7 Simple Bookkeeping Strategies for Health and Fitness Coaches

“Accounting is the art of turning chaos into clarity and confusion into financial wisdom.” - Michael Carter

Operating your own training or coaching business can be incredibly rewarding, especially as you see your client’s joy as their fitness, health, and overall wellness improve. And as your client improves, your bottom line improves. Right? If you are not on top of your bookkeeping, you may not even really know. Staying organized is vital to gaining success over the long term. However, many aspects of running your business, including bookkeeping, can be overwhelming. I mean, you are a coach, not a bookkeeper or tax professional. You have probably never been trained to do accounting.

With that said, here are 7 simple strategies that will help you maintain the books for your professional health or fitness coaching business:

1. Gather Essential Information From your Clients

Maintain detailed records of client information, including names, addresses, phone numbers, email addresses, and credit cards. This data not only aids in marketing but also streamlines the invoicing process. Organize them on Excel spreadsheets, or other similar online tools, but make sure that these records are safe and secure.

2. Have a Separate Bank Account for Your Business

People tell me all the time that their business isn’t big enough for a separate bank account or that it is just easier to have one account that you use for your business and your personal finances. I have not met one accounting professional that agrees with this statement. If you have not already separated your business transactions from your personal ones, stop what you are doing and open a separate business account before you do anything else!!

I would highly recommend Relay for their no-fee banking solutions designed specifically for small businesses. You can have multiple checking and savings accounts, debit cards for each checking account, free ATM deposits and withdrawals at thousands of ATMS, they will help identify recurring charges in your existing bank account, and it syncs with popular small business bookkeeping software like QuickBooks and Xero. It is the bank that I use for my business, and I couldn’t be more thrilled about it. If you are interested, signup for free via this referral link https://app.relayfi.com/v2/register/business?referralcode=GainsandLeaks for a couple of benefits that you won’t get by going straight to their website to sign up due to my relationship with them. Relay is also the official banking platform for Profit First. If you don’t know what that is, subscribe to my blog because I am already working on my article about it next.

3. Record All Your Financial Transactions

The best way to keep your financial reports accurate at the end of a period (month, quarter, or year) is to record ALL your financial transactions soon after you make them. The longer you wait, the more likely you are to not remember what a transaction was used for. It doesn’t matter how big or small, you should always record all your revenues and expenses.

For those just starting their business, Excel is recommended as a simple hands-on option. Create separate tabs for revenues and expenses, inputting transaction details, dates, and amounts. Keep all your printed sales invoices and receipts organized by date in separate folders for quick reference.

4. Identify Your Profit & Loss

Accurate records of revenues and expenses are crucial for determining your Profit & Loss, which tells you whether your business is making or losing money. There are a couple of simple steps to identify your Profit & Loss. First, create business expense categories, such as Rent, Supplies, Membership Fees, Taxes, Insurance, and so on. Then decide which category each of your transactions falls into. Add up all the amounts for each category. Determine which ones are revenue and add them up to get your total revenue. Determine which ones are expenses and add them up for your total expenses. Deduct your total expenses from your total revenue to get your Profit or Loss and assess your business's financial health.

5. Monitor Your Cash Flow

Monitoring cash flow is one of the most crucial elements for any business because it can turn into a big disaster quickly. Cash flow activity is the movement of your money in and out of your back account, or your wallet if you use actual cash.

But don’t get confused. It is not the same as Profit & Loss. Profit & Loss determines how much you made or lost in a specific period. Cash flow determines the amount of money you have at any given moment. Knowing your cash balance is just as important as knowing your profit. It makes it easier for you to create a budget for future expenses, especially larger expenses.

6. Maximize Tax Deduction by Identifying Your Expenses

While you want to record as many expenses as possible to reduce your taxable income, you can’t include personal expenses. So be sure to know which is which and remember to keep them separate. This is another reason that a separate business bank account comes in handy. In its most basic form, business expenses are expenditures essential to operating your business. Since you are a health and wellness coach or fitness trainer, some of your business expenses could include exercise equipment, certification or education cost, rent expenses, travel and accommodations for conferences, or anything else relevant to your business.

7. Schedule Reminders for Your Tax Payments to Avoid Late Filing

Take the time to learn about the IRS rules about the tax bracket that is applicable to you. Always prepare your tax filings before the due date to avoid paying penalties. And give yourself plenty of time. The IRS makes it difficult for a reason. They are more than happy for you to be late so they can take on penalties and interest. Find a scheduling or reminder tool that works for you, so you won’t miss it. If you are unsure what you should be doing, ask a bookkeeper or tax professional to help you out.

Getting Started

Doing your own bookkeeping can be confusing and overwhelming. However, if you follow these simple guidelines, you and your business are more likely to avoid future accounting-related trouble. Additionally, when you understand your finances, you will be able to identify areas that need improvement.

When your business begins to grow, your finances will expand as well. Some business owners hire a bookkeeper from the very beginning, so they don’t have to worry about spending hours learning about it. But some business owners wait until they are overwhelmed and behind. And often time, those are the businesses that have overpaid in taxes because they were not properly managing their books, even though they were doing their best. When you decide it is the right time for your business, hire a reliable bookkeeper who will look after the day-to-day of your business’ financial activities. If you wait until you are overwhelmed, it will likely cost you more money in the long run. I suggest hiring a professional to do the job, so you can stay focused on your clients.

Filing your taxes yourself, especially if it is your first year in business, can be time-consuming are frustrating. Gains & Leaks would be more than happy to be your bookkeeping and tax expert to help you with your day-to-day finances and to file your tax returns. Chances are it will be worth the reduction in your tax bill.

-Jeff