Accounting for Sports Instructors

Balancing the books: accounting for sports instructors

Before we jump straight into accounting for sports instructors: Do you remember how it felt to earn your first money? Remember the thrill of someone paying you for your hard-earned skills? And remember, soon after, the sound of the taxman knocking on your door?

Unless you coach your clients for free, as a Sports Instructors, you are a commercial entity – either operating as a Sole Trader or as a Limited Company. As such, you have to report on your earnings and expenses and tell the taxman whether you’ve made a profit or a loss.

BUT – stick with us – there are ways to make this simpler – and more fun – than it all sounds.

The basics

Accounting for sports instructors is as simple as:

  1. Keeping a record of the money going out, and the money coming in;
  2. Adding everything up at the end of the financial year.

It really is that simple! The most important thing is to keep receipts so you can justify them in case of a tax investigation.

Accounting For Sports Instructors

Photo and tutorial by Mrs Smith (link in image)

1) It all starts with a nail and a piece of wood

The best advice I was ever given when it comes to finance tools didn’t involve a computer – but a nail and a piece of wood. The simplest filing system in the world keeps your receipts in chronological order, where they will wait until your next bookkeeping session. Just keep your ‘filing nail’ close to where you’d usually drop your keys/wallet, and pin all your receipts on there (expenses and income). That’s the day-to-day accounting job done.

2) High Intensity Interval Accounting

Just like HIIT is a mix of short bursts of intense training interspersed with recovery, accounting can be an on/off activity.

During recovery, just keep the receipts of your cash transactions. And once every few weeks or months, sit down and log all the receipts in a book (paper or online).

3) Do sweat the small stuff

You only pay taxes on your profit (your income minus your expenses) so make sure you keep a record of ALL allowable expenses. It all adds up, so don’t forget your digital receipts for services you use online (for example if you run Facebook advertising). The following categories can generally be claimed as work expenses (see UK rules for allowable expenses):

  • Travel: expenses to go to your clients’ homes, to your classes, to a trip you’re organising, incl. some car expenditures
  • Some food/drinks/hotel
  • Rent – even if it’s just a room in your flat
  • Costs of using a facility (eg gym, yoga studio)
  • Utility bills: electricity and water in your flat
  • Phone (mobile and fix line) and broadband
  • Marketing (eg cost of designing your logo, online advertising, printing flyers etc)
  • Courses, magazines, books, seminars
  • Clothing: uniform (eg branded) and protective (some argue that sports bra / kit / shoes might be allowable under that rule…)
  • And last but not least: all the things you buy for your business – as long as they are a necessary expense: laptop, tablet, printer, yoga mats, training equipment, safety equipment etc

4) Keeping the books: double-entry what?

To keep everything in order, keep the books simple: once a week/month/quarter, take all your receipts and list them in one place. This can be a simple paper booklet, a spreadsheet or an online account system. All have this in common: they simply list all your transactions in chronological order, with the expenses in one column, and the income in another column. Keeping this list is enough for any accountant to prepare your tax report at the end of the year, if you’d like to outsource this bit. Just make sure you keep all your receipts for the minimum legal duration.

Tip: No need to go overboard with technology

From receipts to book keeping to your tax return, everything can actually be done on paper – if that’s your preference. Technology can make things quicker and easier (especially if you’re using an accountant for your tax return). Here are some of the options you can use:

  • Paper book: 4 columns: date / description / money out / money in.
  • Spreadsheet: You can download our very simple template here, and open it in Google Sheets or Open Office (free), or Microsoft Excel and Apple Numbers.
  • Online booking systems: if you book your classes and get paid through an online system such as OffPeaks, you can usually download all your transactions in one go – a massive time saving.
  • Online accounting systems: From keeping receipts, to bookkeeping, to submitting your tax return online – they do it all – see below.

Tip: But if you do want to go overboard with technology…

Be our guest! There are dozens of really good online accounting systems, and here we’ll focus on those developed with independent/small businesses in mind. No need to go for a fully-blown system, which will overwhelm you with features only larger companies will need. Depending on the structure of your business (sole trader, or limited company with employees), here are the features to look out for:

  • Does the system link with your bank/PayPal/Stripe accounts? Will it automatically import your transactions for you?
  • Is a mobile app available?
  • Can you scan your receipts with the app, so you don’t have to type them in?
  • Is it compatible with your country’s tax system? Can you submit your tax return straight from the system?
  • If you regularly issue invoices (for example to corporate clients), can you do that?
  • Are you registered for VAT? If yes, can you submit your VAT returns through the system?
  • If you employ other people, can the system run simple payroll for you?
  • Are you working with an accountant? If yes, what system does he recommend?
  • What’s their support system like? Do they offer free webinars?

Here are a few systems, which tick most of those boxes, without being overblown:

Kashflow: From £7/month. Great starter package for sole traders.
FreeAgent: From £19/month. Incl. payroll, VAT, app and expenses scanning. Also includes automatic submission of your tax return (company and/or sole trader).
Xero: from £7.50 a month. One of the more comprehensive ones, with additional features such as inventory management and UK pensions management.

To sum it up

No need to become an accountant to keep your records clean. Start with a nail and a piece of wood, and regularly book time to put it all in one place. And once you have an overview of where your money is coming from, and where you spend it, you can start optimising your business and plan for a more profitable future. How do you currently run your accounts? Any question? Please let us know in the comments below.

About the Author Julie Freeman

Marketing @ OffPeaks. A Swiss expat to London, passionate about the mountains - hiking them, running them or biking on them. Also passionate about helping sports instructors grow their business.

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