Of the hundreds of gym owners I’ve had the privilege of speaking with over the last three years, less than 20% have said they’re already paying themselves what they’re worth.
That means most of you reading this right now aren’t paying yourself what you’re worth!
I have a problem with this and you should too.
Now I want to tell you why you aren’t doing this so you can fix it. You can’t fix what you don’t know.
You are doing absolutely necessary work in this world – saving lives! We need more people doing this work. It doesn’t entice people, though, because the pay sucks! We can and are changing that.
1. Most gym owners don’t set anything aside to pay themselves before they start spending on the latest and greatest software, training program or marketing trend designed to increase revenue. They feel if they invest in just this one more “shiny object” it will be the answer to increased revenue and then they’ll have the ability to pay themselves.
In fact, most the time the exact opposite is true. If you start paying yourself first, getting your pay out of your operating expense account before you make any other decisions, two things will happen.
a. You’ll have less to spend on shiny objects.
b. You’ll be more energized by the pay you are taking and therefore more willing to look for more efficient and effective ways to do the same work as that shiny object WITHOUT spending your pay.
2. The second reason most gym owners don’t pay themselves what they’re worth they haven’t taken the time to determine how much they’d pay someone else to do all the jobs they’re currently doing in their business. Do you even have a list of everything you do? Can you assign it a dollar value? This can be very sobering because as I said at the beginning less than 20% of you are paying yourself that. So you’re quickly going to see the gap. Remember, the only way to close a gap is to first recognize it exists.
3. The final reason most gym owner’s don’t pay themselves enough is they don’t know their numbers and targets for spending on fixed costs. This leads to spending too much in these areas and voila- not enough money left to pay themselves. If you’d like help knowing how much to be spending on key areas (rent, payroll, marketing) let us know and we can help.
The good news is 20% of you are paying yourself what you’re worth and that means it’s possible for the rest of you. If you’d like help to know how you can avoid the burn out and start living the life you dreamt of when you opened your business, reach out – we’re honored to help.
When you purchase a new vehicle, you get the fun of riding around in a new car with the new car smell! Our job has just begun – to get your new asset recorded properly on your books. We thought it’d be fun to give you a behind-the-scenes sneak peek at our part.
The first thing we’ll ask you for is the sales contract. It will give us the payment price of your car, and we’ll use that number to record your new asset on your balance sheet. If you paid cash with no trade-in, the journal entry we’ll make is:
Debit: 2019 Toyota RAV4 $25,500
Credit: Cash $25,500
Then we’ll decide on a depreciation method and book depreciation monthly or at year-end.
Debit: Depreciation Expense $5,100
Credit: Accumulated Depreciation: $5,100
If you traded in a vehicle that is on your books, we’ll need to make an adjustment to your books. Effectively, your old car will be eliminated from your balance sheet. If this asset had a book value and it was not fully depreciated, the net value would be compared to the trade-in value and a gain or loss on the asset sale would be recorded on your income statement.
Let’s say the balance sheet value of the three-year-old car you traded in was $10,000 and you got $8,000 on the trade-in. Here’s what we would record:
Debit: 2019 Toyota RAV4 $25,500
Debit: Accumulated Depreciation $15,000
Debit: Loss on Sale of 2016 Car $ 2,000
Credit: Old 2016 Toyota RAV4 $25,000
Credit: Cash $17,500 ($25,500 – $8,000 trade-in)
We’d also start the depreciation for the new car.
New Car Loan
Most often, a new car purchase will be financed, so we have a new liability to record too. We’ll need to get a copy of the loan documents from you and an amortization schedule of the payments. Let’s say you made a ten percent down payment with no trade-in. Here’s how that would look:
Debit: 2019 Toyota RAV4 $25,500
Credit: Cash $2,550
Credit: Toyota Loan $22,950
Then, each time you make a monthly payment, the amount will need to be split between principal and interest and those amounts will need to change each month.
Debit: Interest Expense $390
Debit: Toyota Loan $ 60
Credit: Cash $450
We left out a few trade secrets just to keep it intriguing. There are a lot of other numbers on a car purchase: taxes, licenses, warranties, add-ons, fees, and more. Some of these can be directly expensed, while others need to be included in the value of the asset. So if you’re happy that we’ll take care of this for you, we’re happy to do so.
Let us know if you purchase an asset this summer – car, truck, gym equipment or new air conditioner – so we can get it booked right for you. They’re all somewhat like this car example, but different depending on the type of asset. Either way, we’re happy to help.
It’s a gig economy. QuickBooks Online makes it easy to track and pay independent contractors.
In days past we used to call it “moonlighting” – taking on a second, part-time job for extra money. And we saw how prevalent this became was when millions of people had to resort to side gigs to keep afloat during the economic downturn of a decade ago. Some who had lost full-time employment even turned one or more of these part-time passions into a small business and became independent contractors for other companies.
If you’re thinking of hiring a freelancer to do some of your work, you’ll find that QuickBooks Online can accommodate your accounting needs for them nicely. Since they’re not W-2 workers, your paperwork needs are minimal. They’ll simply fill out an IRS Form W-9 and you’ll pay them for services provided, dispatching 1099-MISCs after the first of each year so they can pay their taxes.
Here’s how it works.
Creating Contractor Records
Warning: Be sure that any independent contractor you hire cannot be considered an actual employee. The IRS spells out the differences very clearly and takes this distinction very seriously. If you have any doubts, we can help you determine your new worker’s status.
You can either let a new contractor complete his or her own profile or do so yourself.
Like you would with anyone you employ, you’ll need to create records for contractors in QuickBooks Online. Click on Workers in the left navigation pane, then Contractors | Add a contractor. In the window that opens, enter the individual’s name and email address. If you want the contractor to complete his or her own profile, click in the box in front of Email this contractor…
Your contractor will receive an email with an invitation to create an Intuit account and enter W-9 information, which will be transmitted to your QuickBooks Online company account. This will make it easy to process 1099s when tax season arrives. He or she will also be able to use QuickBooks Self-Employed, an Intuit website designed for freelancers. We can walk you through how this works.
If you’d rather enter the worker’s contact details yourself, leave the box blank. A vertical panel containing fields for this information will slide out from the right.
Contractors are also considered vendors. So when you create a record for a contractor, it will also appear in your Vendors list in QuickBooks Online. In fact, you can complete a contractor profile by clicking Expenses in the left vertical pane, then Vendors. Click New Vendor in the upper right and fill in the relevant fields there. Be sure to check the box in front of Track payments for 1099. An abbreviated version of your new record will also be available on the Contractors screen as the two are synchronized.
When you create a Vendor record for an independent contractor, be sure to check the Track payments for 1099 box.
Working with Contractors
You’ll notice in the screen shot above that Brenda Cooper had an Opening balance of $2,450 when you created her record. That’s money you already owed her, and for which she had probably sent you an invoice. QuickBooks Online turned that into an Accounts Payable item that you could find in multiple reports and on both the Vendors and Expenses screens. It will be listed as a Bill in reports, though you haven’t actually created one yet.
You have three options here. You can create a Bill and fill in any missing details if you don’t plan to pay Brenda immediately. If you want to send her the money right away, you can either enter an Expense or write a Check. There are many places in QuickBooks Online where you can do the latter two. We think it’s easiest to return to the Contractors screen, since you can accomplish all three from there.
The Contractors screen contains links to the three ways you can handle compensation due to a contractor.
Whenever you receive an invoice from a contractor, you can visit this same screen and choose one of the three options.
You’ll have to select a Category for your payment from the list provided in each of these three types of transactions. The Chart of Accounts contains one called Subcontractors, which may or may not work for your purposes.
We strongly encourage you to consult with us as you begin the process of managing independent contractor compensation to deal with this issue as well as others. QuickBooks Online offers multiple ways to get to the same end result, and it can be confusing. Contact us, and we can schedule a consultation.
Hiring a new employee is a big accomplishment in any small business, and there are a lot of steps involved, too. Here’s a handy checklist to help you stay organized when you bring that new hire on board.
First things first, the legal and accounting items:
· Signed employment agreement, typically an offer letter. There may also be a supplemental agreement outlining employee policies.
· Payroll documents include:
o IRS form W-4
o Form I-9
o Copy of employee’s government-issued ID
· Most states require a new hire report to be filed; sometimes your payroll system vendor will automatically file this for you.
· Notify your workers comp insurance carrier.
Next, it’s time for employee benefits enrollment:
· Health insurance
· Any other benefits you provide
· Provide the employee with the holiday schedule
· Explain their PTO and vacation if not already explained in the offer letter
Set your new employee up for success with the right equipment:
· Coffee mug, Water bottle
· Locker space
· Facility access, parking assignment
· Desk space and computer access
· Office supplies
· Other supplies
Your new employee may need access to your computer software systems:
· Employee email address
· Any new user IDs and password for all the systems they will need to access
· Document access
How will your new employee learn the ropes?
· Set up training
· Assign a buddy
Hopefully, this list will give you a start toward making your employee onboarding process a little smoother. And if we can help with any additional questions, please contact us at any time.
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