For a lot of people, the thought of finance results in a groan. That’s what big companies have people in grey suits for, it’s like some dark art that we don’t want to associate ourselves with. As a result, we often avoid it and turn it into a major chore.
For the majority of personal trainers, a simple spreadsheet will do a great job of tracking everything you need to track, as long as you have a process around using it and inputting the information on a timely basis. I would recommend you set up with two sheets, one for income and one for expenses.
Income:
This contains money received for the services you provide. Depending on the way you take payments this may be a list of clients with either monthly payments or if you do session blocks, payments and space to make a note of when they take the sessions, so the sheet becomes multi- purpose. From a finance perspective, you want to include the date received, the amount received, payee name and have a note space for any other relevant information.
If you also provide services you invoice for, such as classes at local leisure centres, etc. then you may want to set this up as a separate sheet with all the information you need to build your invoice but the money received should be added to the master income sheet when it comes in.
Include income based on the date received rather than the date you did the work. (Assuming you are using a cash basis for your accounts. In the UK this is the most straightforward option, and you are fine to use it if you run a small self-employed business with turnover of £150,000 or less a year, if you are bigger than this or using a traditional accounting method for some other reason, you need to account for income and expenditure based on invoice dates, but that is outside the scope of this article).
Expenditure:
Here you will list all your expenses if you have an accountant that helps with your tax return then if in doubt include it here and they will be able to advise if it is allowable for tax purposes.
If you do your own tax return, then I recommend spending a bit of time looking at the gov.uk website to understand what is allowable and what isn’t.
Generally, business branded clothing is allowable, but generic clothing wouldn’t be. Courses and education related to your business are normally allowable (so include your LTB subs). If you have a regular place of work, then you can’t generally claim mileage there but if you may be able to claim if you are going elsewhere. These are generic examples, and this article is not intended to provide financial advice. Please ensure you check with the government site or an accountant for your specific questions.
For each expense include the date paid, the amount paid, who you paid and what you paid for / it’s relevance to your business. You should also keep your receipts or invoices in a central place. Based on the cash basis accounting model you would include things as you pay for them so you may find that you include a course in one tax year when you pay for it but the related travel expenses in the next tax year when the course takes place.
Process:
This is the key part.
Whatever approach you take to manage your finances it is important to keep on top of them.
Whether it is an accounting app (like Xero, Quickbooks or ReceiptBank) and/or a spreadsheet, having a regular time slot you update and review your income and expenses will make life a lot easier than leaving it all to the end of the year.
You don’t want to get to the end of the year and realise that you haven’t been paid for something. Nor do you want to be scratching your head about something on your bank statement trying to remember what you paid for
If you find yourself regularly running out of money or stressing about finance, then I would recommend looking at your processes around finance. While it won’t create money it will allow you to make better spending decisions and stay on top of things.
If you use a payment provider to manage your payments, you will need to be on top of notifications for skipped payments and cancellations. The timelier you can be in responding to these the less likely you are to find yourself with a large overdue account. Scheduling in a time to look at this is a good idea.
Having a daily admin slot in your diary can be a good idea, if you don’t have anything to deal with you’ve got a bit of extra time for study, or whatever you want, but I’m sure most of us have lots of little tasks that could be easily covered off if we included an allowance for it and our lives would be less stressful as a result.
Learn More About LTB
Would you like to learn more about finances as a personal trainer? Check out our Business Foundations Finance course which is available if you’re a member of LTB. If you’re not a member, you can sign up to our 2-week free trial. You’ll get full access to everything on the site and can cancel anytime.