Personal Training – Items used with a specific client to provide service – An expense of Cost or COGS?

Personal Training: Are Specific Client Items an Expense or Cost of Goods Sold?

Hi everyone,

I recently started providing one-on-one personal training sessions using specialized Electro Muscle Stimulation equipment. As part of the training program, each client purchases special undergarments (for hygiene purposes) that must be worn under the equipment. I source these undergarments directly from the distributor.

I charge clients a nominal fee for these items, typically just covering the base cost plus a small amount for shipping and handling. My goal isn’t to profit from these items, as my income comes primarily from the training services I offer.

Currently, I categorize the cost of these undergarments as an expense in QuickBooks. However, I am reconsidering whether they should be classified as Cost of Goods Sold (COGS) since they are essential for delivering my service.

I’d appreciate any insights on how to properly account for these items.

Thanks in advance!

1 Comment

  1. bdadmin

    Reply

    It sounds like you’re navigating an important aspect of accounting for your personal training business, and your question is quite relevant.

    In your case, the undergarments you provide to clients can be classified as Cost of Goods Sold (COGS) rather than a regular expense. Here’s why:

    1. Direct Relation to Service: COGS generally includes costs that are directly tied to the production of goods or services. Since your clients must purchase these undergarments in order to effectively participate in the training you provide, they are directly related to your service.

    2. Essential for Service Delivery: As you mentioned, you cannot deliver your service without these undergarments, which makes them integral to your offering.

    3. Inventory Consideration: If you maintain a stock of these undergarments before selling them, it further supports the classification of these costs as COGS. You would be tracking the cost of inventory sold during the period.

    In summary, since the undergarments are essential for the service you provide and are a direct cost associated with that service, it would make sense to categorize them under COGS in Quickbooks. This change will help give you a clearer picture of your gross profit from personal training services.

    It might also be beneficial to consult with an accountant to ensure that all aspects of your bookkeeping align with tax regulations and best practices for your specific business structure.

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