Unexpected Tax Deductions for Your Fitness Studio
By Danetha Doe
As a fitness studio owner, filing taxes can be an overwhelming process. Keeping the financials organized is challenging enough—not to mention the fear of making a mistake and having the government come knocking on your front door.
However, while many fitness studio owners are scared of the IRS finding a mistake, the biggest mistake that many of them make is that they don’t claim enough deductions.
Forbes writer and tax expert Kelly Phillips Erb points out that many small business owners under-deduct on their tax filings because they are afraid of making a mistake—leaving hundreds (if not thousands) of dollars on the table.
How does this happen?
There are two primary reasons why a small business owner may under-deduct on their tax filing—disorganization and lack of education. In this article, we’ll go through the best way to keep your finances organized throughout the year, and commonly overlooked tax write-offs for wellness and fitness professionals.
A lesson in tax deductions for fitness studio owners
The foundation for filing accurate taxes lies in your financial organization. Keeping your finances organized throughout the year is important for managing cash flow and for filing taxes with ease and accuracy. If the company’s bookkeeping, receipts, and statements are not organized and in one place, the probability of making a mistake on the tax return is much higher.
Why is this the case?
Step 1: Stay organized
Let’s imagine someone sleeps through their alarm clock and is now running late to their morning meeting. They throw on their shoes, grab their bag, and rush out the door. Halfway to their meeting, they realize they left their keys, phone, and wallet. Forgetting these items could have been avoided if they had placed their keys, phone, and wallet in one place instead of having to scramble at the last minute.
Your tax filing works the same way.
Giving yourself plenty of time and keeping all of your information in one place ensures that you don’t miss any tax deductions. That might sound like a lot of work—and it can be.
That’s why using a bookkeeping program, like Bench, can make organization a fast and effortless to-do instead of an exhausting and time-consuming one. It not only keeps you organized and up-to-date, but it also has reporting capabilities that will catch expenses that get overlooked.
For example, merchant fees associated with your Mindbody account. Bench catches these fees for you and ensures that they are included as a deduction when you go to file.
Step 2: Don't miss out on common deductions
Now that your finances are in shape, the second step in filing accurate taxes is to know the common deductions you can claim. This is where many business owners miss out on deduction opportunities and overpay, simply because they are not aware of the various items they can write-off.
Before we dive into the common deductions fitness professionals can claim on their taxes, let’s review the definition of a tax deduction.
A tax deduction is a business expense you incurred during the year that can be used to reduce the amount of taxes the business owes, otherwise known as the tax liability. Any legitimate business expense can be claimed as a tax deduction as long as there are receipts and valid reasons. This definition is important to note because any given tax deduction could apply to one business, and not another. Or vice-versa.
The key is whether or not it is a legitimate business expense, which will be unique to the industry and approach to business.
Here are a few common deductions fitness professionals can claim:
- Supplies (yoga mats, towels, etc.)
- Services (cleaners, Spotify subscriptions, website hosting fees, Mindbody fitness software, bookkeeper such as Bench)
- Payroll—this is always a tricky area, so be sure you are using a program that accurately details the taxes associated with employees
- Home office
- Marketing and advertising expenses
All of the above are pretty obvious deductions for fitness professionals.
Here are the most commonly forgotten deductions:
- Education expenses (certifications, Mindbody BOLD conference, professional development workshops)
- Healthcare expenses
- Cost of employment search (this could include any marketplace subscriptions or costs related to securing a client)
- Professional association fees
- Attire related to your line of work
For a more comprehensive list for fitness professionals, check out this checklist: Tax Breaks Every Fitness Business Owner Should Know.
What about personal protective equipment (PPE)?
The COVID-19 pandemic required all businesses to take safety precautions to the next level. This meant business owners went the extra mile to provide their employees—and even clients—with protective gear, including face masks and gloves. Generally, any expenses that are ordinary and necessary are deductible for small businesses, meaning these items are considered a deductible business expense.
If you made these purchases with Paycheck Protection Program funds (PPP), they still qualify to be claimed as an expense on their return. If you did apply for a PPP loan, you may want to seek out a tax expert who can help ensure your taxes are in order and help you benefit in the future.
Say goodbye to tax-related stress
When it comes to tax deductions the two most important things to remember are to keep financial documents organized throughout the year, and remain educated on the types of write-offs that are available to your fitness business.
Mindbody does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only. You should always consult your own advisors for tax, legal and accounting advice and before engaging in any transaction or making decisions about your own business and circumstances. Mindbody assumes no liability for actions taken in reliance upon the information contained here. Mindbody Business articles and other Mindbody blog entries reflect the opinions of the authors and do not reflect the views of MINDBODY, Inc. or its affiliates. Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success.