Keeping records and information has got to be the least popular part of starting and running your own fitness business. Owners of fitness businesses are seldom trained accountants so this area of the company is often neglected. So, before you start panicking and putting out your CV for the personal training jobs, let’s start with some basic guidelines.
What is a sole proprietor?
The simplest form of fitness business start-up is what is referred to as a sole proprietor. This is nothing more than a person who trades using his/her own name. there are no formal registration requirements and you can simply begin trading.
However, once you start trading as a fitness business you will need to do the following:
- Open a bank account that is registered in your own name if you don’t own one,
- Register on the South African Revenue Service website for income tax purposes, and
- Register with the South African Revenue Service for VAT however if your turnover is low this may not be necessary.
If you are going to be employing people you will then also need to register for:
- UIF (Unemployment Insurance),
- PAYE (as an employer),
- Workmens Compensation (which is now called COID), and
- Skills Development Levy.
Keep records of what’s happening in your fitness business
As a fitness entrepreneur, when your business provides a service or sells a product (such as a nutritional supplement or something similar) you will generally be required to issue your customer with an invoice. This is simply a document that is addressed to your customer in addition to containing your company information, for instance, name, address, contact numbers, registration number and VAT number as well as information about the sale such as quantity description of foods or services, price and the amount of VAT
If you are providing goods or services on account, you can make use of an invoice as a delivery note. This means that your customer signs the invoice when the goods or services are delivered and it becomes proof that these were delivered. Your invoices must follow a numerical sequence. To staff off you can buy invoice books from your local stationery shop otherwise most account software packages will put together invoices automatically for you.
If you are going to allow your customers to buy on account then you will need to give them a monthly statement which is simply a document with your copay details on it that provides information on the most recent month’s transactions with the customer.
Each company should also have order or purchase forms, goods received notes, good returned notes and possibly delivery notes however these are not essential for very small businesses as much of the work is done verbally or (alternatively) on the invoice.
Every month it is necessary that you fill out and submit the following forms if you are an employer:
SARS has recently made this task a bit easier by permitting all three of the above forms to be completed on their EMP201 form. This needs to be completed as well as paid for by the 7th of each month. As an employer it is also necessary that you provide your employees with wage or salary slips which explain exaxtly what you are paying and what any deductions are for.
Regarding UIF you will also need to advise the Department of Employment and Labour about any changes in the details of your employees. Examples are pay rates, registration and new employees. Every alternative month you’ll also need to submit your VAT return and pay across the VAT due if you are VAT registered.
Every month you should also try and work out your income statement, balance sheet, cash flow, debtors ageing and creditors ageing. These can be done with most simple accounting packages or manually. These calculations will help you to understand how well or badly your fitness business is performing.
Want to know more about running a successful fitness business? If you do, please follow this link.