Financial Planning for Personal Trainers

Organising the finances of your business can be a daunting proposition, but it needn't be that way. If you're self employed, a Sole Trader or a Limited Company, you have certain accounting & tax responsibilities that you need to understand.

This section aims to provide at least some of the basic information which you may need to know to get started.

We would advise you that the NRPT cannot give formal advice on the subject of finances and so we have included details of a recommended company to do just that (which can be found at the bottom of the Basic Principles section). The initial meeting is free of charge and they can provide you with a tax pack which is also free of charge.

We do recognise that some of you may have an extensive business background and so may not need this advice, but many of you won't and this is aimed at giving you a warm start. It may appear to be stating the obvious, but not to everyone. But do please let us know if you have any further ideas or suggestions for this kind of content. Happy reading!

Basic Principles for Organising

About You

As a self-employed person, you have certain accounting and tax responsibilities. These may be summarised as follows:

  • Maintain and retain proper books and records
  • Prepare accounts once a year
  • Prepare a tax return once a year
  • Pay any tax due
  • Register for and pay National Insurance Contributions

Who Do You Need?

In short, unless you are a Chartered Accountant yourself, you'll need to find a  firm of Chartered Accountants and/or Chartered Tax Advisers. If they are experienced in the health and fitness industry, then all the better.

Keeping Your 'Books'

As stated in the introduction, managing your finances should be straightforward and you have responsibilities to the Inland Revenue which require you to keep "Books".

'Books' are simply a record of all your transactions, both what you receive and what you pay out for. This section covers these areas in more detail. Whilst it may seem obvious, things like writing details of a transaction on a cheque stub, it is easy to forget which means you will probably then spend time afterwards trying to remember what you wrote the cheque for in the first place.

Whatever type of business you run, whether it is a limited company, partnership or you are self-employed, when completing your tax return you need to consider which business expenses are allowable and need to be reported.

There are tables that can act as a guide to helping you write up your books and also act as a point of reference to determine what types of expense are tax deductible. If you unsure, just note in your cash book and this can be reviewed with your accountant.

Records should be retained for 5 years.

The Inland Revenue have the right to impose penalties for inadequate records.

Some Simple Tips

1. Your Business Bank Account

  • We recommend trainers maintain a separate bank account.
  • Keep all bank statements
  • Write details of transaction on cheque stubs and paying-in slips and keep these.

2. Cash Book

This is a record of transactions reflected in the business bank account

  • Record all client fees.
  • Record details of all bankings.
  • Record all expenses paid out of business bank account.
  • Record all amounts taken out of business bank account for personal use ("Drawings").
  • Record any personal funds paid into business bank account.

3. Petty Cash Book

This is a record of cash expenses.

  • Record any cash paid into petty cash float.
  • Record all cash expenses (eg taxi/train fares, stationery, parking meters)

4. Invoices

These should be kept in separate file dividers month by month.

  • Keep all sales invoices raised.
  • Keep invoices for all expenses except where amounts are very small (eg pens, coffee etc).
  • Keep petty cash invoices separate from cash book invoices.

5. Other

  • Keep any other records eg credit card statements, building society books, which relate to the business
  • Keep details of any assets used for both business and private purposes eg record business/private mileage in your car so running expenses can be split. If you work from your home keep sufficient records to confirm which expenditure relates to business and which to private use.

Value Added Tax - or VAT

What is VAT? VAT is a tax on consumer expenditure. It is collected on business transactions, imports and acquisitions. Most business transactions involve supplies of goods or services, in your case the supply of Personal Training Services.

VAT is payable if they are:

  • supplies made in the United Kingdom (UK) or the Isle of Man
  • by a taxable person
  • in the course of a business and
  • are not specifically exempted or zero-rated

What are the VAT rates?

There are three rates of VAT:

  •     a standard rate, currently 20%
  •     a reduced rate, currently 5% and
  •     a zero rate

Do These Rates Apply to All Goods and Services?

No. Some supplies are exempt from VAT, which means that no VAT is payable. Also supplies are outside the scope of VAT if they are:

  •     made by a non-taxable person
  •     made outside the UK and Isle of Man or
  •     not made in the course of business

When Must I Register and Start Charging VAT?

The supply of any goods and services, which are subject to VAT at any rate are called taxable supplies. The current threshold above which you must start charging and paying VAT is £56,000. This is applicable for taxable supplies in the last 12 months or less.

If the value of your taxable supplies is over a specific limit as above, you need to register for VAT, unless your supplies are wholly or mainly zero rated in which case you may apply for exemption from registration. You may be charged a penalty if you register late.

There are certain circumstances when you might want to voluntary register for vat.

What happens after I've registered?

You need to charge VAT on all your taxable supplies from your date of registration and keep:

  • a record of all standard-rated goods and services you supply or receive as part of your business
  • a separate record of any exempt supplies you make and
  • a VAT account

At preset intervals (typically quarterly) you need to fill in a VAT return with details of your sales and purchases. If the VAT on your sales is more than the VAT on your purchases you pay us the difference. On the other hand, if the VAT on your purchases is more than the VAT on your sales you can claim the difference from us.

The flat rate scheme for small businesses simplifies VAT accounting procedures to save you time and money.

Further Help and Information

The HM Revenue & Customs website www.hmrc.gov.uk provides a wealth of information about vat, the rules, exemptions, processes, forms etc which will help you find your way around this area. Remember though that unless your taxable supplies exceed the current threshold you dont need to register.

If you are in any doubt or would like further help you can ring the Customs and Excise National Advice Service on 0845 010 9000, they are very helpful.

Please remember that the NRPT cannot offer formal advice on these areas, we can only point you in the right direction, but if you have any questions or would like to speak to someone about vat issues or any other financial aspect of your business then please contact your usual financial advisor.

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