The gymOS Podcast from PushPress

Lessons from COVID-19: Prepare your Finances with John Briggs

March 21, 2020
The gymOS Podcast from PushPress
Lessons from COVID-19: Prepare your Finances with John Briggs
Show Notes Transcript

John isn't just a #taxgenius, he's a gym owner, and the author of Profit First for Microgyms. He also runs Incite Tax, a multi million dollar tax and accounting firm which is the largest firm serving microgym owners in the country. John has been teaching microgym owners how to improve their cash flow for 10+ years and deeply cares about helping gym owners get paid what they're worth.

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spk_0:   0:00
Welcome to the gym OS podcast, helping fitness professionals become better business owners. One episode at a time. Hey, guys, what's up? I got a special guest for you guys today. John Briggs from Incite Tax, but you probably know him for his book Profit. First for Jim's. This one's actually kind of important to me as you'll hear when you ah, check out this episode. But, um, I make a lot of financial mistakes. I've learned talking to John. Actually, I've known it all along, but he's just really exposed it for me. Um, I am not the best with my money. I'm not the best, um, in general with being on top of stuff like like John wants. And I think if any of you guys are like me and you've got these, like $5 recurring charges that just hang around for 10 years, this is one you're gonna want to listen to. Um, John kind of goes over the concepts of profit first, how he actually gives you kind of the framework for how you can do it yourself if you want to. Of course, I recommend you probably by his book, or check out his stuff online to figure out, um, how to actually die. Listen and do it right. But you know what? Any starting point is better than no starting point. So if you feel like you've got some financial problems or you're maybe one big crazy event away from being underwater at your gym, check this episode out because John's gonna give you some really good tips. I'll catch you on the side. Alright, here we go. Ah, Welcome, everybody. Another episode of the gym OS podcast. This is Dan Way more ASIO push breast here. Um, today we got a pretty special guest for you guys. Um, a lot of you might have trouble managing your money on a month to month basis. A lot of you guys might be, um, one month away from maybe even going out of business. If so, I can tell you from experience. You're not alone. And ah, guest we have on today could probably tell you experiencing that alone too. He's helped a ton of Jim's fix their financial system, or snot system, their financial situation. Today we got John Briggs. John is from incite tax. He's the author of profit first for micro gyms. And, um, generally good guy owns a gym in the community, and he's been working hard to try and help other gym owners. Correct and fix Some of the approach is that they have the money to try and shore up some of these financial situations. I have. Um so without further ado, let me let John introduce himself real quick. Tell us a little bit about himself.

spk_1:   2:35
Yeah. Dan, thanks for having me on here. Um, so I'm a c p a by education, and I have a firm owned this firm for 10 years now on then, a couple years ago, I decided, you know, we having fun serving the gym owners. Why don't I become one as well? So I bought into the gym that I work out up because it was failing and thought it'd be a good experience to figure out if I could also help with Jim Turnover. Ah, new leaf from the ownership side, not just from a financial planning site. Um, wait. We have a great team here. There's 20 of us, and, um, you know, we're just We think the world is a better place. The more gym owners that there are, the more the more assistance they can provide to people, the better the world is in general, if you think about the benefits of health and what that does for economy, for people's take home pay for what they're able to do, how long they can live. So we're super stoked about being able to serve the gym industry. And, you know, we want to keep them in business as long as possible.

spk_0:   3:46
Yeah, I think that's awesome. You guys have that viewpoint. That's exactly how we feel here. In fact, um, as you were talking, I was kind of thinking like one thing that's cool about the cross, the community. It's almost like the church community in that. Like you're you're a C P A. I'm an ex developer like there are people from the professional realms that have found their way into into fitness and these communities that are happening in these micro gyms, and they love it so much that they're bringing their professional skill into the arena, right? I see that kind of church is probably the same thing to community. I think that's a pretty cool thing that you're able to bring the financial planning aspect into the arena here real quick. Before we begin, I see a sign in the background says CK The ire s, uh, What is going on with that? Can you pull that into frame?

spk_1:   4:31
Yeah, it's actually a board game. Stick

spk_0:   4:34
the iris. Did you do that on purpose?

spk_1:   4:36
I did. Ah, uh, it's a real board game is kind of Ah, it's modeled after Monopoly. Yeah.

spk_0:   4:48
Okay. Well, you got that because I had to know what it said. School. Um Damn, I had a question asking around that church thing, too, and I forgot it got so distracted by stick the I RS. But let's dive into what it's like to be a gym owner. That's struggling because you you're probably one of the few gym owners that I know that actually inserted yourself right into the point of struggling like most most of us, like we started a gym. And then we realized there's some stuff we gotta fix your just like hell, man, this one's really in bad shape. I'm going right in. So why don't you tell us? Like what it was like those first moments where you took over the gym that you already knew was in trouble. What was that like? You

spk_1:   5:26
know, And it's funny the Mord moment itself. Um, I would say it were those months as many months, but yeah, I certainly in hindsight, I think it'd be it would have been easier to create a profitable Jim from scratch. Um, but yet you jump in and the future's looking at these numbers and you're looking at the commitments that were made by previous owners. And you're like, Wow, they, for example, they had way too much square footage for the number of members that they had. They went, they did a classic mistake. They had because I was at the gym when we're at this, a smaller location. 2000 square feet. And they had maybe one class there was at capacity, so automatically course, that means we should jump into a bigger space. Well, let's go from 2000 square feet to 7000 square feet. Yeah, we can handle that. Well, just the members will come because it's a bigger space. We'll get more. Well, that didn't happen. And ah, Anyway, so we're stuck with this rent obligation. Um, it's tied to the business with not a lot of members. We had a scenario where owners, the previous owners did nothing to actually create a vision or a culture. So it's kind of like each coach being able to do whatever they wanted When they showed up to coach their classes. Some of those became pretty entitled, and we used some passive aggressive techniques to get them out, like putting them on probation, taking away classes until to see if they could improve. Or, you know, they chose to quit. Um, but I can tell you, it's it's stressful because, as I mentioned, I health is a huge benefit for everybody, and fitness is a big part of that. And so we had this community that I was a part of. I enjoyed my workout routine. Um, the location's great for where I work and live, but it's like man, now this there's this additional stress. What do we do so that these people can keep this habit going in their own lives? Um, but yeah, you almost don't even know where to start sometimes when you look at it. So we just started with revenue compared to expenses. We don't have enough great so that means we need to focus on sales. Okay, let's look at our expenses, though, and we just we hatchet it through, man like surgical, I would say. So let me ask

spk_0:   7:52
you this. If there's a gym owner out there right now, who's listening to this? And like those, there's only so many levers you can pull to become profitable, right? Uh, you know, make more money, spend less money, are basically the two easiest ones for a gym owner. Um, if they're in that boat right now, what do you think that they should attack first? Or is it both in tandem?

spk_1:   8:13
For most gyms that we come across that are struggling, they have enough revenue, and it just comes down to being more conscious and controlled and decisive about their expenses. Because what happens is sometimes when things were good, our expenses will increase with the good increase. But then, if it drops a little bit, expenses don't drop at the same pace. And so we just we've added, you know, financial fat onto our gym. Ah, and it's harder to get rid of it. So a lot of times it's a simple as going through the expenses and identifying You know what, These aren't really good expenses. What? I teach it this way. A lot of times, people have spoken to their accountants about their expenses. The accountant comes back and says, Is it variable? Or is it a fixed expense? Which is accounting jargon? And I give Jim owner's permission to not care at all what those two words mean, because I don't think understanding if your expenses are variable or fixed helps you make better business decisions. I think the two criteria should be. Is this productive for my gym, or is this not productive for my gym? I know it sounds really simple, but gym owners aren't taking the time. Actually asked those questions, What do I get out of spending this money? And if they're honest with themselves, they'll realize there's a lot of expenses that they could cut back and still provide a great service to their members and allow them to profitable, which then therefore allows them to stay open for us long as they want,

spk_0:   9:47
right? And I guess, in order to even get to that point where you're looking at expenses and and um, deciding this productive or not. I feel like I know quite a bit of gym owners who don't even look at their chart of accounts. Maybe don't even know what their charge accounts are, right? Like, what would you suggest if somebody right now is like Okay, great. Welcome. Expenses where my expenses like, what would you suggest that they dio?

spk_1:   10:10
Yeah, uh, he has a great observation. Um, their bank account is where I would recommend they start. OK, print off. And I wouldn't even look at. I'm gonna look at the last 12 months. Let's start small. Give yourself a little victory, right? Just like when a new member comes in, you want to give them some sort of small victory? The very first workout. It's no different with our financial habits. So look at last month's bank statement. That's it. And look at your expense items and you might even realize I don't even know what this expenses for. That's probably a good sign that you don't need that expense.

spk_0:   10:52
Yeah, that we So we can actually do that Here, push for us. My partner Brian does that, and it's always like I know it's the first, like it just happened yesterday. The towards the first month I'm like, what is this expense? And what is it for? What is this expense? It was a form like great brains in this thing. But it's good because we just found that we had paid two months for some service that we didn't even know. I think we got like, someone took our Carter. It was like something in the medical field or something. Something totally random. Um, yeah, it's a good idea. So, like, um, one thing that I would do when I owned the gym is I would point out that bank statement and I had, like, a bunch of different highlighters, and I would go like yellow green, like I would highlight them. I had a color coding system, and that way I can kind of scan and see, like I'm seeing a lot of I had a red like pinky red one for the ones that are like, I probably should get rid of this. And then if I saw a lot of that, I'm like, Okay, I need to devote cause times of issue, an issue. And if I looked at my thing and I like one or two? Yeah, whatever. You know, maybe I should deal with it, but I was, like, not worth my time for this, You know, these $12 charge or whatever, but I saw a bunch. I'm like, Okay, this month, I'm sitting down in fixing all of these red things. So if you feel like you're kind of strapped for time or you need a system, I I need systems. So that's kind of that could be one way to do it. I'm sure there's,

spk_1:   11:55
I think it's a very simple approach that any gym owner is capable of doing. So that's a create starting point.

spk_0:   12:01
Yeah, I think that's a good topic to about getting a little win. I mean, it's in in your gym. It's so obvious, like when someone comes in, you're just like a man like, let's not try and lose £40 today. Let's just like just get in and have a good time and just enjoy fitness for for the first step. But then, when we apply that stuff to our own lives were just like I want, I want to become profitable tomorrow, right? Like and you've spent four years cramp your book So, like, you've got to take the little wins. I think it's a great piece of advice. Cool. So when you're looking through these McCall buckets of expenses and kind of like looking through this stuff, we're gonna flip back to this chart of accounts mode, I guess. Um, what do you see in your clients are the biggest offenders of, like, things where they're they're bloated out of proportion. That that can easily be trimmed back. Like just classifications of expenses, I guess.

spk_1:   12:52
Um, Dusan Subscriptions. Ah, you're just talking about that $12 expense, right? Um, those $2 expenses add up, and if you're not paying attention to him, you don't even realize that you're paying for it because you're not using it. You know, our do you have some sort of service that maybe you're paying for all the bells and whistles, but they have a load less expensive version of what you're actually using or music service is. So many gyms have multiple music subscriptions like I get It's only 10 to 15 bucks a month. But that crap adds up and with the margins that you have is a gym owner. Especially if you're not profitable. You've got to take the time to get rid of that first. Um, that I mean, those are the most common ones that we see are people like Oh, yeah. What was paying for two or three? Um, when I joined the gym kept being this, like, $5 charge. And every month, I asked the other business part of like what the hell it's it's expected. He finally, like, found out it was from a previous domain service they were using. Where there you are all is like, we haven't used that for a year and 1/2. But this company just kept charging him, charging him in other scenarios. I know a gym owner out, And, uh, North Carolina, where he bought one, was like bulldog machines like you, the floor cleaning machine. And he had at least tone. Well, their contract stipulated. We will keep charging you regardless of how much you paid us until you cancel the payment.

spk_0:   14:31
Even if you own, even if you've come down,

spk_1:   14:33
even if you've come to own it. It was in the contract. And because he wasn't looking at his numbers the way you should have. We're talking like, I swear it's like $4000. He overpaid. That's almost

spk_0:   14:47
predatory. Because who a like, understands our language in the contract. And B is like, Okay, five years from now, in June of 2025 this contract should be over. Someone remember,

spk_1:   14:57
there's no doubt that there's an ethical problem with that company. Who sold him that and did that type of agreement with the same self?

spk_0:   15:06
Or is that a reseller?

spk_1:   15:07
No. Is it? Yeah, I was somebody sell

spk_0:   15:09
her. I love I love my bulldog machine. I was, like, hoping it wasn't them.

spk_1:   15:13
Yeah. No, not not the company itself. But at the same time, too. You can't shirk from taking the counter ability of like, Yeah, I should've been looking at my numbers and realized Wait a minute. Why am I why I keep seeing this monthly lease payment? Hey, that

spk_0:   15:29
actually brings me to ah, very pertinent question that I have, because my gym might be going through it soon or went through it. So we negotiated when we got our lease. That like, um, we would get, you know, deposits back on certain times. Or like certain kickbacks vested over time, like they gave us like tea. I kickbacks. Not on the first date, but, like every six months, we get some. I'm pretty sure we forgot about that and paid the full amount of rent. Like when those t I have to go check. Do you have a system that you I'm not the best of this either Guys, this one talking. But if you have a system and like, other than just obvious writing it on a calendar like what the hell should I have done to make sure that when that six months, cause I mean, they're kind of written, So it's like it wasn't six months. It was like, 18 months and 36 months or something like that, right? Yeah. Like, how do you and same with bulldog thing like, how do you expect people to remember that? What did you do your system for? That you

spk_1:   16:22
don't. But like you actually said it, I literally would go into my calendar 18 months from now and put a task, or like, a block out of blocks ing your rent payment is gonna shit decrease. Based on this, it's the simplest way like everyone had. Well, I shouldn't say everyone. You should have a calendar if your gym owner like

spk_0:   16:41
a big one on the wall. But

spk_1:   16:43
Big one on the wall are just Google calendar, which is free. Um, I would do it on my Google calendar. That's you could put a note in your cell phone. You can just set a note for yourself to populate on that date. But whatever system you need to remind yourself, that's what I would d'oh.

spk_0:   16:59
Just I guess the point is to make sure to do it immediately, and not

spk_1:   17:02
immediately. Yep, the second you have it set up.

spk_0:   17:05
So, um, something I want to kind of dive into that you brought up that I'm the biggest offender of, like, I actually need your help. Personally, my finances are not the greatest. Um, but all of these $5.12 dollars, $15 charges that add up, um, I would be the first to be, like as not worth my time for five bucks. Right? But as you were saying, it, I realize like it's actually super important to dial in. Those $5 charge is because you're actually training yourself to have the state of mind of being financially responsible right? Like, do you think? Am I alone here, or is this a common threat of people nowadays?

spk_1:   17:43
It's, I think it's a common threat, especially if you're not dying like bleeding profusely as a gym. From a financial standpoint, it's easy to just say, Look, my time's worth more than that is $60 a year whatever, like all eventually get to it or something. But, I mean, think about There used to be more of a kick in the CrossFit community, where people get infuriated when members with cheat reps during the workout and as well, they're only cheating themselves. Yeah, but someone else had competing against them and they were gonna get mad at each other. That's effectively. What you're doing is you're it. You're admitting that you're cheating reps, which we know in the long run is not a good habit to have in your workouts. Because then every time you feel slightly exhausted, you're gonna go ahead and give in to the exhaust instead of pushing through and, you know, getting a better result out of the workout. This is no different when I look at $5 say to myself, you know what if I tolerate that $5? Where else is this toleration showing up in my life? And it could be showing up in areas that have more zeros attached to the

spk_0:   18:49
number? Absolutely. Yeah, if I had ah Dollar for every time I said it's not worth my time. I wouldn't be in a bad financial spot, I guess. All right, cool. So let's talk about profit versus a system so that profit first is a book that isn't particularly pointing towards Jim's fitness or anything like that, right? And that's more of a mindset. Ah, framework of Aah! Financial hand management. Correct?

spk_1:   19:18
Yeah, totally. So we have profit. First, the generic system, Um, which is why I wrote profit 1st 4 Micro Jim specifically so that it at least talks to the gym owner. But it is. It's a framework absolutely designed, like its structure to be designed for the needs of each individual owner. And there are some actors that just makes sense for everybody. But then there's other things that people need to tweak. Um, that works best for the way their cash flow works, and they're different things they got going on.

spk_0:   19:49
Yeah, I mean, like every framework you can'tjust wholeheartedly subscribed to a framework without taking your own personal circumstances into account. So great, Why don't you give us the top down layman's version of profit first and why it's effective?

spk_1:   20:04
Well, I mean, the 1st 1 is just the gym owners work, or they like they live paycheck to paycheck despite working a heroic amount of ours. And so this system helps them really make the time. They're sacrificing with all those hours of putting in so they don't distress about the paycheck to paycheck thing. From a overview standpoint, it's really the idea of spending your money, but like on paper before you actually spend it in real life, um, the challenges is as humans we have. There's this law that this guy developed called part petitions It up that he coined called Parkinson's Law, which says that the supply will always, um, increased to meet the demand. Uh, and the way this works with business owners is it that one bank account and their expenses are always going to increase to the extent they have money available to spend. And so we just say, Hey, how about this? Why don't we set up for some additional bank accounts for the big expenses that we know you're going tohave or should have, like owners pay paying yourself. That is the most important expense that that Jim can have for us. A gym owner. Cyprus suffered account for it. So in income comes in and it gets deposited. Let's take a portion out and put it in the owners pay account. Let's take a portion out and say some for taxes. Let's take a portion a now and set a little bit of side for the equipment replacement that we know where is gonna have to happen at some point down the road now a son. When I look at my operating expense account, I have less money in there because I've already spent it in other places with other commitments have already made. And now Parkinson's law has a much, uh, it's a more difficult time for it to kind of screw us over, because I could just look it the now expense. I can clearly see now how much I actually have available for operating expenses, because I've set aside the money already for the other

spk_0:   22:09
commitments, right? I assume probably in your book or through through some of the workbooks that you have available. You kind of lay out all the different buckets of these, like pre revenue spend categories that people need to pay attention to. Absolutely. Okay, cool. So, I mean, that's good, So that if they if people confined that, then they could start looking at the things that they need to spend before they spend spend on paper before they spend in real life. Do you recommend one bank account or multiple bank accounts?

spk_1:   22:39
Multiple bank accounts?

spk_0:   22:41
Are those bucket in a certain way? Like this is for owners. And this is for expenses of the gym, or how do you How do you stay?

spk_1:   22:46
So we call them the Essential seven Were another bank accounts. Okay, I'm here. Yeah, um, an income account for all deposits to come into. And that's its only purpose. Owners pay profit to distribute to us and owner for the risk of being an owner. Taxes, uh, equipment. And, uh, let's see, where am I? Missing the operating expense? Of course. And I'm missing an obvious one.

spk_0:   23:17
Uh, what about coaches bay? Or is that

spk_1:   23:20
a team member expense? That's the one. Yeah,

spk_0:   23:23
I got it. Like family feud. Okay, cool. So you're getting seven bank accounts, and you're you're funneling. Income comes into one, and then you're kind of spreading out. Does it income also become your op operational expense account?

spk_1:   23:37
No. We recommend keeping them separate.

spk_0:   23:39
Okay, so does the income income. Does the income bucket get zeroed out every month?

spk_1:   23:44
Every. We actually suggest you sit down either once a week or twice a month, but every time you sit down and get zeroed out, Yep.

spk_0:   23:52
So you're saying zero out that income

spk_1:   23:55
again? Coming. That's right.

spk_0:   23:56
So this is very interesting to me, because now it's basically like your book's almost become your accounting and that you take you take everything from here you distributed across these accounts, this one ends up zero. And then the one account that you kind of get to discretion Aly spend from probably works its way down to zero, and then you just start all over again. Next month on the income comes

spk_1:   24:15
in. Hey. Yes, Go ahead, finish. So it it's actually a great way to not have to budget because you're setting aside the money to the main buckets you know they need to go to because most people are really terrible at budgeting anyways. And this way, you're covering all your bases. Um, all the important things that the gym's gonna have And it also forces you to see because especially in the beginning, you're gonna pay yourself a certain mountain, gonna transfer that into the owners pay account. Then you're gonna compare what's left in Europe operating expense account to the bills you actually have. And a lot of times you have more bills to pay. Then you can afford to pay

spk_0:   24:52
what you do. Then

spk_1:   24:54
that forces you to actually ask those questions. Is this a productive expense? Or this is is this not a productive expense? And I'm obviously gonna pay the ones that are most critical first to keep the doors open and the service going. And I might find that I'm consistently pushing off certain bills. That tells me I need to cancel that service. Yes, pay the bill eventually, but you don't need it because you've already told yourself this is in critical to my operations

spk_0:   25:22
right now for that, for those gym owners who start doing this process and get to the end of it all and realize like, I just I paid all the bills. I still have some more bills that are like lights were going off. Our coaches aren't showing up if I don't pay it. Um, what do you do then? You do. Is there like, an order of precedence that you're dipping out of the like the prophet First Paper's type accounts?

spk_1:   25:46
Yeah. So, um, the tax account would be the 1st 1 I take out off. And here's why not, Because you won't have money set asides to pay taxes. But if you're doing this system and you don't have enough left over, you probably don't have a profit that you're gonna pay tax on in the first place. So that's why I say, out of the tax account first, inexorable to be equipment because it's not an immediate emergency. Um, those are the first to thin profit would be the one after that. Owners pay being the last one. But we think it's more important that the owner pay themselves regularly, which is what the owners pay accounts for, then being able to give themselves a quarterly profit distribution. When in the beginning. There's praying, not a prophet to distribute in the

spk_0:   26:32
first place. And and I'm gonna guess that it's the same thing you want to put yourself in the mindset of getting in the habit of paying yourself. Yes. Yeah. Okay. Cool. Um and I'm assuming also in this book. Um, I haven't read it. I have a backlog of books I need to read. This is on my shelf. Um, probably you need to push this one forward after all these admissions I made. But I'm assuming in this book that you you have percentages or some type of ratios where the money's going different places. That's

spk_1:   27:02
why we have a table.

spk_0:   27:03
Okay. We won't give away the secret sauce here. Um, cool. So how many gyms are using? Are you helping her? Now

spk_1:   27:13
we have a little warm 300 clients that are gym owners.

spk_0:   27:17
That's awesome. And that is that, like a bookkeeping client like you're working with him regularly. Or is that more like your consulting them howto become their own profit First guru thing?

spk_1:   27:24
Yeah, all of the above combination tax consulting, bookkeeping Service's profit. First coaching?

spk_0:   27:31
No. All right, cool. Um, so let's talk Let's actually dive into that tax thing that you mentioned before. This is an ongoing question. I always I always have our a debate I have with people. Um, I'd like to know your take on getting a refund during tax season.

spk_1:   27:46
Yeah, so I think it's important that we understand if we get a refund during tax season. That means you gave alone to the government and they're not paying you interest on it. That's all a refund represents now. Sometimes the refund is a component of credits that air earned, which means you didn't pay money in and you just get money back. Great. We'll take that all day long. But if you paid money in during the year and you end up getting a ton back, you're giving your You're giving the government interest free loan, and I can tell you they're not appreciative of your willingness to do that. They're not been a fitting your life because you're so generous in doing that. So it's always better in our mind to strategically plan. Um, look, do tax estimates figured out. It's one of the reasons why the profit first system works so well is because you're setting aside money your tax account. Bye. You're not necessarily always sending that money every time to the government, so you can rely on that balance and use it if you needed to for other emergencies. Plus. And when the tax bill comes, you now have the exact amount that you need to pay, and a lot of times they end up over saving, and they can then use that. So it's like I don't

spk_0:   29:06
give you. You

spk_1:   29:07
think you get a refund with exactly ish yourself? You're your own refund.

spk_0:   29:11
Yeah, and I think I think that the concept of what you're saying is really important. I get this argument a lot of people because people always assume the bigger the refund, the better. And I also understand that like there's some people that if you don't get a refund, you might really hurting yourself at the end because you didn't plan for it. But I think the key thing is like you're saying is you're gonna be accumulating some money in an account over time, you're going to make some quarterly payments to the government for your taxes, but you might be saving more in their quarterly or at worst case, you're gonna have, like, up to a quarter's worth of money in there. And if something, like, if something of an emergency happens in your life, the governance not gonna give you your money back so you can handle a medical bill, Right? But if you're accumulating this bank account and you can't send it to them, you're gonna own some interest. You know it, Sze nothing in the world. It happens all the time. The ire s but you have the money and you have the money to deal with what you have to deal with. And I think that's what's important. Because I see a lot of people, not just gym owners, gym owner. Specifically a lot of people in general, um, who are basically one life event away from, like a toss Tass trophy financially, right? Like one accident. They didn't expect one, you know, natural disaster in their gym they didn't expect. And it's just game over. That's tough. Yeah, cool. So, I mean, if you're listening to this and you feel like that's you, these are the reasons why we want you to pay attention to people like Jon because they're gonna it's gonna take time. It's just like any client. You bring it to the gym, but you're gonna start getting your stuff in order to the point where you do have a rainy day fund. Um, like this, this is super topical. And by the time people listen is that might be completely over, but in, you know, a Corona virus, There's gyms in Italy that have been shut down for two weeks like the government won't let them open. And I don't know how that would impact some gyms. If you're Jim had to shut down for two weeks, and all your members asked for two weeks, so the membership back right could happen. I mean, it could happen in the next coming weeks, even here, So yeah. Anyway, um, outside of all that, um, what is a simple tax tip that you would you would throw out there for a gym owner to maybe be able to deploy to help help themselves save some money or, um, put themselves in a better position?

spk_1:   31:23
Yeah. So our favorite go to, uh, some people call it the Augusta rule. Others call it corporate rent. Ah, it's referred to as the Augusta rule on the East Coast because every year ah, there's a really big golf tournament out in Augusta, Georgia called the Masters. And Augusta is not a very big city, but during the Masters, it triples in population, and there's literally just it's not a good investment for someone to own a hotel out there because they'd only have occupancy for, like, way 2 to 3 weeks out of the year. So what happens is, um, a bunch of these people opened their homes and they rent them out and they get paid an exorbitant amount of money. Well, I I don't know the actual history of how this law got into place with my guess is some rich person in Augusta. Ah, push this through to a lobbyist and they created this tax rule in the tax code, And it says, if you have a property and you rent it out for less than 14 days during the year, you are not required to claim the income you make off of renting that property. So basically, it says, if you have a property and it's more than 14 days, that's a rental property based on tax code, less than that. It's nothing. So these people can rent their homes out for these two weeks during the Masters. Ah, and not have to claim the income. Well, that's pretty cool. How does how can we get that to benefit a gym owner? Well, companies have board meetings and big companies spend money, lots of money, renting out hotels and convention centers and venues tohave a company meeting. Well, your company doesn't matter that you're one employee or two employees. You're still a company based on the tax rules so your company can rent your living space from you as a venue toe hold its monthly corporate meeting because you're renting it out once a month. That's 12 times during the year, which fits into this tax, Religious explained. So any income you make off of that personally, you're not required to claim that as income on your tax return. Is

spk_0:   33:42
this Augusta ruling nationwide thing? Or is that

spk_1:   33:45
Yeah, they just call it the Augusta role because people in Augusta do

spk_0:   33:49
it. Oh, wow. So a company can rent out, or any any entity can rent out something. Property for home Maximum 14 days.

spk_1:   34:02
Yes. So in this case, We're looking at it from the angle of you own your living space. Um, you can rent out your living space. Oh,

spk_0:   34:11
the person not to the

spk_1:   34:12
person. The company is taking an expense because that's what the tax code calls ordinary and necessary, which is dates, actually doesn't make any sense. So they created definitions to further explain ordinary necessary, which also don't make sense. But basically, other businesses do this so you can do it. Okay. The company the company pays the rent expense, which reduces your taxable income, but it's paying the rental expense to you. But you don't have to claim it as rental income.

spk_0:   34:45
Okay, so I'm gonna follow up with a question that I know I'm gonna prevent a bunch of gym owners from really hurting themselves. What is the limit like? You can't say it costs my monthly mortgage, right?

spk_1:   34:59
You do. You nest. You definitely need to do a market rate. We typically recommend going to Airbnb or Bourbeau, as they say now on their marketing, and just search for property similar yours in your area and see what they're going for for a day use. Um you could also contact the hotel and get a pit from them. In general, what we have found is 12. $51,250 is a pretty safe average for most people in the United States. But I have clients in New York and they could do $3000.

spk_0:   35:38
Yeah, I was gonna say, if you're in a really high rent area,

spk_1:   35:41
but it's got it for sure. It has to be market rate. Because if you are audited and it's exorbitant and doesn't match market rate, you have now invited the ire of the I r. S onto you. And you don't want that.

spk_0:   35:55
Yeah. I mean, I guarantee there was some enterprising gym owners right now thinking just like me. Like cool. I'm gonna charge my monthly mortgage for

spk_1:   36:03
$10,000. Everything

spk_0:   36:06
will just go away. No. Yeah. Okay. Cool. That's that's, um This is why I think everyone needs to pay a tax guy personally, because who knew that out there? I didn't know that.

spk_1:   36:18
Well, I can tell you to win. Some of these people go to their actual account, and they say, Hey, I heard this on a podcast. If he counts not aware of the tax code they're going to like. You can't do that because they're gonna be thinking of a different tax rule that basically talks about You can only take expenses to the extent of your income and the hobby anyways, so Ah, yeah, it's really important. Have a good tax person.

spk_0:   36:40
Yeah, um I mean, I'm the tax laws in America are very beneficial to business owners, and I think for good reason, because business owners create jobs and stimulate economy and all these things. So if you are kind of just like running through your business and just plowing your all your business numbers into quicken or something, you might I'm not licensed to give tax advice, John is. But you might be overpaying, and you might not be able to take advantage of, like, a lot of these old things that you shouldn't know unless you're this what you d'oh! I would hope you didn't know that. Um, but you hire someone like John who does, and then you save a ton of money, right? That's just how it works. All right, let's rapid fire through a couple of things. Um, getting towards the end of this episode What is your favorite podcast right now? Other than mine

spk_1:   37:29
Other than yours, of course. Um oh, gosh. I listened to quite a few, but there's one with his name's Dan Sullivan. Ah, it's like a technology one. And that's how good I am with things I don't even know. They're freaking names. I'm kind of the same way. I

spk_0:   37:46
listen to so many podcast. I get him mixed up. I get the titles confused. I get the author's confused exponential wisdom. Oh, that sounds good,

spk_1:   37:55
that they're really good. Hey, think this. They always discover they're talking about new technologies and how it's changing the world. And I just find it fascinating every time.

spk_0:   38:04
Yeah, I think that's a good thing to dial into. Um, do you have a mentor?

spk_1:   38:10
I do have a few mentors. I'm currently working with a company. Kelly Roach Team is how they call themselves. Um, that's mainly on the inside tax side. And then we have to brain as our businessmen tours for

spk_0:   38:25
the gym sites over the gym side. Okay, Yeah, I just did a podcast with Chris, and that was ah, really fun. Kris is Kris is a great guy. Super Okay, so I'm gonna t that one up. Do you feel like people out there listening right now should have a mentor if they don't,

spk_1:   38:41
I absolutely think you need a mentor. And here's why. You are the as the owner. You're the least competent person in your business structure. And here's why. Because wherever you're currently at, you've never had a business at that size before. So how do you know how to run it? So, like when we first hit, we crossed the 1,000,000 point at Insight Tax. I had no idea how to run a $1,000,000 business. And now I don't know how to run a multimillion dollar business. I need a mentor to help me see what I'm not seeing. Also go through moments of second guessing yourself, and you need someone Thio basically give you the confidence we need that and to or to give you the direction when you need it. I just I think as an owner, you need mentors in your life for sure.

spk_0:   39:29
Yeah, I say that all the time to people like I am further along this business than I've ever been. And I think I think for some people out there. That's a hard thing to admit, to be able to look at yourself and be like, Well, I just took another step into the into the forest and I'm one step deeper and I don't know where I am. That's it. Sometimes it's hard for me to say it and were to say it, but it's the truth. Um, I do think hopefully if you're running your gym, you for your farthest farther along than you've ever been, cause if you're not, that means you're kind of going backwards. But, um, if you if you are and you feel that way, it's like I think it's something to be proud of, not ashamed of them. And your ego shouldn't get in the way of talking about that because all the best people who have done all the best things have somebody in front of them helping them save time and save them from making mistakes.

spk_1:   40:16
Yeah, I don't think anyone should be ashamed of that. It's just a reality, as the owners were the least competent. My team members know what to do because I'm they do the same thing. It's just more of it, Yeah, but you know, we do. I've never had this menu member for I've never had to deal with a poisonous coach, you know.

spk_0:   40:33
And if you really, really want to dive deep into, like, running a business and being a leader, you should be trying to build a business where you aren't the best coach anymore. And you're not the best front desk person or the best sales were like, You are you Aren't you the best leader? You're the best person putting all the butts in the seats and getting the bus driving the right way. But if you're still looking at your gym and being like I'm the best coach, I'm also the best salesperson. I'm the best janitor. Then Then the gym is struggling for that, right? Yeah. You That actually leads me to ah to Ah, really exciting one that I want to ask you. And I'm gonna I'm gonna hope that this works cause I might not have you. Are you watching her? Have you watched the show? Narcos Mexico.

spk_1:   41:13
I haven't see,

spk_0:   41:14
um, it didn't work. Okay, I'm, like, obsessed with this show right now, and its base is basically, you know, about the drug trade in Mexico and this guy who took it from an idea to $15 billion a year and I'm watching it like, Oh, he's a CEO and he's making that he shouldn't He, like his biggest mistake in the show is he's the most important employees for every section, and that's why it all eventually has problems because he doesn't have the leadership to put people in place to handle all these things for him. Um, and it's just I just think it's funny, like I'm watching this and I'm, like, learn, trying to learn for push pressed on time. And now that we're talking about, I'm like, Yeah, the gym owner is also you know, the best mule, then problem. You

spk_1:   41:56
know, you bring up a good point. So I think a lot of times there's three things that we misunderstand is as owners in general is the difference between the word delegation, abdication and decision making. A lot of times when we delegate were actually we ended up abdicating the responsibility, and we don't have them bring accountability back to us. We just hope things get done. Then when we take a step up for like a way. That's not good. Now, I said, We have people coming to us. We make the decisions for them and then they go out and do the work. But the reality is, if you want to own a business, you need to delegate the responsibility they need to feel responsible and accountable to you. Ah, in order for you to really probably meet the vision that you have for your

spk_0:   42:42
job, Yeah, I mean, it's it's It's a scale thing. Like if you really want to take your gym to the next level, you can't be making every decision for every person. You have to be training people to the point where you can trust that they're making the right decisions and have them tell you. And then maybe you guys talk through it and help them, you know, help them. My thing is like I want to help you find you find the better decision, not me, tell you what the decision is. I still have a comment that myself, honestly, it's it's tough, it's hard,

spk_1:   43:07
it's really hard. I still struggle with it, totally

spk_0:   43:10
So actually, that's a good take away from me from this. This because ah I never thought I never realized I was three. I thought there was to like, either. I'm telling you, are, um I'm I'm giving you the power to do it. But that's a big thing with me. Is trying to get people to help. Um, all right. Cool, man. Hey, this is a super cool episode. Ah, I learned a lot. I hope you guys learned a lot. Um, thank you, guys all for joining another episode of the gym OS podcast. We're here trying to help you guys become better business owners. One episode at a time. This is a super cool. And we had John Briggs in From Incite Tax. Author of Profit First for Micro Jim's. If you guys haven't caught that, you might want to get out. I'm sure it's on What Amazon Amazon. You about one of these days, I might get around to writing a book. It's on my on my to do list. Um, super cool for you doing that. I give props that must take in a long time. Um, hey, if if these guys want to check you out or or no, no more information about you or what you're doing How can they find you?

spk_1:   44:07
Um, profit first for micro jim's dot com or insight to tax dot com. Ah, those air easy ways to find out where I am or what we're doing.

spk_0:   44:16
All right, Cool. All right, guys. So hopeful. You guys learn something? If anything, Um, just understand that if you don't understand the tax law, you might want to consult tax people to help you save some more money When the tax bill comes along. We are in tax season right now, So this will be especially poignant for many of you until next time I see you guys later. Boom. There we go. Another episode of the Gym OS podcast Done. I know you took some good stuff from that. Like I said, I did. And that's kind of the mission. Here is every day. We're trying to learn a little more. We're trying to become better owners a little bit more, and I'm glad you shared a little bit of time with me today and and John Briggs to work on your own business. We all as gym owners are spending so much time in the gym trying to work on everyone's physical fitness and their movement patterns and the things that they're doing in there. Jim are out of the gym to improve their wellness. And you need to spend more time working on your own fitness. And I finished. I'm talking about your business fitness. So I hope you enjoyed that episode. If you like that a man we're working on something new this time We did video. So if you like that and you're watching the video hit, hit that like button or subscribe Thio the Push Press YouTube channel. We got all kinds of good content coming out all the time. It is our mission to put out content to help you become a better gym owner. If you're listening this on the podcast, make sure you subscribe. Don't be a dummy. You know you need this every week. We're doing it every week, putting out new content right into your ears, so subscribe like it. Give us five stars. You know the whole deal. Help another gym owner find us. Help Apple and Spotify and them know that we're relevant. And we're helping gym owners give us the props. Thank you. We'll see you next time. Until then. Keep on grinding guys.