Handling the bookkeeping for a yoga studio may be a foreign task for a studio owner. However, we have been doing yoga studio bookkeeping for years for studios all around the country. Typically the owner is really good at running the studio and getting new business, however many struggle with handling the bookkeeping.
Typically the bookkeeping is just something that the studio owner doesn't want to deal with or simply doesn't have the time to handle. Running a yoga studio has so many other important tasks that outsourcing the bookkeeping is usually the best solution. Here is a list of bookkeeping related issues that you may want to consider when starting a new yoga studio.
Entity Formation And Taxes
One of the first recommendations I would make is finding a good CPA to work with. You would want to discuss the entity formations with your CPA. Depending upon your specific circumstances you may want to consider an S-Corp for your business. Your CPA should be handling your tax return, general tax advice and tax planning.
You will want to have an annual review of your financial situation prior to year-end with your CPA to get a tax liability estimate and ask for advice. You definitely need to avoid year-end bookkeeping as your bookkeeping should be updated regularly. If you outsource your bookkeeping your finances will be updated regularly and you can use your bookkeeping to help you make key business decisions.
Point Of Sale System
After you have chosen an entity type the next thing I would worry about is how to accept money. Many yoga studio owners choose to have some sort of POS system to track sales and payments. One POS software that seems to be quite popular among yoga studios is Mindbody.
Many of the Mindbody users I have talked to are happy with the software's functionality, ease of use and customer support. From a bookkeeping perspective it works just as you need it to. The most important thing you will need to do with your POS software is to create a daily sales summary journal entry. This should show you a summary of your different sales and payments for the day. It is important to understand and mirror the way funds will flow into your bank account.
Your next consideration should be some type of accounting software to track your income and expenses. I highly recommend using QuickBooks as your accounting software. QuickBooks is a great software for the business owner that doesn't necessarily understand accounting. QuickBooks will easily let you handle simple accounting operations so that you can keep your business running smoothly.
Once you have a way to accept money and properly track it you will still need a way to pay vendors and keep them happy. Using the enter bills and pay bills function of QuickBooks will help you stay organized. By entering the bills into QuickBooks you can stay on top of outstanding balances and due dates so that you don't pay your vendors late.
I also highly recommend printing checks from QuickBooks. This will automatically enter checks into your bank register, which will reduce data entry and help you to manage cash flow.
Another step you will have to take is setting up payroll for your yoga studio. I would recommend outsourcing your payroll to a trusted payroll service like Infinisource or ADP. Payroll services offer very competitive rates and rather than having to deal with tax filings and deadlines you can focus on running your business.
I would inquire with your payroll service provider if they can provide payroll data that can be imported into QuickBooks. If they are unable to do that you will need to correctly enter payroll data into QuickBooks.
If you do have independent contractors for your yoga studio you want to make sure that you properly track 1099 contractors in QuickBooks. You want to make sure that you follow the IRS guidelines for independent contractors. One warning is that I have seen many yoga studios go through an audit because they are paying their yoga instructors as independent contractors.
In many cases the contractors were reclassified as employees. If you truly feel your instructors are contractors then I would recommend three major rules to follow:
- Don't set your teachers schedules.
- Have them set up an LLC and pay the LLC not the individual.
- Make sure that they all have workers compensation insurance or an exemption certificate.
You might want to check with your CPA or bookkeeper regarding independent contractors to ensure that you are in compliance with the law.
Handling the bookkeeping for a yoga studio isn't much different from other small businesses. However, it does help to work with a bookkeeper that has experience in your particular industry. If you are starting a new yoga studio and have questions regarding the bookkeeping aspect or other financial questions please feel free to reach out.