Gym Fitness Bookkeeping Chart of Accounts

Every business requires a chart of accounts. Wait, WHAT IS A chart of accounts!? As a business owner, a gym/fitness owner you get out of bed and don’t think accounting. But, I do and I am here to help. As the owner, you don’t need to know it all, but you do need to know the basics and how to read financial statements if you want to grow your business. Just like your own fitness clients, some want to get results and others want in depth knowledge in what to eat and which exercises improve a certain muscle. Be the owner that wants to improve and learn what each account affects. I am planning on making some 101 brochure’s to help you in the path of accounting. Check back often to learn more on the basics specifically for gym’s and fitness centers.

Let’s jump in.

Chart of Accounts

The chart of accounts is a list/categories used to record all your business entries. Each industry has a slight difference chart of accounts but they all have the main accounting categories. The main categories are Assets, Liabilities, Owners Equity, Revenue, and Expenses. Once you get the basics you can always add more when you want to hone into a certain muscle, I mean account.

Now, lets dig in a little deeper and see how each chart of accounts is built. After all, everything is structured to be easily understood by all. In accounting we always have two financial reports that shows us the picture of our business. The first report is the Balance Sheet and this shows us a snapshot of three categories; Assets, Liabilities, and Owners Equity. The second report is the Income Statement (AKA Profit/Loss Statement) which is a recap of 2 categories; Income and Expenses.

Balance Sheet Accounts  

– Assets
– Liabilities
– Owner’s Equity

Income Statement Accounts

– Revenues
– Expenses
– Misc Income & Expenses

(Check out the posts about the Balance Sheet and Income Statement for more info there).

Remember to keep your chart of accounts simple and add to it as you grow. You want it to be easily understood by you. You can always add more accounts if you notice discrepancies where you want to focus on the big picture of the account. The accounts are an easy way for an owner to see changes. Monthly reports help see the totals, but detail reports help you see the fine lines in an account.

Here is a Chart of Account I use for Gym Fitness Businesses on a Cash Basis Method.

Balance Sheet: Asset Accounts

100****  Checking Account (* are the last 4 digits of the account number)
110****   Savings Account (* are the last 4 digits of the account number)
160      Prepaid Insurance
175      Buildings (if you own your building)
176      Accumulated Depreciation – Buildings
180      Equipment (Fitness Equipment)
181      Accumulated Depreciation – Equipment

Balance Sheet: Liability Accounts

210      Wages Payable
220      Interest Payable
230      Unearned Training Revenue
240      Mortgage Payable (if you own your building)

Balance Sheet: Owner’s Equity Accounts

300      Capital Deposits – Owner X
310      Capital Withdraws – Owner X
320      Retained Earnings (Summary of Profit/Loss)

Income Statement: Revenue Accounts

400      Gym Membership Monthly Training Sales
405      Gym Nutrition Sales
406      Gym Merchandise Sales

Income Statement: Expense Accounts

500     Cost of Merchandise Sold (Generic)
501 Direct Coach Labor
505     Cost of Nutrition Purchase
506     Cost of Gym Merchandise Sold
601      Advertising
602      Bad Debts
603      Bank Charges
604      Charitable Contributions
605      Dues & Subscriptions
606      Gym Supplies/Equipment
607       Insurance
608      Janitorial & Cleaning
609      Lease Expense
610       Legal Expense
611        Licenses & Permits
620      Meals & Entertainment – (Generic/Unsure)
621      Meals & Entertainment – 100% Deductible
622      Meals & Entertainment – 50% Deductible
630      Office Expense
640      Payroll Expense – Coaches
643      Payroll Expense – Admin
644      Payroll Expense – Owner’s Pay
650      Payroll Tax Expense
660      Rent
661       Repairs & Maintenance
665      Training & Education
667      Travel
670      Utilities (I include gas, water, electricity, phone, internet, cable)
800     Amortization
805      Depreciation

Income Statement – Other/Misc Income & Expense

850      Interest Income
860      Interest Expense

Use this chart of accounts to get your gym fitness cash basis bookkeeping started.

Liability Vs Expense

What Is the Difference Between an Expense and a Liability?

Now you know what a liability and a expense is. A liability is something a business owes. A expense is something a business paid.

Can you tell the difference between a business expenses and a business liability?

A business expense is the cost of operations that a business incurs to generate revenue. Expenses are related to revenue, and both are listed on a business income statement. In short, expenses are used to calculate Net Income.

REVENUE – EXPENSES = NET INCOME

For example, if a company has more expenses than revenues for the past three years, it may signal weak financial stability because it has been losing money for those years.

A business liability is what the business owes over a period of time and incurred to keep the business open. Liabilities are related to assets, and both are listed on a business balance sheet. In short, liabilities are used to calculate Equity.

ASSETS = LIABILITIES + EQUITY

Expenses and liabilities should not be confused with each other. One is listed on a company’s balance sheet, and the other is listed on the company’s income statement. Expenses are the costs of a company’s operation (paid now), while liabilities are the debts a business owes (not paid but needs to pay at some point).

The 5 Main Account Types: Liabilities

The second main category to grasp is the liability account.

What is a Liabilities?
A liability is, tangible or intangible, that a business owes and must pay to someone else (the IRS counts as someone else).

Think of a liability as everything your business owes that will have to be paid for with cash or services. For example, your business most likely owes taxes, business loan, wages, mortgages, deferred revenue, and accounts payable (think accounts to pay).

What Business Financial Report Shows Liabilities?
Balance Sheet

Types of Business Liabilities

  • Current Liabilities
  • Non-Current Liabilities
    • Long Term Liabilities

Current Liabilities

Current liabilities are all liabilities of a business that are due within 1 year.

The most common current liability include accounts payable, taxes, and payroll wages.

Non-Current Liabilities (AKA Long Term Liability)

Non-Current Liabilities, often called Long Term Liability is a liability a business that will be due over 1 year.

The most common long term liability are business loans, mortgage loans, and vehicle loans.

Liabilities on the Business Balance Sheet

Liabilities are important to a businesses because it tells the owner what is owed to debtors.

Bring it Home: Liabilities and Assets

Assets are the things a business owns or is owed (need to be received)

Liabilities are the things a business owes or needs to pay.

If a business subtracts its liabilities from its assets, the difference is the business equity.

Come on back soon to read next 5 main account types: Equity.

The 5 Main Account Types

You started your business. Now it’s time to categorize. Wait. What! I need to categorize! Yes you do. But luckily accounting has made it easy (or tried to make it easy) and created 5 main account types. Okay, maybe not that lucky, the accounts can be a little confusing. It’s okay, we are going to break them down to help all business owners learn the basics.

The 5 main accounts are:

  • Assets
  • Liabilities
  • Equity
  • Revenue (AKA Income)
  • Expenses

Remember the 5 main categories as they are the basis to reading financial reports. Each transaction performed by a business must be reported in one of the 5 main categories.