Maximize your gym's profitability with these 6 key tax deductions. Learn how to navigate the complex tax landscape and save money on everything from equipment to utilities, wages, maintenance, marketing, and insurance from a CPA specializing in gym finance.
While you are excited to get people come in and use your machines and inspire them to reach their fitness goals, you also need to be focused on the numbers too.
Things like overhead costs, maintenance, cash flow, and taxes will impact the health of your gym.
Paying taxes is an unavoidable part of running a business, but what if I told you there were ways to save?
Most gym owners do not know the amount of money they could potentially save by deductions items from their gym.
You may be able to deduct your gym equipment all at once if it it qualifies under the Section 179 deduction.
The Section 179 deduction changes year to year so it is important to consult with a tax professional about utilizing this.
You can still depreciate the cost of the equipment over its expected lifetime.
The IRS uses a system called Modified Accelerated Cost Recovery System (MACRS) to calculate depreciation.
Under MACRS, gym equipment is usually considered seven-year property, meaning you can deduct a portion of its cost each year for seven years.
Utility expenses that come as a direct cost of running your gym can be deducted from your taxable income.
The expenses must be ordinary and necessary to fall under the category of being deductible.
If you were to live above your gym in an upstairs floor, you would not be able to deduct all the electricity, water, etc, bills.
Keep all your bills and receipts and record these expenses consistently.
Always remember, the tax code is complex, and while these are general principles, the specifics can vary based on the details of your situation.
Consult with a CPA like Fitness Taxes or Asnani CPA.
The salaries and wages you pay to your gym employees, including full-time, part-time, and temporary workers, are fully deductible business expenses.
Even trainers, management, and custodial staff.
In addition to direct employee compensation, the payroll taxes you pay on employee wages are also fully deductible.
These deductions help offset the costs of having employees and can significantly reduce your gym's tax liability.
Maintenance and repairs are considered business expenses.
The IRS defines these costs as "necessary expenditures that a taxpayer makes to keep their property in a usable condition."
This covers everything from yoga mats, screws on a machine, or electrical repairs in a treadmill.
Always consult a tax professional to make sure you stay tax compliant.
Marketing includes costs like digital advertising on social media or search engines, print advertising in local newspapers or magazines, television and radio commercials, billboards, flyers, and more.
The costs of hiring someone to make these ads are also covered.
If you host a special event to draw in potential members or sponsor a local event or team, these costs can often be written off as marketing expenses.
Health insurance, liability insurance, property insurance, and workers compensation are all covered.
To ensure you are utilizing the most amount of insurance deductions for your business, consult with a tax professional.
Whether it's the significant investment in gym equipment, the essential utility costs, employee wages, the inevitable repairs and maintenance, your marketing efforts, or the necessary insurances, there's a host of deductions available to make running your gym more affordable.
The tax landscape is ever-changing, and there may be additional opportunities for tax savings.
We are a CPA that focuses on helping gym owners, coaches, and trainers with their taxes.
We have also written a course based on the business side of coaching, incase you don't need to pay monthly for tax help.
Book a tax analysis today.
