Everyday Accountants are a pioneer of tax and accountancy services for the fitness industry in the UK. In this blog, we have summarised some of our top tips for self-employed personal trainers.
Our top tips, in no particular order, would help any personal trainer avoid some key pitfalls. These tips are an opportunity to improve your overall finances. Better tax management could potentially mean more money in your pocket such as avoiding falling on the wrong side of the law such as penalties for late filing of tax returns and late payments of tax liabilities owed.
Business Tip 1: Don’t be tempted not to declare all your income
Perhaps you receive money in ways that could be hard for HMRC to prove that you earned, such as cash received. It may be tempting to pocket the cash to save tax and national insurance. Firstly, this is illegal and is considered tax evasion and if ever discovered by HMRC, this could lead to potential fines or even imprisonment depending on the scale and deliberateness of the act. HMRC receive millions of tax returns every year, and if your tax return falls outside certain rules and averages, you may be subject to a tax investigation; it can happen.
However, there are also very good money management reasons for declaring all your income and paying taxes accurately. Firstly, there are income thresholds you need to meet in order to receive a stamp towards your state pension contributions on retirement. Secondly, there may be times in your life where you need to prove that you have a sustainable income such as if you want to get a mortgage to buy a house or take any finance to purchase assets such as a car or even furniture. Thirdly, there may be times in your life where you need to prove what income you earn to receive financial support. Perhaps you pay premiums on a business-related life insurance product that pays out on certain income levels you earn. More recently, perhaps you needed financial support from the government through COVID which paid out based on how much money you earned on average before the pandemic.
Business Tip 2: File your taxes as early as possible
Many self-employed individuals wait until the month of the online filing deadline (31 January following the tax year) until they file their taxes, and some even on the last day.
The filing deadline is also the payment deadline and therefore if you wait until January to file, you will have less than a month to find the money to pay what you owe the tax man. Rather than waiting until 31 January, you can file your return as early as 6 April in the new tax year.
Here at Everyday Accountants, we say filing your taxes as early as possible allows you to plan your finances better and ensure you will have enough money to pay any tax owed by 31 January.
Business Tip 3: Separate your business affairs with your personal affairs
At Everyday Accountants, if you were to engage with us to be your trusted accountants and business advisors, we would insist that you have a separate bank account for your self-employed personal training business. This bank account could even be a personal bank account when you’re self-employed making it quite easy to open the account with your current banking provider.
Keeping your business affairs separate makes it easier for you to distinguish between what is personal and what is business when you come to analyse your bank account. This could consume a lot of time if you have a mixed account.
Business Tip 4: Plan ahead and future proof
Many people adapt slowly to change. There can often be significant changes to industries, tax rules and legislation. The faster you can adapt, the easier it will make managing your business. For instance, a significant change to income tax within a few years will be Making Tax Digital (check out our other blog on this). Some of the improvements you can make is moving business records and bookkeeping to a digital platform such as cloud storage or bookkeeping software. Get ahead of the curve and save yourself potential stress and issues later down the line.
Business Tip 5: Seek Professional Advice for Complex Matters
Tax is complicated, and it is hard to get right yourself. If you are not sure about something, it is worth seeking the advice of a professionally qualified accountant.
You preach to your clients when they join the gym that they are best to hire you, in order to learn the basics and ensure they don’t injure themselves, so why would you not take your own advice?
It will save you hours in the short term and thousands in the long run, as a good accountant will save you money, worry and stress.
Plus as an added bonus, accountancy fees are tax-deductible, that effectively means the fees you pay save you tax at your marginal rate.
We could carry on even further, but we are sure that there is enough information here to support any personal trainer to make improvements to regarding their accountancy affairs. Feel free to read the different posts on our blog for more information on some of the tips discussed above and other interesting topics you may want to know.
Lastly, if you would rather outsource your accountancy affairs over to Everyday Accountants, please get in touch by email or sign up through our website.