Running your own fitness business teaches you all sorts of new things, I recently had a discussion with a client about sales tax and the infamous rounding issues that taxes present and I realized how complex this issue is and how much stress it can cause to fitness professionals!

I will do my best to explain how it works and why cash registers, POS systems and even accounting software have issues with rounding.

We will use an example of a protein bar that cost $2.39 and a sales tax rate of 8.75% since this was the question asked of me. If we sell one bar the tax is $0.21 so the total equals $2.60. The problem with tax is when you sell multiple bars. If you sell 12 bars at $2.39 that is $28.68 pre-tax and the tax is now $2.51.

Do you see the issue people have? The tax for an individual bar is $0.21 than the tax on 12 should be $2.52, what happened to the penny? Here is the thing, if I charge the person the $2.52 then the tax percentage paid on $28.68 would be 8.79% when it is supposed to be 8.75% and I have effectively over charged my member.

So why is this? A penny is a 100th of a dollar or .01 but the percentage used for tax is .875 and percentages can go on forever but there is no way to charge a person a ¼ cent or a ½ cent so you have rounding issues. The one thing you can do with Volo, and most other POS systems, is charge by the line. This means that you will not use the QTY box provided instead you will ring in 12 individual bars and systems like Volo will charge the tax per line.

In the example here I have sold 3 power bars as seperate units for a total tax of $0.87:

And then sold the same 3 power bars as quantity of 3 for a total tax of $0.86:

Remember the government would like to collect the tax on the total sales not on each item sold so if you have a price for a group of items that is what the tax is calculated on.

If you start down the road of breaking group items into individual items for the sake of taxes then you are opening your business up to problems beyond just power bars because all unlimited bootcamps or packages of training or even memberships are based off of individual sessions or access rates and this can become very hard to charge the tax for.

Rounding is a normal part of accounting and it will always cause some people anxiety but in the grand scheme of your business it is the last thing to be concerned with. Keep good sales records and record the tax for all of your sales and you will be golden.

Remember the only certainty in life is death and taxes neither can be calculated easily and both are affected by other variables so instead of fighting them learn to live with them and just enjoy your life and business.