We all want be financially successful right? And when you think about that success, I’m pretty sure the vision of lots of clients and classes immediately spring to mind.
But it’s more than just that … and I’m afraid it’s the boring bit too – finances.
We all hate paperwork and dealing with financial records. But ignoring the rules and thresholds demanded by HMRC is a big mistake and can get you a hefty and completely unnecessary fine.
Here are five tips that will help keep you on the right track:
- Get an accountant: Trying to save money by not using an accountant will almost certainly be a false economy. They will prepare your annual accounts and advise you on what you can put against tax, from equipment, such as mats or weights, to the car mileage rate you can claim. They will also offer tax planning to help you decide when to set up as a limited company or register for VAT.
- Keep good records: The last thing you need is to get to the end of the tax year and find that you don’t have the information you need to file your accounts and then spend hours scrambling around and perhaps not claiming what you are entitled to claim. Always ask for receipts and keep a regularly updated record of earnings, possibly using an online accounting system, so all your income and outgoings are in one place.
- Set money aside: As a freelance fitness professional, you MUST put money aside as you earn it, otherwise you could be faced with a tax bill you can’t pay. Every year, there is a set amount you can earn before paying tax and this changes almost every year. Consult your accountant or check the HMRC website for updates.
- Sole trader or a limited company: As discussed in a previous Blog, many fitness instructors are sole traders. However, if you are earning over a certain amount, or if you want to present a more professional face, your accountant will be able to advise you whether it’s worth switching from sole trader status to setting up your own fitness training company.
- File accounts on time? You’re unlikely to win an argument with HMRC, so make sure you stick to their timings and avoid a fine. If you are a self-employed fitness instructor registered as a sole trader, your tax year will run from 6 April to 5 April of the next year. You will need to file your accounts by the following 31 October if you’re filing a paper form or by 31 January if you’re filing online. If you set up a limited fitness training company, your tax year will run from the month that you set it up to the same month the following year. Your accountant will be able to advise on when you need to prepare your accounts by and when you have to pay your tax and NI bills.