Seven Year-end Tax Moves for Fitness and Wellness Entrepreneurs
By Ryan Smith
You can’t avoid paying taxes altogether (unless you’d like a visit from an IRS agent), but there are a few year-end tax moves you can make so your tax bill is a lot smaller next year.
1. Start a new business
Did you open your first yoga studio this year? As long as your start-up expenses don’t exceed $50,000, you can generally deduct $5,000 in business start-up costs during your first year.
If you incurred over $50,000 in start-up costs, your available first-year deductions will be lowered by the amount that you exceed $50,000. For example, if you spent $52,500, you’d only be able to deduct $2,500.
If you haven’t committed to your next venture yet, you can save on your taxes by getting the wheels in motion and spending your first $50,000 before December 31.
2. Buy new business equipment
If you buy new equipment, like weights for your gym or fresh towels for your spa, that you put into service before the end of the year, you can deduct the cost on your next tax return (up to $1,000,000 per asset, and $2.5 million in total). The only qualifier is the equipment has to be for the exclusive use of your clients.
3. Pre-pay for streaming music
If you play music for your clients, you can pre-pay for a year of streaming and deduct the cost now.
4. Repair old equipment
Sometimes it’s better to repair that old treadmill, rather than buy a new one. You can fully deduct the cost of routine maintenance for business equipment that’s suffering from wear and tear.
5. Invest in education
You can deduct the cost of education related to your current business. Whether it’s paying now for a Group Fitness Instructors Certification, or taking an online class to learn how to better manage your studio, investing in yourself now means a bigger deduction come tax time.
6. Donate to a cause you care about
If your business is aligned with a qualified charity (it doesn’t have to be fitness-related, although there are lots of those), then now is the time to give. The way you deduct charitable donations depends on your business structure. This guide can help you sort out the difference.
7. Buy bookkeeping in bulk
If you plan to use an online bookkeeping service next year (like Bench), you can pre-pay for the next year of bookkeeping and write it off as a deduction. The same applies if you’re behind on this year’s books and pay for catch-up bookkeeping.
Although this blog offers business advice, this content is for general informational purposes only—it is not intended to replace the guidance of a licensed legal or financial professional. Information created by third parties that we may link out to or feature on our site is not endorsed by us and remains the responsibility of such third parties. MINDBODY assumes no responsibility for errors or omissions in the content. Bench assumes no liability for actions taken in reliance upon the information contained herein.
This article was originally published on December 26, 2017 and updated on November 5, 2018.