Bookkeeping Strategies For Gym & Fitness Studio Owners
Bookkeeping can be a tedious business. More than likely, your passion focuses on your clients' health and fitness, not the number-crunching that goes along with being a business owner.
Accounting and keeping your books in order can be confusing, time-consuming, and downright frustrating. Unfortunately, it is also a necessity. Well-organized books ensure you have access to accurate and up-to-date financial information, help you make sound business decisions, stay compliant and prepare in advance when tax season rolls around.
Luckily, there are some essential bookkeeping tips that, when practiced, will help keep your business better organized and running smoothly.
1. Separate your personal and business accounts
Personal and business accounts can often get muddied and mixed up, especially with small businesses. This may not seem like an issue at the beginning when your business is small, and you are only dealing with a few clients, but as your clientele base grows, it can make bookkeeping a much more complicated process.
Separating your personal and business accounts will make bookkeeping easier and allow for much more efficient tax returns. It can also give you the advantage of more accurate cash flow management and establish stronger credibility and professionalism with your business.
2. Keep your books up to date throughout the year
Your business is busy, which is a good thing! Unfortunately, it can also take your focus away from tasks like bookkeeping. Too often, business owners don't make their bookkeeping a regular priority, leading to more significant issues later on.
By keeping your books up to date throughout the year, you can have constant visibility on your gym's financial performance, allowing you to identify potential issues ahead of time. You can also make better business decisions since you will always have access to reliable and timely financial information, not to mention next tax season will be a breeze. If you don't have the time or the knowledge to manage your own books, consider outsourcing the work to a professional.
3. Leverage your gym management software for bookkeeping data
When choosing the software you will use to manage your gym or fitness studio, look for a program with dual functionality. You want to sync the sales and billing data on your gym management software with your accounting software to minimize errors and save time on manual data entry.
Software like Mindbody is an excellent choice. It can be used to obtain the sales and billing data necessary for the bookkeeping process and is specially designed to cater to the fitness industry.
4. Keep track of your equipment and depreciation
For most gym and fitness businesses, your success depends on the equipment your members use. Equipment is a fixed asset, and it depreciates over its lifetime. Because of this, be sure that when you purchase your equipment, you don't expense it at the time of purchase, as it could lead to misstated financial statements. You will also need to manage and track the depreciation value of your equipment asset every year.
Fitness equipment trends may change over time as technology advances. Therefore it's important to keep track of the value of your equipment so that you will be able to sell your old inventory for a reasonable price, helping to subsidize the cost of purchasing new equipment when the time comes.
5. Conduct monthly inventory checks
If your facility has a retail section that sells merchandise or fitness gear, you should conduct monthly inventory checks to prevent theft and eliminate errors. These regular checks can also help you stay on top of inventory levels and identify the top-selling products that your members want to buy.
For more information on how outsourced bookkeeping can work for you, contact Enkel today.
Cash Flow Optimization
As the name implies, cash flow is the amount of money that flows both in and out of your business every month. Every company aims to have positive cash flow, meaning more money coming in than going out. This is important because it allows you to pay your employees their monthly wages and allows you to cover all of your other operating expenses.
The operating costs of a gym can often be substantial. You must consider how much it costs to rent your space, lease your equipment, pay your employee wages, market your services and pay your software subscriptions. Without all of these expenses, your business wouldn't be able to run correctly.
It may seem challenging to maintain a positive cash flow with all of these expensive costs, but by following a few easy tips, you can optimize your cash flow and experience greater success.
1. Automate your payment and billing process
Managing and collecting membership fees can be a complicated process. Each member has different payment frequencies, payment methods, and membership fee amounts.
Finding a way to automate the collection process can save you a substantial amount of time while helping to ensure a constant inflow of cash throughout the year. Automatic membership collection also gives you better revenue forecasting abilities based on the new subscription and churn data reflected in your system in real time.
The best way to automate your payment system is by using a specialized gym or fitness-based software like Mindbody. This program allows gyms to handle all of their payments through a centralized payment system making tracking and reporting much simpler.
2. Lease your equipment instead of buying it
The amount of equipment a traditional gym requires can be extremely expensive, and purchasing all this equipment at once can significantly impact your cash flow. Since workout trends and technological advancements impact which equipment is popular at any given time, it can be much better to lease it, saving you money in the long run and improving your cash flow.
If you decide to purchase all of your gym accessories, consider financing instead of paying for it all at once. This will keep more money in your bank account and improve your overall financial situation.
3. Offer discounts for annual payments
Everyone loves a deal, and your potential members are no different! A great way to encourage members to join your gym is to offer them a discount to pay all their yearly fees upfront as one lump sum payment. This helps secure all payments and is a great idea to draw in new business, especially if your gym is still new.
However, you will need to track the payments as deferred revenue, but it is still extra cash in your account to use for your business if necessary.
4. Charge membership fees at the start of the month
Most businesses' expenses come due during the middle and end of the month. Charging all your memberships right at the beginning of the month means you will start with a higher positive cash flow. You also decrease the amount of time between when you have to pay your expenses and when you get paid.
5. Always keep your books up to date
This may seem like an obvious tip, but many businesses fall behind in their bookkeeping procedures. They, therefore, don't have access to accurate and up-to-date information at any given time. Keeping your books current is key to improving your cash flow, as it provides visibility on your upcoming expenses.
It also allows you to keep track of your vendor invoices to have a clear idea of when they are coming due. Many vendors charge interest on late payments, which is something that you want to avoid to keep money in your business instead of putting it frivolously into someone else's.
6. Forecast your cash flow
Forecasting is essential for all aspects of your business, but it can be especially helpful when looking into the future health of your cash flow. Forecasting cash flow allows you to predict what your gym’s situation will look like in the future. From this estimation, you can put a plan in place for slower months, allowing you to be more proactive than reactive.
Managing your gym's cash flow can help you control your expenses and ensure that you always have sufficient income to cover them. With a bit of planning and some helpful tips, managing your cash flow doesn't have to be an overwhelming task.
Accounting Tech Stack
As a fitness studio or gym owner, it is imperative that your books are constantly organized and your numbers are kept current - the health of your business depends on it. Many tools can help you do this, but some stand out among the rest. These software programs and applications will help to save you time and money and give you access to your critical financial data when you need it.
Xero
Many small business owners make the mistake of using Excel to manage their books. Unfortunately, Excel is prone to errors and can be time-consuming when managing large amounts of data.
Accounting software like Xero can simplify your bookkeeping. This cloud-based accounting software allows you to easily access all of your financial data while you're on the go. It can also help you manage your inventory, track your income and expenses, generate financial reports, and create budgets.
MindBody
MindBody is a cloud-based business management software program that is designed explicitly for fitness-based businesses. It has class scheduling and booking capabilities and can help you manage your memberships. It has POS payment processing capabilities and can help you keep in touch with your clients through its marketing application.
MindBody allows fitness professionals and gym owners to manage every part of their business efficiently. It is also scalable, making it easy to grow alongside them.
MindBody has some accounting functions that can be extremely useful for a fitness-based business, such as:
- Handling all payments directly through the app - If your gym or studio has an in-store retail section, you don't need a different POS system to track your sales. MindBody is capable of monitoring all of your diverse sales revenues.
- Managing recurring membership payments - MindBody can automatically charge and collect any recurring membership fees, which can also go a long way in improving your cash flow.
- Tracking staff hours - Using the MindBody app, your employees can clock in and out, allowing you to track their hours at ease. This can help you calculate payroll, tips, and commission.
Dext Prepare
Managing your expenses can be difficult. Handling paper receipts and manually entering them into databases and spreadsheets can be time-consuming and leave too much room for transcription errors. Dext Prepare is the perfect solution to this problem.
This program allows you to easily take photos of your documents, and the information will be automatically extracted for you. You can then export this data to your accounting software. In the event of a CRA audit, Dext Prepare will store copies of all of your receipts and invoices for up to six years. This program helps boost your business's efficiency as it reduces the need for manual data entry, saving you valuable time.
Payworks
There is no doubt that managing payroll can be tedious. With different employees working different schedules and making different pay rates, it can be challenging to keep track. Fortunately, Payworks offers a solution to this problem. It offers several features that make managing your employee payroll a breeze.
In the fitness industry, it is prevalent to have a range of full-time employees and part-time contractors running different classes or training programs. Having a mix of full-time employees and part-time contractors is an excellent idea for your business as it means you don't have to bear the financial commitment of relying solely on full-time staff.
Nonetheless, this mix of staff means that you will have to put in extra effort to track them separately in your regular payroll software. Payworks takes away this hassle and keeps track of full-time employees and part-time contractors, ensuring that your employee payrolls are done accordingly.
Finding the right tools for your fitness studio or gym business can go a long way toward helping you better manage your time, save money, and consistently access accurate and timely financial data. Keeping your books organized will help you considerably when it comes to making timely, data-driven business decisions.
If you want to find out more ways to optimize your fitness-based business and improve your bookkeeping, the team of professionals at Enkel can help. We know how important it is to have a detailed perspective of your business, and we can provide you with the assistance you need to enable it to run smoothly. You can contact us today for more information.
