Thinking of opening a fitness business?
If you are really into fitness and are thinking about starting your own business, you might be wondering if owning a fitness business is right for you.
So many people are ready to start their business, they jump right into the deep end of the pool without knowing quite how to swim.
In the excitement of a new start-up, decisions regarding the financial backbone of a new company are often left until last or neglected completely. It is much easier to avoid mistakes and maximise your future chances of success if pre–launch planning is undertaken with professional help.
We can help you from day one by looking at your cashflow position, which is one of the most important factors for any new business; by helping you to find the best bookkeeping system for your business and by discussing your options for the best tax savings available.
Are you going to launch your business as a sole trader, partnership or limited company? Before you choose your business entity the following should be considered:
- commercial risks
- expected profitability
- use of car for business purposes
- tax planning preparation
- Business Plan
Have you set out your business objectives in writing? Can you demonstrate qualified experience in the type of business that you want to launch? How are you going to finance the company? What are your expectations for sales, profitability and investment in assets? Have you consolidated all this information in a formal business plan.
Even if you don’t want to borrow money, a good business plan will help you to understand your current position and give you a good indication of your future possibilities. We know that a good business plan is imperative to your business, especially given the current economic climate.
Banks and finance companies
Identify your ‘friendly bank manager’. As this can be one of the most important contacts for your business it’s crucial that you’re well prepared for that critical first meeting. We already have well-established relationships with all the major banks in Ireland and are able to help you prepare for your first and subsequent meetings
VAT (Value Added Tax)
You should decide whether or not it’s in your best interest to register for VAT from the time of starting up. Whether you decide to register now or in the future, both the profitability and the cashflow of your business will be affected.
One of the main advantages of registering for VAT when you do start-up is you’ll be able to reclaim VAT on purchases made before you start trading. Don’t worry though, if you find it’s best to register at a later point in time, Revenue have made it possible for traders to reclaim VAT prior to their registration provided the claim is made within certain time limits.
Tax traps to avoid!
- Tax Penalties – As soon as you have set a start date, ensure that you notify Revenue of your intention to commence trading. Self-employed individuals, partnership businesses and limited companies face penalties for failure to notify Revenue that they are liable to tax.
- VAT Penalties – Do not represent yourself as registered for VAT if you are not, as this is considered to be fraud. If you do register for VAT submit your returns and pay your dues on time to avoid late filing penalties, interest and surcharges.
- Missing Invoices – Always obtain a proper invoice for any business purchase and a VAT invoice if you are registered for VAT. If you fail to do so, you may find that your claim for tax relief will be denied, as will your VAT reclaim.
- Company Car – Whether you are self-employed, a member of a partnership or operating as a limited company, planning for the use of a car in your business needs to be thought through carefully. Self-employed individuals and partners will need to keep a log of business mileage to backup any claim for tax Limited company owners will need to compare whether the cost of using a car owned by the company will be more cost-effective than using a privately owned vehicle for business purposes. The tax implications vary considerably depending on many factors, which is why a careful review should always be undertaken in order to minimise any tax charges and maximise any reliefs.
Many crucial decisions are often overlooked in the pre-open phase such as taking time to find the right place to rent at the right cost and managing build-out costs in order to keep monthly rent and monthly loan payments reasonable. Some of these decisions are challenging and involve compromise but can make the difference between a successful business and a bankrupt one. Negotiate the rent on the front end. Obtain several bids from general contractors and suppliers. And really think, do you need that $12,000 water fountain in your front lobby?
The best time to ensure the financial stability of your gym or fitness business is when you are still in the planning stages of your fitness business.
Not sure where to start? Need an accountant to look over your future build-out or current expenses? We can help