Salaries are the highest expense in the budget for most fitness facilities and can run 50 percent or more of total revenues. This does not leave much afterwards to pay business overhead and still generate a profit. That is why how you set up your compensation packages is so important, especially for your personal trainers.
Several questions arise when determining how to pay personal trainers, but the main two are: should you hire trainers or should they be independent contractors, and how much should you pay them?
Let’s first take on the topic of employees vs. independent contractors. In the past, most personal trainers were independent contractors. Slowly, many facility owners brought the training department in-house and made trainers employees. Owners reasoned that they supplied the facility, the equipment and paid the overhead for things such as utilities, meaning they were absorbing the cost of doing business rather than the trainers. So, owners began hiring trainers at less per hour, noting that the owners were absorbing the business costs, so the owners should expect a larger cut of the clients’ fees.
Bringing the training department in-house also allowed owners to gain more control and standardization over the personal training department. An independent contractor situation can seem unprofessional and confusing to clientele.
In addition, the IRS has strict guidelines for who should be considered an independent contractor or an employee. According to the IRS, you should hire trainers as employees if:
- Your business establishes and evaluates program recommendations and training techniques
- Your business markets the program, books appointments and collects money
- Your business sets policies and procedures and schedules meetings
- The position is an integral, daily part of the business—a service you offer regularly