By Mike Jesowshek, Special AFS Contributor
As we are entering the heart of tax season, fitness studio and gym owners are likely on edge. It does not have to be that way. We previously wrote an article on how to make tax season a breeze and I suggest you revisit that as we kick off 2019 so you know things you should be aware of. (and don't miss Mike's article from last year as well!)
However, now that it is tax season you have to bite the bullet and handle the 2018 items. I will be discussing 3 tax tips to consider as you go through this year’s tax filing. As always, being a business owner gives you incredible tax advantages, do not let those slip by.
Know What Deductions Are Available, Don’t Miss Out On Viable Business Expenses
All too many fitness studio and gym owners spend January and February completing back bookkeeping for the prior year. This leads to rushed financials just to make it disappear so they can file and move on. Unfortunately, this leads to many missed tax deductions. Of course, proactive bookkeeping and tax planning will always lead to the lowest tax liability but if that was not done, take a little extra time to make sure you are taking advantage of the business deductions available to you this tax season. Here are some examples to consider:
- Advertising and Promotions
- Business Meals
- Contractor or Commission Payments
- Gifts to Clients
- Home Office Expense
- Music for Classes
- Office Supplies
- Personal Use of Automobile
- Professional Services (Accountant, Lawyer, etc)
- Repairs and Maintenance
- Small Gym Equipment and Supplies
- Subscriptions and Memberships
- Travel Related Costs
- Utilities (including: phone/internet/etc)
Do not be afraid to ask for an extension so you can have everything gathered that is necessary for filing and make sure you do not miss expenses.
Do Not Rush
Many small business owners will rush through the tax season because it is one thing they always dread. As previously mentioned this can really be costing you valuable tax savings. Many small business owners think that extending their tax return is a bad thing. That could not be further from the truth. Do not be afraid to ask for an extension so you can have everything gathered that is necessary for filing and make sure you do not miss expenses. However, if extending there are two important things to remember:
- File your extension on time. The worst thing you can do is file late.
- Submit your estimated taxes due with the tax extension. An extension is just an extension to file but taxes are still due, so be sure to include your estimated taxes with your extension. Should you overpay you will get that back as a refund.
Learn From Your Mistakes
If this tax season is miserable just like every other, do something now to change that. There is no time better than the beginning of the year to get your ducks in a row so you can make next tax season more pleasant. Fight through this tax season knowing that the things you put in place now will lead to business accounting and tax peace. Consider these items:
- Complete your bookkeeping on a monthly basis.
- Do regular tax planning throughout the year to minimize your tax liability next year. Some tax strategies need to be implemented before year-end so always looking backwards can be costly.
- Send in estimated tax payments on a quarterly basis. By doing your bookkeeping regularly you will have a good idea on the profit of your business which you can use to send in estimated taxes now instead of year-end, where you could be hit with interest and penalties.
- Hire a CPA if needed.
Mike Jesowshek, CPA is the founder of the accounting firm JETRO and Associates. He has a strong passion for both fitness professionals and technology. He helps provide a digital accounting, bookkeeping, and tax solution for studio and gym owners who are looking to take it to the next level by utilizing modern, cutting edge technology.