6 Tax-Saving Strategies for Gym Owners Before Year-End

As a gym owner, the end of your fiscal year presents valuable opportunities to optimize your tax position. Here are six strategic moves you can make to potentially reduce your corporate tax burden while reinvesting in your business.

1. Small Equipment Purchases: Immediate Write-offs

Did you know that equipment purchases under $1,000 can be immediately expensed?

This means you can reduce your taxable income dollar-for-dollar for these purchases. Consider items like:

• Smaller workout equipment (resistance bands, dumbbells, etc.)
• Cleaning and sanitization equipment
• Office equipment for your gym's administration

Remember: Only purchase what your gym actually needs - don't buy solely for tax purposes!

2. Major Equipment Investments: Depreciation Benefits

For larger purchases over $1,000, while you can't expense the full amount immediately, you can still benefit from depreciation deductions.

This allows you to claim a portion of the cost as a business expense this year. Consider:

• New cardio machines
• Weight training stations
• Specialized fitness equipment

3. Optimize Owner Salaries

Increasing your salary as an owner can be an effective way to reduce corporate profits and transfer money to personal income.

This strategy needs careful consideration of personal vs. corporate tax implications, but it can be an efficient way to manage your overall tax position.

If it’s not obvious, there’s a dual benefit here when you pay yourself more salary

1. Your corporate profits will reduce resulting in lower corporate tax, and
2. Your personal income will increase resulting in more money in your pocket

4. Year-End Bonus Declaration

Declaring bonuses before your year-end can help reduce taxable corporate income. These bonuses can be for:

• Owner compensation
• Key employee retention
• Performance rewards

It’s always best to talk to your tax accountant about this strategy to ensure you’re using it effectively and considering a holistic approach to corporate and personal taxes.

5. Home Office Deductions

If you're managing any part of your gym business from home, don't overlook home office deductions. These can include:

• A portion of your rent or mortgage interest
• Utilities
• Internet costs
• Home maintenance

These expenses are usually overlooked and can drastically decrease the corporate tax you owe in your business.

6. Revenue Timing: Subscription Management

For membership fees and subscriptions paid in advance, proper revenue recognition can help manage your tax timing. This means correctly allocating prepaid annual or quarterly memberships across fiscal periods.

When a member prepays their membership, you shouldn’t be recognizing that payment all at once. This will overstate your revenue across your fiscal year.

And especially so when a member doesn’t purchase a membership on day 1 of your fiscal year. This is almost always the case.

So considering your revenue timing on a prepaid subscription can help reduce your annual tax burden in your current fiscal year.

Important Considerations

Before implementing any of these strategies:

• Consult with your accountant to ensure these moves align with your overall tax strategy
• Keep detailed records of all purchases and expenses
• Consider the timing of these actions relative to your fiscal year-end
• Remember that business decisions should be driven by business needs first, tax benefits second

By planning ahead and implementing these strategies thoughtfully, you can potentially reduce your tax burden while investing in your gym's future growth.

If you need help implementing any of these strategies, we’re here to help. At Blueprint Accounting, we work with gym owners to help them be more tax efficient and make money from their gym.

Reach out to us today for a Discovery Call.