Volo Innovations

Ok so we all know the old adage the two things for certain in life are death and taxes right, for some fitness businesses the tax can cause their death.

Such is the case in BC and Ontario Canada as both provinces are introducing a Harmonized Sales Tax (HST) come July 2010. The HST is a combination of the Goods and Service Tax (GST) and the Provincial Sales Tax (PST). Currently fitness memberships and service are exempt for PST in both Provinces, so what does HST mean for the fitness industry in these two regions, simply put it equals a 7% increase for BC and an 8% increase in Ontario on all fees and services the business offers. It is a forced fee increase that turns a business based on health and wellness into a tax collector for government and has no benefit to the business.

It may seem small to add another $5-20.00 per month to these fees but add to this the possibility of new and higher tariffs from the Society of Composers, Authors and Music Publishers of Canada (SOCAN) and the proposed 5% tariff on gross sales from the Neighboring Rights Collective of Canada (NRCC) and you suddenly have an industry that is here to help people stay healthy, fit and active feeling a little sick to their stomachs.

Below is a breakdown of what a fitness company will pay in taxes and tariffs based off their potential sales and income.

Club Size - Members	Small - 500	Medium - 1500	Large - 5000
Estimated revenue (exclusive of tax) based on $600/member	$300,000	$900,000	$3,000,000
NRCC 5% Tariff on Gross Sales	$15,000	$45,000	$150,000
NRCC Group X Tariff (20/30/50 classes per week) $3.00 per class	$3,120	4,680	$7,800
Current SOCAN tariff	$642	$963	$1605
SOCAN Tariff 15 (If enforced) $11.46 per sq/ft 3,000/6,000/10,000	$344	$688	$1,146
Total Tariffs	$19,106	$51,331	$160,551
Taxes
BC (only) New HST 12%	$36,000	$108,000	$360,000
Federal and Provincial corporate taxes (based on a 20% income from sales) BC 13.5% - 22%	$8,100	$24,300	$132,000
Total Tax collected & paid	$44,100	$132,300	$492,000
Total Tax and Tariffs	$63,206	$183,631	$652,552

 

For our American neighbors remember this could happen to you and with your business tax rate sitting in the 35% range the last thing you need are more taxes.

Australia has been a legal battle for some time trying to stop these same tariffs they are facing a potential 3000% increase in fees. This threat is looming in the US as well and organizations such as IHRSA are taking action now, so check out what you as a fitness professional can do because if you ever have a dream of getting bigger and opening your own gym or Boot Camp franchise then you need to get involved now. Be active in your federal and state taxation for businesses and look at who is pushing new music tariffs in your region.

In Canada get involved and help support the legal challenges to the NRCC proposed tariff go to the Fitness Industry Council of Canada and learn more about how to help.  No single thing that can bring down your dreams quicker than being side swiped by organizations and government.

Go get involved no matter how small your business is this will affect you and your clients or members in a negative way so post signs in your gym get member to sign petitions and let's put a stop to the tax and tariffs that are kill our industry and livelihood. 
For list of who wants your money go to the following links: In Canada in the US and globally

Almost all trainers, boot camp operators, Pilates and even yoga instructors use music to help motivate their clients. If you own a facility then the chances are you have music running all the time, am I right? Anyone with a fitness business uses music at 1 point or another.

Well what would you say if I told you that you would have to pay 5% of your GROSS revenue and $3/class. For some you would say go to h*** that is my profit margin. Well currently Australia and Canada are fighting against the music industry proposed tariff. If passed this would potentially cripple fitness businesses with taxes, tariffs and surcharges.

Now perhaps you are thinking well we are in the US so what does it matter? It matters a lot, once they have set precedence in 1 country they will use that to convince the powers that be to enforce rulings in other countries.

Join operation M.U.S.I.C, members unite to stop increasing copyright charges, by getting involved with the organizing bodies in your country that are working together to keep this tariff from moving forward:

• In Australia at http://www.operationmusic.org.au/
• In Canada at Fitness Industry Canada
• In the US at IHRSA

All of these bodies are working together to try and keep this from being implemented. At the IHRSA trade show last month there was a reception where Fitness Industry Canada (FIC) received a huge response to this issue and pledges of support from various bodies. check out the article in FitNet to learn more about what happened at IHRSA.

Please spread the word, get involved, post it on your blog, tweet it, FaceBook it do what ever you can to help raise awareness on this issue as it has the potential to severely cripple the fitness industry.

Today I learned about a "Fitness Professionals Licensing Act" that has been proposed in New Jersey. I am all for improving the quality of people that call themselves trainers or fitness professionals having seen too many people that love working out so they think this means they have what it takes to teach other people how to safely and effectively workout.

Here are some of the points in the proposed bill, new trainers that don't have a degree in a related field would be required to do a 300 hour in class course, and do 50 hours of unpaid internship. Everyone will need to write a board certified exam and apply for a license that requires renewal ever 2 years. There will be minimum hours of practical experience and minimum hours of continuing education hours required every 2 years.

There are also provisions for existing trainers needing to complete a certification course and apply for a license within a certain time frame after the bill passes.

If you live in New Jersey you might want to check out the bill and see if it is going to affect your business. It might be a good thing by weeding out some of the non-professionals you might have new clients coming your way. Or it might be a bit of a red tape nightmare with governmental bodies creating new forms and requirements that you need to do fill in to maintain your standing in the community. Either way I wish you luck with your business!

Surge ahead!

Every fitness professional has worried about this at one point in their career, a client has an injury and you wonder did I do everything I could to avoid that. Well after you think that through and realize that you did everything according to protocol and current standards you realize that you want to express to your client that you are sorry they are hurt but you don't want them to use that against you. What can you do? 

In Canada we have recently seen "I'm sorry" bills being passed that allow people to apologize without the people they are apologizing to being allowed to use that as a tool against them in litigation.

For more info read this article, or check with your local legislators.