Personal trainers deal with a lot of responsibilities. Obvious responsibilities include showing up on time and running a client through a safe and productive exercise session. Personal trainers must be responsible enough to follow the rules of the gym in which they instruct.
Adhering to the rules and requirements of any insurance or rental contracts can’t be ignored either.
What is a business code on a tax document?
Personal trainers serving as direct employees to a gym and paid with a W-2 don’t need to worry about business codes. Independent contractors and other self-employed personal trainers file a Schedule C form with their tax return. The Schedule C details profits or losses associated with running a business.
Personal trainers are, generally, sole proprietors who must fill out a Schedule C form to detail their income. The form must be completed correctly and without omissions. The form does specifically ask for a numerical business code. Trainers may not understand what purpose a business code serves.
A business code refers to a six-digit code that classifies the type of the commercial endeavor a sole proprietor (in this case, a personal trainer) is involved with. The purpose of providing the business code allows the Internal Revenue Service to record statistics related to domestic business activities. Logs of the statistics may be culled to serve a number of different research purposes.
The official name for the IRS’s business code is the NAICS (North American Industry Classification System) code. The Office of Management and Budget (OMB) helped craft the NAICS code. The code system is not only used by the Internal Revenue Service. Various federal agencies utilize the code to log statistical data.
Train Anyone, Anywhere in the World.
What is the business code for personal trainers?
A “personal fitness trainer” falls under the business code of NAICS 812990. The code does not strictly refer to health and fitness professions. Rather, the code refers to all “personal services.” In addition to personal trainers, house sitters, wedding planners, and the like would use this category.
Typically, you request the services of an accountant to handle your tax duties. The accountant knows the code to use and will select the appropriate one. Any trainer who tries to complete and file their own tax return should not ignore the importance of jotting down the correct business code.
The code number should be entered on Section B of the Schedule C. Section A requests that you list your “principle business or profession.” Both sections A and B should match or else the form begins with a sloppy error, an error that could be problematic.
Why should I avoid minor errors on a tax return?
The inclusion of a business code on a tax return does not have any bearing on the return itself. One code number does not increase or decrease the amount of tax owed. So, some might not think it is a big deal to make a mistake and may not worry that sections A and B don’t match. This perspective could create annoying, avoidable problems.
Personal trainers, like all other sole proprietors, take business deductions on their Schedule C. A trainer may be able to deduct commuting expenses or uniform costs. Unfortunately, Schedule C filers are often at a higher risk of an audit.
The chances of an audit increase when a return and its forms contain mistakes.
Messing up sections A and B on the Schedule C would reflect a mistake that really shouldn’t occur. Personal trainers need to describe their job correctly and input the right business code number. Otherwise, they may find themselves going through the time and expense of an unexpected IRS examination.
What is the best way to avoid dealing with business code errors?
In addition to researching personal trainer business codes and tax forms, fitness professionals should look into hiring the right accountant. A tax expert who previously handled personal trainer returns would be a good match. This accountant may be able to keep tax filing season as trouble-free as possible.