Health & Wellness
Memberships, class packs, and gift cards create accounting complexity. We track what you've earned versus what you owe.
The Industry
Wellness businesses collect money in ways that make accounting complicated. A client buys a 10-class yoga pass for $180 and you see cash hit the bank. But you haven’t earned that $180 yet. You’ve earned it one class at a time as they show up. That pass might take three months to use up. Or it might expire unused. Either way, treating that $180 as January income when the client bought it in January creates a false picture of your business. Multiply this across memberships, packages, and gift cards and you end up with no idea what you’ve actually earned in any given month.
Then there’s the staffing question. Many wellness businesses work with instructors, massage therapists, and estheticians who come and go. Some are employees on payroll. Some are independent contractors who rent space or work on commission. Getting this wrong isn’t just an accounting problem. It’s an IRS problem. Misclassifying an employee as a contractor can trigger back taxes, penalties, and interest that put studios out of business. The line between contractor and employee in this industry is blurry enough that many owners guess and hope for the best.
Who This Covers
Who This Covers
Yoga studios, pilates studios, fitness gyms, day spas, massage therapy practices, med spas, personal trainers, wellness coaches, float therapy centers, and recovery studios. Any business in Metro Detroit where clients prepay for services or buy memberships.
What Complicates It
What Complicates It
Prepaid class packages and memberships that create deferred revenue. Gift cards that may never be redeemed. Independent contractors mixed with W-2 employees. Tip income that needs proper reporting. Commission-based pay structures. Retail product sales mixed with service revenue. Seasonal swings that make January look nothing like June.
What We Handle
We track revenue based on when services are delivered, not when cash is collected. When someone buys a 5-pack of massages, that money goes into a liability account until each massage is used. Your monthly income statement reflects services actually performed, giving you a real picture of business activity. Expired packages and unused gift cards get handled properly so they don’t sit on your books forever as phantom obligations. This matters when you want to know if April was actually profitable or if it just looked good because someone prepaid for six months of membership.
For contractors, we make sure W-9s are on file before the first payment goes out. We track payments throughout the year so 1099 filing in January is just pushing a button. For employees, we handle payroll with tips reported correctly, commissions calculated, and all the withholdings done right. If you have a mix of both, we keep everything separated and documented so you’re prepared if anyone ever asks questions about worker classification.
Package and Membership Tracking
Package and Membership Tracking
Revenue recognized as services are used, not when packages are purchased. Deferred revenue tracked as a liability until earned. Expired packages cleared appropriately. Gift card balances monitored. Monthly financials that show actual business performance instead of timing distortions from prepayments.
Payroll and Contractor Compliance
Payroll and Contractor Compliance
Employee payroll with tips reported and commissions calculated. Contractor payments tracked with W-9 documentation on file. Year-end 1099s prepared without scrambling. Clear separation between employee and contractor relationships. Payroll tax filings handled correctly so nothing comes back to bite you.
What Goes Wrong
The most common mistake is treating prepaid packages as income when sold. A client buys a $500 package in December and you count it as December revenue. January through March you perform the services but show almost no income because no new packages sold. Your financials show a boom in December and a slump in Q1 even though business was steady the whole time. This makes it impossible to know if you’re growing, shrinking, or holding steady. Owners make decisions based on these distorted numbers and end up surprised when cash runs short despite what looked like a good month.
Contractor classification is the other landmine. You’ve been paying your yoga instructors as 1099 contractors for years. They set their own schedules and teach at other studios too, so it feels right. Then someone files for unemployment or the IRS audits and suddenly you’re defending that classification. If you lose, you owe back payroll taxes, penalties, and interest going back years. Some studios survive this. Many don’t. The documentation you keep and the actual working relationship matter more than what you call the arrangement.
False Revenue Picture
False Revenue Picture
Packages counted as income at purchase create artificial income spikes. Months where you deliver services but sell few new packages look unprofitable even when you’re busy. Gift cards sold around the holidays inflate year-end numbers. Business decisions based on this timing noise lead to bad choices about spending, hiring, and pricing.
Compliance Gaps
Compliance Gaps
Contractors paid without W-9s on file create 1099 filing problems. Worker classification that doesn’t hold up to scrutiny creates tax liability. Tips that flow through without proper reporting trigger payroll issues. These problems compound over years and surface at the worst times, usually when you’re trying to sell the business or get financing.
What Changes
Monthly financials reflect reality. You see income from services actually delivered, not from cash that came in for future work. You know what you’ve earned and what you still owe in prepaid obligations. When comparing March to April, you’re comparing actual business activity. Growth trends become visible. Seasonal patterns emerge clearly. You can price new packages confidently because you understand the real economics of delivering those services over time.
The compliance anxiety goes away. Your contractors are documented properly and you understand the distinction between them and employees. Payroll runs smoothly with tips and commissions handled correctly. When it’s time to file 1099s or respond to a state inquiry, the records are there. You spend your energy on running the studio, training staff, and growing your client base instead of worrying about what might go wrong with the IRS or state agencies.
Pricing and Profitability Clarity
Pricing and Profitability Clarity
You know which services and class types actually make money after accounting for instructor pay, supplies, and overhead. Package pricing gets set based on real delivery costs. Membership tiers reflect actual usage patterns. Decisions about adding new services or instructors are backed by numbers instead of gut feeling.
Confidence to Grow
Confidence to Grow
Expanding to a second location or adding a new service line requires knowing your numbers. Clean financials show lenders you understand your business. Clear contractor documentation means scaling the team doesn’t multiply your compliance risk. You grow based on what the business can actually support, not what you hope is true.
Metro Detroit's Small Business Bookkeeper
The Next Step:
A Short Conversation
Tell us about your business and your current bookkeeping situation. We'll listen, answer your questions, and give you a clear quote.
