Accounting
Accounting and Bookkeeping for Fit Pros
Accounting and bookkeeping is a necessity in business but, not a natural skill-set for most. It is commonly procrastinated by small business owners because it feels like a huge undertaking on top of everything else we do to run a lucrative, successful business. A word to the wise though, it is very powerful work, and once tackled, very rewarding. The majority of my independent personal trainers and studio owners offer:
- “I’m not good at math”
- “I was never taught this stuff”
- “What the heck is a P&L?”
- “Why do I need an Excel spreadsheet of all my expenses?”
- Or, they are scared to death to tell me they haven’t filed a tax return in the last three years.
You may not know this about me — but I am a ‘math nerd’. I am so excited to discuss accounting because I LOVE the topic of personal finance. I’m an accountant’s daughter and was a good math student. As a business owner, my mother helped (er, uh, made) me learn the details of managing my own books. There is much I don’t know of course, but I am very excited to at the very least make sure you, my fitness professional colleagues have a basic understanding of the fundamentals AND a safe space to get some answers without judgement. I know I am the minority in my excitement, but why not capitalize on my enthusiasm and address something that has possibly eluded you. A clear vision of your financial present and your goals will empower your business. Take the pressure off yourself. It’s ok that you don’t know everything yet!
Let’s look at a few key points to simplify and ease the angst of this topic.
Experts are available to help you. Namely, a great accountant and a great bookkeeper. What should a great accountant or bookkeeper look like for your business? At the minimum, three things:
- Meet with you and understand the vision and brief history of your business
- Be candid with you and express faith in the success of your business
- Always be ethical, honest and competent
A great accountant will be willing to sit down with you and look at what you want for your business’ big picture, because they will be a partner in that vision. Maybe, they are an associate that you check in with two or three times a year. You want to take advantage of their knowledge. Remember, they look at the books of hundreds of businesses a year. Those insights are valuable to you. You also want to find a professional that really cares about your success. That’s why you are going to them. You may not yet know what your big picture should look like and that’s ok. A quality accountant can help.
Choose an accountant or bookkeeper who can be candid and who believes in you and your business.
I have an accountant I adore [Let me know if you’d like a virtual introduction. Peter Shannon and Associates.]. One of the partners of the firm was candid enough to say to me, “If you’re not making $125,000 a year, I don’t want you doing this.” He knew my qualifications, my work ethic and the market. He knew me well enough to say “No” to a new business that did not compensate me with a salary worthy of my experience. He set a standard and belief in my worth. If $125K wasn’t delivered, then I needed to be putting my efforts elsewhere. He knew the industry standard for someone with my qualifications and he cared about me as a practitioner.
Just imagine your accountant saying something like that to you. How would you feel if they knew you as a practitioner and knew your business? In taking the time to know you, they can set a standard for you based on knowing your business ethic and qualifications. This is a beautiful scenario, and a key component to a successful relationship with your accountant and bookkeeper. For the long run, you want someone who is going to be optimistic and part of your team in moving your business forward successfully.
An ethical and honest accountant and bookkeeper is mandatory.
Leave the shady, rule-bending, sneaky, dodging your fiscal obligation advisors out of your business. If there any feelings of doubt or you are noticing that your accountant is pushing what is legal or permissible, then by all means, say something and find another accountant. Ask questions. They should explain to you what they are doing and why. When it comes to Uncle Sam and our state and IRS obligations, we want honesty, integrity and someone who has our back. You should have confidence that your accountant holds you and your business’s interests to the highest standard. Uncle Sam is unwavering in enforcement. The risk isn’t worth it.
Next, how do you find someone with these qualifications?
I highly recommend talking with competent, financially literate, successful business owners. You might have a family member who has owned an accounting business for years, ask for their guidance if not their services (working with family can be tricky.) Consider a client who is running multiple successful businesses, is financially responsible, and to your knowledge, has never done anything to indicate that they spend beyond their means. For obvious reasons, discuss with them outside of session time, prefacing it with, “I respect our professional relationship, but if you don’t mind offering a referral to me, I’d appreciate it.” Ask them, “Do you have an accountant you love? Do you have a bookkeeper you love?” If their referral is indifferent and just wants to run the numbers and do your tax return, that might be fine, but I’m shooting for more than “fine” for all of you. There are great bookkeepers and accountants that are really passionate about what they do and want you to succeed as a small-business owner. You can find them if you ask around and interview.
IMPORTANT: Your bookkeeper and accountant should be two different people. (I have a fabulous bookkeeper as well, email me if you would like an intro.)
- Your bookkeeper is going to do your monthly P&L and balance sheet, and any kind of special reporting you need. (I used to love a detailed cash flow spreadsheet visibly accounting for every expense in addition to general categories. Special requests like this are between you and your bookkeeper.)
- Your accountant is going to handle big-picture recommendations: Legal changes, legal obligations, discussing the vision for your company, your corporate tax return and possibly personal tax returns.
I highly recommend accountants and bookkeepers that have some sort of project pricing. [This is covered in the Nine Week Turnaround. Email us if you have questions.] I also advise selecting an accountant and bookkeeper that are well-versed in working with other financial professionals. Your accountant and bookkeeper will need to connect at certain points and share your information to move projects forward. (Note: Your accountant and your attorney will also bounce back and forth between one another in their recommendations. Some decisions are both legal and financial. Deciding what kind of entity you should be: whether S-corp, C-corp, or LLC will be decided by the advice of both your attorney and accountant for example.)
In moving forward with accounting and bookkeeping as it relates to you, consider the following:
Be honest with yourself about fears regarding accounting and bookkeeping. If there is anxiety, annoyance, or frustration, talk it out with someone you trust. Avoid Paralysis by Analysis. Consider these common fears and find comfort that you are not alone…
- I’m not good at math.
- I have more debt than I even want to look at.
- I’m glad to have an increase in revenue but now I seem to have lost control of my time and schedule.
- I think I know how much I make but there never seems to be enough at the end of the month.
- I’m commingling business and personal funds and I don’t know how to remedy it.
State your fear out loud. For example: “I’m afraid. I don’t know the finances for my business.” It’s momentarily intimidating but it will move you forward.
Know the absolute basics of your numbers. A lot of us do not. Trainers tend to work in the mind-set of “this is how much I’ve earned this hour, earned today, earned this week or earned this month = how much I can spend.” This view is limiting and gets us into financial trouble very quickly. There are basic financial details with in your accounting that can empower you to make better decisions and ultimately be more lucrative. Doesn’t that sound great?
Know what’s really coming in, and what’s really going out. [This is the purpose of a Profit and Loss statement (P&L).] Start simply. Review your business checking account and look at all training deposits for the month. (If you don’t have a business account and you are commingling personal and business funds, please schedule a complimentary call here today.) When you suspect you are earning $300 a day you often will spend or rely on that total, as opposed to a more financially wise habit of honestly looking at your merchant account to view a legitimate total. Then, you will be reminded of a dip in revenue: “Oh, I forgot these three days were taken off, and then the flu bug hit everybody in the gym.“ With this reminder you will make better decisions moving forward. It’s honoring that moment that speaks to your gut and nags you to be honest about money. Don’t ignore your gut. Embrace the realization.
This same mentality applies to expenses. What’s really going out? We, independent trainers, for example, think it’s just studio rent and our cell phone. That’s a big part of it but the $50, $100 and $200 expenses over the weeks, months or year add up very quickly and make a huge difference when not monitored… liability insurance, CEU obligations, new devices, subscriptions, parking, gas, clothes for work, shoes for work, merchant fees, web hosting, hotspot, marketing expenses, etc.
Here are our takeaways:
- A great accountant will…
Be willing. Choose an accountant who will make time for you to meet and be a partner in creating your vision for the business.
Be candid. An ideal accountant will believe in you and your business, be straightforward and guide business decisions that lead you to the greatest growth. They also let you know when you need to pivot to a better case scenario.
Be ethical. Your accountant should be direct and fulfill their obligations as a licensed professional and their obligations to you as their client. They should keep your financials in line with all that federal and state legislation requires. You want a partnership with your accountant. Someone that supports your business’ financial success and fiscal responsibilities.
- Remember …
Your bookkeeper and accountant should be two different people. A bookkeeper handles day to day obligations: P&L, Balance Sheet, and often payroll. Both your accountant and bookkeeper have distinct responsibilities, and both are essential to the health and wealth of your business. [I love my bookkeeper. Email for a virtual introduction.]
- Getting started…
First, acknowledge any fears or insecurities regarding your business’ numbers. Fear and avoidance are common. But, you CAN overcome this. This is your money and your business. Second, know the basics. Know your revenue and your expenses to ensure a financially successful future. You are not expected to be a math wizard, just have some basic knowledge of the money flowing in and the money flowing out. Use actual bank statements and current credit card reports and invoices.
Business finances and accounting often sit in a negative light. It’s true, the numbers may not be something that you want to see at first. Or, it could be something that is uplifting to observe. Whatever your current state of affairs, I encourage you to take a deeper look at your numbers. It will be a significant, positive turning point for your business.
As practitioners providing healthy living solutions for a society struggling to find success in wellness, we can absolutely find success with our numbers, our bookkeeping, and our accounting. Remember the courage it takes for our clients to come in and say, “I need help. I don’t know how to work out.” Let’s exercise that courage ourselves.
- What financial or accounting fear have you overcome or financial habit have you added to your practice that might inspire others?
- Will you share your greatest financial fear as a small business owner?
- How could we help you most in overcoming that fear?
