Why Fitness Instructors Should Be Independent Contractors…NOT Employees!!
Many of us thought that by becoming Yoga, Pilates, HIIT, or Dance Instructors that we’d be spending our time outside of the studio coming up with sequences for our students, building playlists, and learning from master teachers of our chosen niche. Not many of us thought what it would actually require: becoming a small business owner. Like it or not, being an independent contractor (aka freelancer), you also have to learn to be a small business person.
It’s possible that you have gotten a you-better-learn-the-business side-of-teaching wake up call. A lot of this is because the IRS has been cracking down, and auditing studios for treating their freelance instructors as employees. In response studios are now scrambling to figure out how best to treat their instructors. Some are making instructors employees without: insurance, pension plans, paid vacation, sick days, and disability insurance (yes, this is legal). However in most situations being an independent contractor is better than being an employee of a studio.
The IRS looks at three different factors when weighing whether someone is an independent contractor or employee, I have linked these sections below and I highly recommend reading each section thoroughly, you will quickly see why there is so much ambiguity around the relationships between instructor and studio when it comes to whether you are an employee or independent contractor:
1. Behavioral: Does the studio control or have the right to control what the instructor does and how the instructor does his or her job?
Most studios I have worked with don’t control the way I teach, in fact I think most studios hire me because they like my unique teaching style. If a studio told me how to teach that would feel very inauthentic to me. I’m sure most of us agree that teaching is an art, and most artist don’t like to be told how to make their masterpieces. However some studios do tell their instructors how and what to teach, so if there’s incongruency the studio could get into some trouble.
2. Financial: Are the business aspects of the instructor’s job controlled by the payer? (these include things like how the instructor is paid, whether expenses are reimbursed, who provides tools/supplies/software, etc.)
I also enjoy the benefit of expensing my: trainings, travel, and “uniforms”. Since I often spend a lot of my day commuting to and from studios, it’s advantageous for me expense that money spent. I write off much of my vehicle and other travel expenses. Also continuing education training are expensive, and I’ve done a lot. Typically if someone is employed by a company they are doing continuous training and have mentors that help them grow. So if a studio’s not going to pay for my growth I certainly want to write those expenses off. Financially I make more money as an independent contractor than I would as an employee because I can deduct my expenses.
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)?
If I’m not getting health insurance, retirement benefits, etc from a studio I want to use those to my advantage when I’m doing my taxes. Health insurance is deductible as an independent contractor, and putting money into a personal retirement account can really help to offset my tax burden and build my nest egg at the same time.
The decision to become an independent contractor or an employee should be based on your personality, and your teaching goals but it’s often out of our hands. If you are working at a studio you are usually at the whim of the studio manager or owner. If it’s in your control ask yourself these questions:
Do you want autonomy? Are you a professional instructor who is teaching at many different studios, teaching your unique programs, hustling to build a client base for privates, workshops, and retreats? In these situation you’re better off being an independent contractor, meaning you are contracting your services to other businesses.
If you want the autonomy of being an independent contractor you’ll have to be organized: itemize expenses, pay quarterly taxes, and contribute to your retirement plan. You have to plan thoughtfully and thoroughly for your future, because it truly is in your hands.
Here’s some extra bits and pieces to considering if you go the independent contractor route:
- REMEMBER at the end of the year you will have to do a profit and loss statement when you file your taxes. It behooves you to be organized throughout the year, and keep receipts and notes. I also suggest hiring a CPA to help you file your taxes (again this is a write off).
- It’s a really good idea to get a professional liability insurance, it’s usually less than $200 per year (which you can write off), and it protects you if one of your students gets injured while working out with you. Feel free to send me an email, and I’ll give you the details of the insurance I use.
- I also recommend having clients sign waivers, and a general policy agreement. General policies agreements can include your hourly rate, late cancel payment requirements, and anything else you want your client to know before working with you. If you would like a waiver template please email me.
- Finally check with your city as you may need to register with the city to do business. For instance, if you operate as an independent contractor within San Francisco, you must register your business and renewed on an annual basis.
- Independent contractors receive 1099s from the studios they work with. You can be a: sole proprietor, corporation, partnership, or LLC. Sole proprietor is the default business type if you haven’t registered your business with the state. And it’s NOT required that you register with the state if you prefer to keep your sole proprietor status.
The purpose of this blog is to empower you to become a better business person and act as a helpful guide so you know the benefits and potential pitfalls of being an independent contractor. I am a Pilates and Yoga instructor, not a tax attorney or CPA, so please seek council from either of these professionals before deciding what is right for you and your business.
If you need business tools or a community of support reach out to me directly. At LubbDubb we have a growing group of freelance fitness who meet monthly in San Francisco to learn business tools, and strategies — it’s free and any instructor is welcome. Also check out LubbDubb you can post your classes, workshops, retreats, and clinics. We process payment, make sharing your offerings to your social platforms simple, and give you the autonomy to run your business wherever your teaching.
Namaste!!
Mandi Bateman, CEO LubbDubb
