Tax season is here and Tax Day — April 15 — is quickly approaching.
John Briggs of Incite Tax explained one of the first steps they take in filing taxes with Box owners is to look at the Affiliate’s entity structure. Is the business an LLC or an S-Corp? And is that right for what the Box has going on?
“There’s never a one size fits all in tax code,” said Briggs, pointing out the tax code is 78,000-plus pages of exception after exception. “Because there’s exceptions, they really need to talk to somebody who can help them through their exact scenario, but for a standard one owner Affiliate, they’re going to want to be an S-Corp. If they have multiple partners, then they should really sit down with somebody because it can get complicated. But it’s all in the name of saving taxes.”
Briggs gave several other tips when it comes to tax breaks in the world of the Affiliate:
“President Trump recently signed an executive order asking those who have the authority to minimize the burden of the health care penalty,” said Briggs. This means if a Box owner doesn’t have health insurance coverage because they can’t afford it, they won’t get penalized.
As an owner, you need to look the part by buying the right equipment for the job. Briggs explained whether it’s buying Nanos or paying for your gym’s branded gear, those can be write-offs.
Briggs explained this more fully in his most recent Pro Talk, but basically you can utilize your home for business meetings and get a tax break out of it. “[It’s] such a great tax deduction for just a few things they have to do on their end to make sure they’re compliant and following it,” said Briggs.
As a gym owner, you probably buy healthy food and supplements. Those can be tax deductions. “No one is going to go to a gym where the owner looks fat or unhealthy,” said Briggs. “That’s work. If they’re spending money on it, it should definitely be expensed.”
Who knew communication could be a tax break? Briggs explained Affiliates use their cellphones to manage member relationships and connect with their community. That’s work and allows for a tax break.
Briggs said a lot of owners typically underreport their miles. Whether it’s going from location to location, taking a trip to the grocery store to buy premium food, or meeting with a potential member, the miles count.
“There’s no one size fits all right answer for paying your Coaches,” said Briggs. “Never accept the explanation that you should never pay your Coaches as an independent contractor or you should never pay your Coaches as employees, because it totally depends on the scenario.”
The last piece of advice Briggs gave for Box owners was to read “Profit First” by Mike Michalowicz. While a lot of Affiliates tell him their business is a labor of love, he explained that will only last so long if they are continually losing money. “Profit First” speaks on a cash flow management system. “Simply implementing some of [Profit First’s] strategies into an Affiliate’s Box will help them realize, ‘There is a way for me to take home money for all of my hard work,’” he said.