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Newsletter: August 2024

This month, we’re exploring the roles of a financial controller, tips to avoid burnout as a med spa owner, and recording your health and wellness business’ revenue.

We’ll translate the financial jargon, equip you with actionable tips, and keep things engaging (because financial literacy shouldn’t feel like a foreign language. So, grab your favorite coffee (or tea!), settle in, and get ready to level up your financial knowledge!  

Take a deep breath, clear your mind, and think about what you’re grateful for at this moment.

I will start:

Today I am grateful for “Courage”. For the courage to walk away from a client whose leadership did not align with my mind, body, soul and spirit.

As business owners, we want to make a profit, while putting our education, experience and expertise to work, however we must remember that “every dollar in our industry is not meant for us”.

So, I encourage you to be brave, be courageous and be wise about the clients/patients that you align your business with – listen to your gut and have the courage to walk away if it just doesn’t feel right. 

I own a Yoga, Pilates, and Barre studio in Seattle, Washington. I use a bookkeeper but often still find it hard to understand how revenue is recorded for our various classes and memberships; it seems to vary due to people sometimes paying in cash or online platforms, sometimes pre-paying based on certain offerings. We also sell clothing and accessories. How should all these different payments and services be recorded to stay accurate, organized and compliant with taxes? I want to ensure proper revenue recognition per GAAP (generally accepted accounting principles).

Best,

First and foremost, congratulations on plunging into the invigorating world of wellness! I do love a good Yoga, Pilates, or Barre class; they each add something special to my workout.

Owning a studio in the vibrant heart of Seattle sounds exciting, but I can imagine bookkeeping might be the equivalent of a mountain pose you’re not quite ready to hold.

Consider bookkeeping as being to record your many ways of arrival of funds what choreographing a smooth flow through your classes is to each different posture and way in which a payment and service needs to be positioned perfectly to keep balance in your books. This is how you can do it:

Categorize Payments: Look at cash, then online payments and pre-paid offerings as different entities. All cash payments should be recorded as the payments arrive and matched to your daily sales report.

  • For all online payments, make sure to reconcile your payment processor reports with your bookkeeping software in order to catch any discrepancies.
  • Any pre-paid services, like class packs or memberships, should be recorded as a liability first. Revenue is recognized only when the service is performed.

 Separate Revenue Streams: It is common for many Yoga, Pilates, and Barre studios to make the mistake of grouping all their deposits together under one income category, without providing specific labels for each source of income. Your classes, memberships, and retail sales are different muscles that need individual attention. Use separate accounts in your bookkeeping software for each type. This will help you see which parts of your studio are the most flexible and which might need more stretching.

Include Sales Tax: Not every dollar you collect goes straight to your bottom line. Some of that goes to Uncle Sam in the way of sales tax. Make sure you’re collecting and accounting for this separately so that you don’t get a surprise bill at tax time. It is important to record sales taxes collected as a liability.

Inventory Control for Sales: Maintain good records of what clothing and accessories are in stock for sale. This keeps the numbers in line with your sales, shows any shrinkage or theft that might be happening, and makes sure you have everything entered and recorded correctly.

Reconcile Regularly: Much like you wouldn’t skip your savasana, don’t ever skip the monthly reconciliations. Compare your bank deposits back to your POS reports. Be sure that everything is lining up. Doing that will catch any errors or missed payments early on and leave you with the strength to make good decisions, armed with an understanding of the flow of your money.

Recording revenue correctly is part of a good bookkeeping structure, as it is not just a game of compliance but about the assurance that you know the financial position of your Yoga, Pilates, and Barre studio and that you are standing on firm financial ground.

Keep on practicing flexing those financial muscles, and soon it will feel as normal as your favorite yoga pose.

If you need any accounting, bookkeeping and financial management support for your Yoga, Pilates, and Barre studio, please do not hesitate to reach out to us.

As this is what we do…

Regards,
Dangerous in Love in Your Finance

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