Do we need to report a no-show cancellation fee as revenue too?
Yes, any consideration received as a deposit or cancellation fee must be recognized as revenue regardless of whether the service was actually provided. Group classes and 1:1 sessions also have different rates and revenue structures, so tracking them separately makes profit-and-loss analysis and instructor settlement more accurate. Pilates equipment such as reformers and Cadillacs is classified as a depreciable asset once it exceeds KRW 1 million and must be expensed over its useful life.
The Trickiest Part — Equipment Investment and Instructor Contracts
You'll want to plan ahead for the tax issues specific to high-value equipment investment and instructor incentive systems
Manage Reformers and Similar Equipment as Depreciable Assets
Pilates reformers, Cadillacs, and similar equipment carry a high per-unit price, so it's more stable for tax purposes to expense them over their useful life rather than in full in the year of purchase.
Determining Employee Status Matters for Incentive-Based Instructors
If an instructor independently recruits and manages their own members and can set their own class hours, a business-income (3.3%) freelance contract fits, but if they work fixed hours under the studio's direction, they may need to be treated as an employee.
Income Structure Features of Pilates & Yoga Studios
Key Expense Items
Must-Know for Pilates & Yoga Studios
Split Pilates Equipment & Instructor Pay by Category to Save on Taxes
From reformers to booking apps, categorizing each item correctly is what cuts unnecessary tax
Long-Term Fixed Assets — Equipment Subject to Depreciation
Pilates equipment: reformer, Cadillac, chair
Yoga fixtures: interior fit-out, lighting/sound systems
Once a per-unit purchase exceeds KRW 1 million, it's classified as a depreciable asset and must be expensed over its useful life.
Consumables — Immediate Expense
Mats, blocks, straps, and hygiene supplies are expensed in full at the time of purchase.
Personal-Service Costs — Instructor Incentives
If an instructor is settled as a business-income earner (3.3%), 3.3% of the incentive payment must be withheld and filed by the 10th of the following month.
Booking App Fees
Group and private class booking-app fees are a recurring monthly cost, expensed in full at the time they're incurred.
| Category | Typical Examples | Tax Treatment |
|---|---|---|
| Long-term fixed assets | Reformer/Cadillac, interior fit-out | Depreciated once over KRW 1M |
| Consumables | Mats, blocks, straps, hygiene supplies | Fully expensed immediately at purchase |
| Personal service | Instructor incentives | 3.3% withholding or employment income |
| Booking system | Group/private class booking app | Expensed immediately |