We have helped plenty of small business owners with opening a yoga studio but mostly from a business perspective. Yoga studio bookkeeping is one of our industry specialties due to how many yoga studios we have done bookkeeping and business consulting for.
The one thing I have noticed about all the yoga studio owners we have worked with is the passion they have for yoga. I'm sure you don't want to get into yoga for business management; you just want to run a studio because you love what you do.
No matter what business you are in having a true passion and love for what you do is what leads to running a successful business. If you are wondering how to open a yoga studio I have plenty of advice from a business perspective based upon my past experience.
Here we will discuss my top tips for those wanting to open their own yoga studio.
Find A CPA And Lawyer
The first thing I would do is find a good lawyer and CPA. So the obvious question is how do you find a good lawyer and CPA to work with? I would definitely start with tapping your business network.
Ask other yoga studio owners who they use and why. See if you can find a CPA and lawyer that have experience with other businesses in the yoga industry.
You will want a good lawyer to make sure you have the business set up properly and protected. They should be able to give you advice on the type of insurance to carry.
A CPA will play a crucial role in your big picture tax and financial planning items. Having a good lawyer and CPA will also help you choose the correct entity type for your yoga studio.
Choose An Entity Type
I would definitely have a conversation with both my lawyer and CPA to choose the correct entity type. The entity type should take into consideration items such as liability concerns and big picture tax planning.
Having a conversation with both will help you choose the entity type that is right for your business as well as your personal situation.
Your CPA and lawyer will also be able to help you file the correct paperwork with the state and federal agencies to ensure that you are set up properly and legally with the government and IRS.
Yoga Studio POS System
Let's get to the fun stuff; bringing money into the bank. You are not going to stand at the entrance with a bank bag full of money, you need to look professional. These days most consumers want the flexibility to be able to pay how they want.
The last thing you want is potential customers choosing another studio because they are keeping up with the times.
I have found that many yoga studios prefer to use the POS software MINDBODY Online. MINDBODY seems to be heavily used throughout the industry and many owners like the functionality and affordability of the product.
MINDBODY online will help you put in good reporting and controls, grow your studio with integrated marketing applications and appear more professional to the public eye.
Bookkeeping For A Yoga Studio
When you start your studio you are going to need a way to track the finances of the business, so you need to set up a bookkeeping system (I know you just cringed at the word). We highly recommend using QuickBooks Pro for windows at the very least.
Even if you are in a Mac environment you can run QuickBooks for Windows on a Mac via Windows parallels. After you have QuickBooks you may want to consider QuickBooks training and consulting to get you up to speed on the program and set up the bookkeeping system properly.
To really over simplify the bookkeeping system for your yoga studio you need to be able to track the money that comes in and leaves your business.
MINDBODY will help you track the money coming in and then you need to properly record your sales in QuickBooks.
Your money going out can be easily recorded by tracking your credit card purchases and checks written to vendors. We highly recommend doing as much digitally through credit and debit card payments as well as utilizing online bill pay.
If you do cut checks we highly recommend printing checks from QuickBooks. The last thing you need to worry about paying is your independent contractors and payroll employees.
Payroll And Independent Contractors
Payroll - You can handle the payroll needs yourself through QuickBooks assisted payroll or have your CPA handle it. However, we recommend that every business outsource their payroll to a trusted company like ADP, Paychex or Infinisource.
Outsourced payroll companies are very competitive and it is no secret that they don't make much money on the payroll service itself (if you don't believe me call me and I will explain it).
We stopped offering payroll services and told our clients to outsource it as we couldn't compete with their rates and our goal is to make our clients as profitable as possible.
Independent Contractors - Independent contractors are a touchy subject for yoga studios. I have seen many studios go through a wage audit and have their yoga instructors reclassified from independent contractors to employees. The back payroll taxes owed can be detrimental for many studios.
You want to make sure you follow the independent contractor rules for your state and make sure you get all of the proper documentation. This is an area I would highly recommend getting some advice on from your CPA.
If you do have legitimate contractors for your business you want to make sure to set up 1099 contractors in QuickBooks the correct way to make tracking payments simple.
Having small business financial reporting in place for your studio is important no matter how small your studio is. You should develop a set of reports with your bookkeeper that you review on a regular basis. If you are not analyzing financial reports regularly then you are running your business blind.
At the very least you want to learn how to run a simple profit & loss and learn how to compare that to previous periods. You should also understand the balance sheet for your business and what it means to the health of your business.
Avoiding or disregarding your financial reporting can give you a false sense of if your studio is succeeding or not.
Before I get into this topic I want to stress that I am not a tax accountant or a CPA. I highly recommend that you consult with an excellent CPA on all tax related issues.
In a very simple approach to taxes I would say you can break things down into payroll taxes and independent contractors, sales taxes and income taxes.
Payroll taxes and independent contractors - I already discussed payroll and independent contractors above but thought it was necessary to mention this again in the tax section.
Another major benefit of outsourcing your payroll is filing and paying your payroll taxes will become the liability of your payroll company.
I would have your CPA work closely with you and your bookkeeper regarding independent contractors. Once the system is established I would have your bookkeeper handle tracking and submitting all 1099 forms.
Sales taxes - I would have your CPA work with your bookkeeper to establish the procedures for filing sales taxes.
Once the system is in place I would make filing and paying your sales taxes the responsibility of your bookkeeper and they can elevate any questions to your CPA as needed. MINDBODY online will prove helpful in tracking and filing sales taxes.
Income taxes - I would recommend that filing state and federal income taxes be the responsibility of your CPA. One thing I would like to add is that you should make sure to open up a dialogue between your bookkeeper and your CPA.
If there is anything that your bookkeeper can be doing differently to make your CPA filing the tax return more efficient you want that communicated between them.
Opening a yoga studio is not much different from starting any other business. However, if you are new to business you may not know all of the proper steps you need to take to set your yoga studio up properly the first time.
If you need any help along the way please don't hesitate to reach out.