Ryan Vaughn explains how gym owners should classify coaches as 1099 contractors or W-2 employees. There's no universal answer, but proper 1099 structure can reduce taxes for both parties. California recently passed legislation forcing coaches to be employees, limiting contractor options there.
Hey, this tip is one that apparently I've been getting known for. I want to talk about coaching classifications. 1099 or W-2? Which one is it? There is no— there's no like black and white answer to this question. The couple words that don't ever belong in this conversation, the word always or never. And so my main goal in communicating this to gym owners is just know that there is an option. A lot of times coaches can be classified as independent contractors. Now I know that sometimes this gets a bad rap because the other side of the coin, the story that gets told sometimes is a victim mentality. of team members who feel like the business owner is being greedy and they're forcing a tax onto them instead of them picking it up. But the reality is being an independent contractor is in fact best for the business and for the person. They just need a good tax accountant to help them understand how being a 1099 contractor Does in fact reduce their taxes. So these are quick tip videos. We have more in-depth resources where we go into the 24 factors that you really need to look at to determine should the coach be an employee or an independent contractor. It could be either way. As of the filming of this video, California, for example, has made some interesting law changes, and they basically have told everyone in their state they don't believe in such a thing as an independent contractor. Certain independent contractor status is getting accepted because some companies have basically bribed politicians, which we know happens all the time, to get an exempt status for their workers. But unfortunately, right now, if you are in California, your coaches are going to be employees. If If that law ever changes, we'll try to remember to take this video down and put up a new one. But as of right now, you're in California, you're kind of screwed. They need to be employees, even if you in fact give them the flexibility to do things. So if you're interested in the actual factors that you should be considering, feel free to contact us. We'd love to be a resource for you. There is a chapter in Profit First for Microgyms related to tax strategy, and I have information in there about coaching classifications. If you like this tip, please subscribe to our YouTube channel, share it with your friends. We love helping gym owners. We want to make sure that no one is overpaying in taxes and ultimately that people are protected from the bullying that the IRS does. So thank you and have a good day. Bye.
