You have finally built your dream Yoga Studio, and even better you actually have clients! This is when you start to realize that there is more to running your Yoga start-up then downward dog and sunrise salutations. You need help so you can add extra sessions, or maybe just to cover some time off for yourself after all of your hard work. No problem- you have plenty of instructor friends in your network that can cover a class or two.
If only it was that simple, but there is one key decision in the process that cannot be overlooked. Will you classify your workers as Independent Contractors or Employees? There are pros and cons to each format, and there can also be legal and tax consequences if you incorrectly classify.
Let’s take a closer look at how these two classifications function and what they may mean for your Studio.
Independent Contractor (1099)
An Independent Contractor is a freelancer that works for themselves and you “contract” them to perform services for your business (think of it like hiring a plumber). The pros of this kind of relationship are: flexibility, cost savings, and no training investment. The cons can be: no company loyalty, may not always be available due to other projects, and little control over the way they complete their work.
An Employee is someone that works directly for you and you have full control of how and when they perform their job. The pros of this kind of relationship are: full company investment, full control over training, control over how the work is executed. The cons are: benefits will be expected, payroll taxes, overhead and ongoing expenses, unemployment and workers’ comp coverage.
Still confused? No worries, an Attorney that specializes in small businesses can help you steer your Yoga Studio in the right direction so you can get back to running your business. Reach out today for help.