Tax season, for personal trainers, is one of the scariest times of the year. Especially for the personal trainers who get into business because they love helping people, not because they love dealing with numbers. Plus, if you’re a trainer who works with accountants, you know you’ll rarely see them until tax season is over.
The truth is, tax season can be a stressful time of the year. The 2019 tax season is a particularly tricky one, with COVID-19 and isolation requirements wreaking havoc on the economy. In many countries, tax payment deadlines have been postponed, including Canada and the U.S. Check your government’s tax website for information on how your tax deadline has been impacted.
Even in a more typical year, it can be incredibly time-consuming to organize all of your documents and determine what you owe. It can be nerve-wracking to find out how much money you owe the government, leaving you wondering where you’re going to get the money from. And it can take you away from doing the things in your business that you really love to do.
Tax season, for personal trainers, can be all of these things…but it doesn’t have to be. With a little planning, preparation, and organization, you can set yourself up for an effortless tax season. Keep reading for five tax tips for personal trainers.
1. Put money aside for tax season
The very first thing one of my early mentors taught me was to set aside money for taxes. Unlike those who are employed by and receive salaries or hourly paychecks from companies, self-employed trainers and independent contractors don’t have somebody deducting the tax from their income before it’s handed out.
This doesn’t mean you don’t have to pay the tax… it just means your payment is delayed until tax season! Plan ahead and set aside a certain percentage of your income every single month in preparation for tax season. While it might be difficult to put your hard-earned money into a bank account you can’t touch, you’ll be glad you did when you receive your tax bill!
2. Stay organized with your receipts
Regardless of whether you track your expenses in a simple spreadsheet or in software designed for bookkeeping and accounting, it’s essential that you stay organized throughout the year. If you aren’t, you’ll be left spending hours trying to figure out where all your money went throughout the year at tax season, wasting time and leaving potential tax deductions on the table.
Create an organizational system that works for you. Many of the popular accounting programs have tools that allow you to scan receipts and upload them as soon as you receive them. You may also want to set aside an hour or two every week, month, or quarter to ensure all your expenses are accounted for and categorized correctly. This small investment of time will save you big headaches during tax season.
3. Understand your deductions
Not all of your money is going to end up in the hands of the government! As a small business owner, you can deduct anything that contributes to the operation of your business. If your business requires you to work from home, you can deduct a portion of your rent or mortgage, utilities, and insurance from your taxable income. All of those coffee meetings with potential clients and referral partners? 50% of those expenses can be deducted, as can any meals you consume while traveling for work.
Don’t forget to write off all of your workshops, seminars, and continuing education training. If you have to travel for any of these, your flights and accommodation will also be deductible. Makes those cross-country workshops seem a little more enticing, doesn’t it?
4. Hire a professional
Your clients hire you because they know you’re the professional. They know they could spend the extra time and energy trying to figure things out for themselves, but they’ve chosen to invest in you because they believe you will get them to their desired outcome more quickly.
Similarly, you may also want to consider turning to the professionals. Tax season for personal trainers can be a key time of the year! Wouldn’t you rather focus on your clients? Rather than spending a day, a weekend, or even a week trying to figure out how much you owe, you could print off a few forms, hand them to an accountant, and have the satisfaction in knowing your taxes have been filed properly (without you spending all your time doing it yourself). While it will require an extra financial investment on your part, chances are, your accountant will be able to find extra deductions you didn’t know about which will offset the costs.
5. Adopt a mindset of gratitude
Giving your money away isn’t fun. It would be much more desirable to keep every penny you earned to yourself, wouldn’t it? The fact of the matter is that we live in a world that requires us to pay taxes, and we can either complain about it, or we can shift our perspective around it.
The fact that you have to pay taxes means that you generated an income in your business. And if you generated an income in your business, that means somebody paid you for a service you offer. And if somebody paid you for a service, it means they trusted you enough to help them make a meaningful change in their lives. It’s not so bad when you look at it that way, is it?
There will always be a little extra time and energy required from you during tax season. But if you follow these tax tips, stay organized throughout the year, maintain a positive mindset around paying your taxes, and consider delegating the filing process to a professional, you’ll have significantly fewer headaches to deal with.