Accounting for Coaching Clients

Coaching is a booming industry in Pennsylvania and a great niche for PA accountants and CPAs. Tap into this broad industry and you’ll be working with some of the most hard-working and intelligent clients you can find. But one thing many of them lack is a clear understanding of start-up steps and financials. You can provide that expertise to keep their business healthy and growing.

There are a wide variety of coaching fields, which include:

• Business, leadership, team, executive, marketing coaching (anything in the business realm)

• Health and wellness coaching

• Career coaching

• Relationship coaching

• Performance coaching (for any field, not just sports)

• Public speaking, acting, writing, and other creative coaching

• Motivational coaching

These coaches are often coming out of the corporate world or are experts in their artistic, health, or sports fields and want to help others benefit from the experience they have accumulated. But they are entering a new profession when they begin coaching, and most (even some of the business coaches) don’t know how to start well and stay on track for long-term success. They need help and they need your expertise. 

Coaching businesses have low start-up costs since they generally don’t need inventory, warehousing, or a large staff. Their biggest costs are marketing and a good website. For this reason, many people dive into coaching without thinking through bookkeeping or taxes. They then find themselves in trouble when their first tax season comes along. 

First, make sure your client has any required PA registration and an EIN from the IRS, then discuss the need for proper bookkeeping for financial success and audit avoidance. You may already have a favorite bookkeeping software that you recommend to clients, but evaluate your client’s particular needs based on industry and specific financial requirements. An integrated system that allows you real-time access will help you guide your client in keeping their bookkeeping up to date to provide accurate reporting and tax preparation.

Coach your coaching client on some of the most important steps to keeping accurate records, such as regularly entering into the accounting system:

• Invoices for coaching services

• Invoices for sales, if your client also sells products (for instance, a health coach who sells supplements)

• Business expenses

• All revenue from accounts receivable and any other sources 

Create policies and procedures, with the input of your client, to ensure that accounts receivable, accounts payable, revenue, and all expenses are recorded on a timely basis. For instance, the client may prefer to enter sales and expenses at the end of every business day. There are also apps available that allow your client to take pictures of receipts or invoices as they are incurred and enter them into the accounting software, eliminating the chance of forgetting to record something.

Accurate information will ensure that your client’s taxes will be accurate. If your client didn’t engage you from the beginning, he or she may have already run afoul of the IRS and PA Department of Revenue for not sending in quarterly estimated tax payments. Set that up immediately and arrange for all fines and interest to be paid – either pay in full or create a payment plan. 

Once the quarterly payments are scheduled, discuss with your client the possible tax deductions available for start-up costs and any business tax deductions that can be planned for in advance. Having a tax-minimizing/revenue-maximizing strategy will set your client up for success. And most likely, when he or she sees how helpful you have been, your client will likely opt for ongoing services. 

Because you’ve helped your client so much, he or she will see you as an expert and may want to continue working with you for other finance-related needs. Be prepared with additional services to offer at various levels and price points. Entrepreneurs have a broad range of needs, from acquiring loans to developing financial strategies to needing a part-time CFO. 

You may also find that you prefer working with certain kinds of coaches. Going deep in expertise in a niche field will make you a sought-after expert, increasing the rate you can charge.

Be sure to tap into the knowledge of other PSTAP members to see how they have helped coaching clients grow and succeed.