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Accounting and tax planning for BJJ, judo, karate, Muay Thai, boxing, and traditional martial arts schools across Canada. Built for owners managing memberships, instructors, tournaments, and events.
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Most martial arts schools start with a mat, an instructor, and a handful of students paying monthly. Within a few years, the operation changes completely: multiple instructors (some as employees, some as contractors), prepaid annual memberships, drop-ins, private lessons, a small shop selling uniforms, gloves, and drinks, and occasional tournaments hosted by the school.
Each of these revenue sources can have its own accounting treatment, and that distinction matters for better business decisions. Payments to instructors raise the contractor vs employee question. When the school joins a franchise or affiliation, royalties and franchise fees need correct treatment. Most accounting software treats everything as one revenue line, which works until you need clear numbers to make an important decision.
We work with everyone from a solo black belt teaching three nights a week, to academies with multiple instructors and over 700 active members, to schools considering a second location.
Annual prepaid memberships, drop-ins, class packs, and private lessons each have different recognition rules. Wrong treatment inflates revenue in months with high enrollment and creates tax mismatch by year-end.
Black belt instructors paid per class, head instructors on the payroll, each arrangement has its own classification under CRA rules. Wrong classification leads to retroactive CPP, EI, and source deductions that the school is responsible for. Setting up payroll correctly prevents this.
Royalty paid to a franchise is a recurring expense. The renovation required (signage, mat upgrades, painting, layout changes) often becomes a fixed asset that depreciates over time. Don't follow that? Don't worry. We're here to get this right from day one.
Selling uniforms, gloves, mouthguards, and drinks adds a different revenue stream with separate GST/HST treatment. Mixing this with service revenue makes margins invisible. Both GST/HST/PST and bookkeeping setup need to handle the split correctly from day one.
Expanding to a second school raises questions about whether each location should be its own corporation, how the small business deduction is shared across associated corporations, and when a holding company starts to make sense. Decisions made at the start of the expansion are hard to reverse later, and connect directly with broader tax planning for the owner.
Monthly royalty, brand-required renovations, mandatory product inventory from the franchisor, all of it needs to be structured correctly from the first day to avoid headaches in the first fiscal year under the new model.
A weekend tournament generates ticket sales, concession revenue, sponsorship, and prize payouts, plus costs for refs, mats, equipment rental, and trophies. Each line has its own treatment, and treating everything as a single net amount distorts what the event actually contributed to the year.
When the school turns profitable, the question shifts from "how do I make this work" to "how do I pay myself in the most tax-efficient way". The mix of salary vs dividend, RRSP contribution room, CPP impact, and whether to use a holding company to retain earnings, all enter the planning.
When the spouse runs the front desk, or a son helps with the kids' classes, the compensation needs to be real, documented, and proportional to the work. Done right, it generates legitimate tax savings at the family unit level. Done wrong, it becomes a CRA issue under TOSI rules.
Whether to incorporate the new location separately, sign in the same corporation, or set up a holding company to hold the operating companies. Each path has implications for liability, taxes, and future sale. Mapping the options before the decision saves restructuring costs later.
The relationship may have started as a contractor splitting commission per class, but evolved into something that looks more like employment, with set hours, school equipment, and exclusivity. We assess the working pattern against CRA criteria before retroactive penalties become an issue.
When a significant share of revenue comes in cash from drop-ins, retail, and small purchases, CRA expects clear documentation. Daily summaries, deposit matching, and invoicing all need to add up. We help establish the bookkeeping process before any review notice.
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