This might come across as a completely random blog post, but in light of the time of year and the fact that I have five accountants in my family, I'm going to write it anyway.
If you are a trainer who does your own taxes, you are an idiot.
Yes, you're dumber than the guy doing handstand push-ups on the stability ball. And, you're giving your money away and likely increasing your risk of being audited down the road.
People come to you to learn how to get fit, more athletic, and healthy. In your eyes, they'd be crazy to try to program or coach themselves. And, just walk into any commercial gym and from the exercises and techniques you'll see executed, and you'll want to pull out your hair. While accountants on the whole are generally very patient people, I'm sure they want to do the same when they hear about Average Joe sitting down for some quality team (read: three days) with Turbo Tax.
Imagine you're going to pay an accountant a few hundred dollars to do your taxes. That's a few extra training sessions added to your week - and you aren't giving up any time to figure out the tax code (which is constantly changing). You can read a book, have fun with your family, or do whatever else it is you enjoy.
Tony Gentilcore is one of my best friends and a business partner, so he won't mind me using him as an example. In the summer of 2007, I watched Tony slave over Turbo Tax for an entire weekend.He had a puzzled look on his face the entire time. When he was done (late Sunday night), I went over and asked him if he's deducted 7-8 different things that my accountant (my brother) taught me about that year. He had no idea what I was talking about.
Tony is a guy that buys books, attends seminars, has professional memberships (NSCA, PETA, and the Chuck 'E Cheese Pizza of the Month Club). None of these were deducted. So, by attempting to "save" some money and do it himself, Tony missed out on a bunch of key deductions and overreported net income. Say, for ease of calculation, that was $1,000 of expenses he didn't write off. That means he reported $1,000 more net income - and in a (arbitrarily assigned) tax bracket of 30%, he gave Uncle Sam a $300 bonus - which would have more than paid for the cost of an accountant and freed up Tony's weekend to listen to do the robot, drool all over his Nora Jones CD, and attack stability balls with scissors.
Now, here's an example of our business finances from our 2008 tax return that will really drive home the point. When we opened Cressey Sports Performance in the summer of 2007, we had to put up $30,000 worth of renovations: walls, doors, carpeting, a ceiling for the offices, and painting, as we were subletting from another tenant and wanted to "separate" our space. It went from this...
To this...
These renovations were placed on a 15-year depreciation schedule - so we got a $2,000 deduction from net income in year 1 (very few people would know to do this on their tax returns without an accountant).
Business grew quickly, and we decided to move (also a deduction) three miles east in May of 2008, which was the end of the lease we were under. When we went, we had to demolish renovations to the old place (which was one of the funnest hours of my life, for the record) - but we also got to write off the remaining $28,000 from that depreciation schedule against our net income for 2008. None of us would have even remembered to do that - but our accountant absolutely, positively did. In the process, he saved us a ton of money that was rightfully ours and kept out balance sheet accurate - and it was no extra effort on our part. That move alone probably saved us enough taxes to cover his accounting fees for 6-7 years - or the cost of our turf and crash wall combined.
Another example on my personal finances was the recommendation I received to maximize my contributions to a SEP IRA to lessen my net taxable income at this point in my life when I don't have any quality deductions - kids, a spouse (yet), or a mortgage (yet). I'll be taxed on it down the road, but at least it's mine in the interim to grow it as I please (and I know there are different schools of thought on this, but you get the point).
Getting an accountant is an investment, not an expense. And, the more diversified I have become in my revenue streams - from CSP, to products, to seminars - the more essential and valuable that investment has become.
You are an idiot if you are going it alone. And, we just found out that our taxes will be going up yet again, so your mistakes are going to be further magnified. I don't know why this happens so much in the fitness industry, but it absolutely does. Find a good accountant.
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