Consider you are a gym owner with expertise that inspires many clients to start their fitness journey. But you don’t know how to manage the finances of the gym, how to calculate tax on the received payment and how to settle your business account. Then, it becomes quite difficult for your gym to survive in the fitness industry as financial management can break or make a fitness business. As per IHSRA’s report, around 81% of the fitness business fails within the first year of the launch. There are many factors behind it, and one of the main reasons for 81% of fitness business failures is financial management. 

If you want, as a gym owner, your gym to witness success with financial growth, you have to ensure proper financial management of your gym. But you might have a question in your mind about how you will be able to manage your gym finances and what tips you should follow. You don’t need to worry about it. Here, we will discuss what gym bookkeeping is and the tips that enable you to ensure proper management of your gym finances. 

Gym bookkeeping stands for 

As a gym owner, you need knowledge and skills in the fitness industry. With this knowledge and skills, you can provide your clients with a good fitness experience that aligns with their passion for fitness. On the contrary, it is also essential for you to understand gym bookkeeping.  

The bookkeeping process enables you to record what transactions are carried out and allows you to maintain and organize all your gym finances. The financial transactions that are tracked by the bookkeeping involve membership tiers, merchandise selling income, expenses, etc. So, it enables you to create an environment where you can deliver remarkable fitness services to your clients and keep track of your gym finances side by side. 

Key aspects of Bookkeeping 

To ensure the financial success of your fitness business, you have to understand the key aspects of Bookkeeping. You have to understand what aspects you have to cover as a gym bookkeeper to ensure a secure financial position for your gym. Here are the aspects that you have to cover as a gym bookkeeper

Recording transactions

As a gym owner and a bookkeeper, you have to record each and every detail of the transaction. You maintain records of all these transactions in journals and ledgers so you can tally each transaction in case any tax issue appears. 

You have to record each transaction, whether it be a membership tier or maintenance of gym equipment. 

Categorizing transactions 

After making a record of each transaction carried out in your gym, you have to ensure that you have categorized each transaction into specific accounts. Distribution of each transaction per category allows you to define the general expenses of your gym and also aids you in determining the financial reporting. Here are the general categories in which you can categorize your gym transactions. 

  • Revenue 
  • Expenses 
  • Assets
  • Liabilities 

Balancing and reconciliation 

As a bookkeeper for your gym, you have to ensure that your journals and the financial statements from the bank align. For example, you have bought gym gear and paid for the equipment through a credit card and forgot to enter the transaction into the journal. 

However, you receive the credit card bill after one month, and when you tally that bill with the gym ledger. Then, you find that you have forgotten to register one payment in the ledger. After identifying that missing transaction, you have to enter that transaction into the ledger for a balance between earnings and expenses. 

Financial statements

After maintaining a proper record of each transaction, you made for the progress of your gym. As a gym bookkeeper, you have to use these records in the financial statements for your gym.  So, you can use these financial statements to make financial analysis. On the basis of these financial statements, you can declare whether your gym is making a profit or seeking a loss. Financial statements that you can create are 

  • Profit or loss statement 
  • Cash flow statement 
  • Balance sheet 
  • Cash flow statement

How to manage gym bookkeeping as a gym owner

As a gym owner, if you want your gym to be a long-term success, you have to navigate the financial terrain. This navigation allows you to keep a record of your financial success and compliance in case of taxes.  Here are some gym bookkeeping tips that offer you a practical insight into how to manage gym books effectively. 

Handle accounts payable and receivable

If you want your gym to expand at the franchise model and witness long-term success, you have to make sure that you handle payable and receivable accounts separately. Payable accounts are the amount that you have to pay to different vendors for equipment, rent, utilities, and payrolls. However, accounts receivable is the amount that you lend to others. For example, the membership cost that you have to receive from your clients falls in the category of accounts receivable. 

Both accounts payable and receivable enable you to analyze whether your gym is on the profit train or cruising through a loss. As a difference, the payable and receivable accounts show the profitability of your gym. If the amount receivable is higher than the payable, it shows that your gym is on the profit train. However,  if the payable amount is higher than the receivable, then it shows that your gym is cruising through loss. So, you have to handle payable and receivable accounts separately to get a clear insight into your gym’s profitability. 

Track revenue associated with membership tiers

To increase the number of accounts receivable, you have to track the revenue your gym makes based on the membership tiers. you have to ensure that your gym offers different membership tiers to attract different segments of clients. Thus, it enables you to increase the transactions from other clients and increase gym profitability. 

Furthermore, you also have to check the transactions from various membership tiers on a regular basis. It enables you to track your gym progress. If any downfall happens in a gym membership, regular tracking allows you to predict the pattern and then outline the pricing structure accordingly. 

Manage employee payroll 

If you want to get additional tax benefits, you have to manage all your employee’s payrolls with precision. For example, you have appointed personal trainers as full-time employees and pay your employees on a monthly basis in your gym. Then, in this scenario, you are able to get tax benefits on the salaries of your permanent employees. Moreover, you can categorize the payments of these employees as payrolls. 

On the contrary, you collaborated with independent contractors as a personal trainer in your gym. Then you are not able to claim aunty tax benefit on these employees.. Thus, careful analysis of employee payroll not only allows you to get tax benefits but also enables you to define the profit-loss threshold for your gym. 

Handle cash flow 

You also have to ensure a proper cash flow in your studio for effective gym bookkeeping. Cash flow plays an important role in defining the success of your business. It affects your ability to handle bills, make an investment in new gear, or manage the studio operation seamlessly. 

For example, if you want your gym to be successful,  you have to ensure proper cash flow in your gym. You have to consider the fixed and variable expenses to provide cash flow. Moreover, you also have to consider rent and heed of seasonality, which can be varied. So, if you make proper arrangements while ensuring adequate cash flow, you are able to define the profit-loss threshold in your gym. 

Using a management software

If you want to keep a record of each financial transaction while streamlining your gym’s other important aspects, you have to invest in gym management software. The software enables you to keep a record of each transaction, such as inventory, membership payments, and merchandise selling. Moreover, you can also receive payments from your clients using the software. This software allows your clients to send you payment for membership ties safely and securely. 

Furthermore, gym management software enables you to schedule your clients’ classes, manage clients, and manage staff. Thus, using management software not only enables you to provide your clients with a remarkable experience but also enables you to maintain your gym bookkeeping records with ease. 

Final thoughts

As a gym owner, if you want your gym to be a part of a long-term success marathon, you have to be a good gym bookkeeper as well. As a gym bookkeeper, you understand the profit and loss statement that enables you to define the success of your gym. Moreover, it also enables you to ensure a proper cash flow in your gym. So, you can provide your clients with remarkable fitness experience while stabilizing the finances of your gym.