As a fitness instructor, your income can come from various sources such as:
- personal training sessions
- semi-private training
- group classes,
- online training
- merchandise
- seminars/workshops
- programmes
It's important to understand the concept of gross income and income tax when it comes to managing your finances.
Gross income refers to the total amount of money you earn from all sources before any deductions are made. This includes your hourly rate or salary as well as any bonuses, commissions, or tips you may receive. It's important to keep track of your gross income throughout the year so that you can accurately calculate your taxes and ensure that you're being paid correctly.
Income tax is a percentage of your gross income that you're required to pay to the government. The amount you owe depends on your income level and tax bracket, as well as any deductions or credits you may be eligible for. It's important to file your taxes accurately and on time to avoid penalties and interest charges.
When calculating your net income (profit), you'll need to subtract any deductions (expenses) from your gross income. This can include expenses related to your business, such as equipment, travel, and marketing costs. You may also be able to deduct expenses related to your home office or vehicle use, depending on the type of business set up.
Common expenses
To ensure you make enough income to cover your expenses, it's helpful to understand what types of expenses your business will incur. Here are some possible expenses that a fitness instructor might incur:
- Rent for a studio or gym space
- Equipment costs, such as weights, mats, and resistance bands
- Marketing expenses, such as website fees, advertising costs, and business cards
- Travel expenses for attending conferences or meeting with clients
- Insurance premiums for liability and professional coverage
- Certification or training course fees
- Phones bills
- Office expenses, such as paper, printer ink, and software subscriptions
- Utilities and internet fees for running an online business
- Professional dues and memberships
- Taxes, including income tax and self-employment tax.
Note that this list is not exhaustive, and the specific expenses that a fitness instructor incurs will depend on their individual circumstances and business structure. It's always a good idea to keep track of all expenses throughout the year to ensure accurate accounting and tax reporting.
A part of running your own business is keeping a record of the income and expenses for tax purposes. Is advised to review the Archives and Records Association of New Zealand who outlines the Record-Keeping Legislation for both paper and electronic-based documentation along with other various types of documentation such as financial records. The Securities Act 1978 states all records of an accounting nature should be kept for a minimum of seven years. Some records you need to keep include, but not limited to:
- Proof of income (bank statements, invoices, etc)
- Proof of expenses (receipts, invoices, emails, etc).
It is advised to discuss this further with your accountant in order to ensure you are collating all vital information to safeguard yourself and appropriately prepare in the event you are called for audit.
Watch
In the following video Personal Trainer Tash discusses how she manages her business finances.
