I currently own a small personal training company in Florida. Personal trainers find me (or I find them) and request to join my company. I market my company, the trainers and process payments for the trainers in exchange for a commission on the prices of personal training sessions (all trainers agree to an identical set price). In order to avoid a massive tax headache one day I'd like some guidance on whether I should continue to classify these trainers as independent contractors or employees.
Here are some factors why I believe they are independent contractors...
I cannot guarantee these trainers any work/income.
Trainers have the ability to accept/decline work and create their own schedules.
I do not supervise the work they do. They are 100% in control of how sessions occur.
They are only paid after every session they complete with a client.
They are responsible for all expenses attributed to the business.
There is no set place of work, hours or days of work.
They are free to work for identical businesses.
Factors why they may be employees...
They are essential to my business. Without them training clients there are no revenues.
What are your opinions?
I have absolutely no problem with the above reasons. The truth here is that anything can happen. No one can give you blessings even in light of the great Q and reasons. What are you going to do if someone says they think you are OK? I know of a case where a mobile DJ co. did the same thing. They treated it as a 1000. They had to pay $50K to the IRS. So what's the best thing? No one can take the risk out of BIZ. Sorry. . .but that is the ever-lovin' truth.
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Good on you for spotting this issue and seeking legal advice. This is one of those areas where you REALLY want to pay an attorney to advise you on this matter. The tax issue is just one aspect; employee lawsuits are the icebergs to look out for. A misclassification suit gone bad can easily break a small business getting off the ground. A perfect case study of how courts can rule in unexpected ways is Uber, which is fighting a number of rulings holding the drivers to be employees. Similar challenges have put home cleaning businesses out of the market.
Find an attorney that will not just give you an opinion on your current business practices, but who will advise you as to the creation of a business model that best insulates you from misclassification lawsuits. It may take a few calls, but you should be able to find an attorney that will offer you a choice between a flat rate or an hourly rate, and you may find that it doesn't cost as much as you may think it will. Best of luck.
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You are on the right track as far as the facts you are analyzing and as has been stated, you should do this analysis with an attorney to ensure all of the necessary pieces are factored in. This is normally a case-by-case analysis because of the multiple variables. Good luck!
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