosure: that’s us), and a CPA to file your tax return, the cost of these services is fully tax deductible.
Just note that if you hire a professional to do work related to your business, but include items of a personal nature—such as help writing your will—you may only deduct the portion of the fees directly related to your business.
If you’re unsure whether service and its fees are tax deductible, review the IRS’ official rundown on deducting legal and professional fees.
5. Entertainment and meals
If you go out for a meal or a coffee with someone for the express purpose of discussing business, 50% of the price tag is tax deductible. It’s worth noting that the meals and entertainment deduction often draws the attention of the IRS. Keep your receipts, and make a record of who you met with, when you met, and what you discussed.
You can keep track of this information on your smartphone with Expensify.
6. Internet and cell phone
Most businesses can’t operate without the use of a phone or access to the internet. Which means business-related phone and internet fees are tax deductible. If you use these services for business and personal purposes, you can only deduct the percentage of time you use them for business.
The price of any class you take to upgrade skills related to your business can be deducted. For instance, if you are a trainer and you take the Group Fitness Instructors Certification with the American Council of Exercise, you can deduct the cost of the course from your taxes.
Note that the education deduction only applies to the cost of courses related to your current business, and not to any anticipated changes in career. If you are a powerlifting coach, but you begin taking flower arranging courses so that you can become a florist, the price of the flower arranging courses cannot be deducted on your tax return.
8. Business use of a vehicle
If you travel to meet clients for training sessions, make sure you deduct costs related to the business use of your vehicle. There are two ways to claim business-related vehicle use on your tax return:
- By using the standard deduction, which 53.5 cents per mile as of 2017.
- By claiming the actual cost of gas, oil changes, and other vehicle expenses you paid for in the course of doing business.
Again, work with your CPA to determine the best deduction method. And in the meantime, record how and when you use your vehicle for business with a mileage tracking app like MileIQ.
Tolls, rideshare services, taxis, public transportation, and other costs incurred while traveling for business can also be deducted. This extends to trips you take to meet with clients or to attend conferences and professional development classes.
9. Subscriptions and memberships
Subscriptions for professional journals and trade magazines relevant to your industry are tax deductible. Membership in professional organizations also qualifies. For instance, the fees you pay to maintain Personal Trainer accreditation with the National Commission for Certifying Agencies (NCCA) can be deducted on your tax return.
10. Work clothing
The cost of work clothing is deductible. However, you cannot deduct the cost of any clothing items you might wear outside of work. Unfortunately, off-the-rack workout clothing can be worn when you are operating your fitness business and when you are exercising on your own time, so it isn’t a business expense.
The exception is if the clothing you wear for work has been branded with your company’s name or logo, in which case the cost can be deducted. If the clothing you wear for work needs to be dry cleaned, the cost of dry cleaning can be deducted as well.
What else qualifies as a tax deductible expense?
Generally, any business-related expense that is ordinary and necessary is an eligible deduction. And fitness businesses typically have access to an array of fitness-industry specific expenses. What you can deduct will depend on the nature of your business. If a business purchase you made doesn’t appear in this article, keep the receipt and flag it with your CPA before you file your tax return.
Disclaimer: This information contained herein does not constitute financial, legal, or other professional advice and is meant to be used solely for informational purposes. It does not take into account your specific circumstances and should be not acted on without full understanding of your current situation, future goals and/or objectives by a qualified professional. MINDBODY and Bench assume no liability for actions taken in reliance upon the information contained herein.
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