Home – New Forums Starting your journey Pilates Studio Employee vs Contactor

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  • #991124
    MrLaforge
    Member
    • Total posts: 2
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    Hi guys,

    Long time reader, first time poster! I love all the great conversations on this site.

    My wife and I are looking to take over an existing sole trader Pilates Studio.
    While looking over the structure it appears that classes are taught by instructors that are contractors to the sole trader.

    I’ve been reading Workcover, ATO and workplace relations sites and I’m still unclear as to if this is legal or not (the current owner does not pay WorkCover or Super payments).

    Instructors are paid a fixed rate per class taught. The current Contractor agreements state that the instructors require their own PL insurance and must send through a tax invoice with ABN at the end of each week for payment.

    I’ve tried the ATO online tool and one of the items that trips me up is the plant and equipment. As its a class taught on equipment the plant is always provided by the employer, it would not be expected that the instructor would provide this equipment.

    My wife has worked in the industry for many years and has told me that this is how every studio that she has worked at is run. Are they all doing it wrong??

    My concern is if workcover and super are also required to be paid then the financials don’t really stack up, or if we drop the hourly rate to include super we’ll lose instructors to other studios who don’t do this!

    Please help, I seem to be going around in circles on this one.

    Thanks everyone in advance!

    #1180114
    Dave Gillen – Former FS Concierge
    Keymaster
    • Total posts: 2,566
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    Hi there,

    Welcome aboard the forums!

    I’m not the person to help with your query, but good luck and hopefully we’ll see you around. :)

    Dave

    #1180115
    MrLaforge
    Member
    • Total posts: 2
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    Thanks for the welcome!

    Anyone able to provide any insight?

    Thanks in advance!

    #1180116
    Alex (LegalVision)
    Member
    • Total posts: 52
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    Hi MrLaforge!

    When buying an existing business, there are a number of legal concerns – You will certainly need copies of documents evidencing ownership of assets, insurance policies, employment contracts, commercial leases, distributor agreements and contracts with customers/suppliers.

    Also, make sure you carefully examine the sales records – Just looking at the financial statements, in particular the balance sheet and profit and loss statement, can be misleading – you should get copies of the business’s sales records as well. This enables you to see the strengths and weaknesses of the business. You can see which products sell the best and what time of year tends to be the busiest.

    HOW will you be buying the existing business – This might seem like a silly question but there are actually two ways – (1) buying the assets or (2) buying the equity. (I assume you will be buying the assets)

    In regards to your questions about the differences between an employee and a contractor, these are some of the main differences.

    Ability to sub-contract or delegate
    Employees cannot sub-contract or delegate their work and cannot pay someone else to do their work for them. Contractors, however, are allowed to delegate or sub-contract and pay someone else to do the work for them.

    Basis of payment
    Employees are paid in salaries, hourly rates and/or on commission-based structures. Contractors are paid on varying bases, including a one-off payment due at the completion of the job.

    Equipment
    In an employer-employee relationship, the employer usually pays for the business equipment. Contractors usually provide and maintain their own equipment and tools.

    Risk
    Employees are generally not at commercial risk while employed, as the employer has legal responsibility for the actions of its employees while at work. Contractors, however, are responsible for their own conduct and the commercial risks of the work.

    Control over work
    Employers are expected to give employees direction in terms of the type of work that is required and how the work is performed. Contractors are able to perform the work as they choose, provided they adhere to the terms and conditions of the agreement.

    Independence
    An employee and employer are working for the same business and the same goals. Contractors are running their own business, independent of the hirer. They can elect whether or not they will do extra work (depending on the terms of the contract) and are allowed to enter contracts with a third parties.

    In my opinion, you’d be better of hiring staff as employees for the kind of business you will be running. It will give you more control over workload and be better for the building up of a new business to create a team environment.

    Hope some of this helps!

    #1244260
    hipilates
    Participant
    • Total posts: 1
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    Whether to hire a Pilates studio employee or a contractor can depend on a number of factors, including the size of your studio, your business structure, and your specific needs.

    An employee is someone who works for you on a regular basis and is paid a salary or hourly wage. As an employer, you are responsible for providing benefits such as health insurance, paid time off, and other employee benefits. You also have the right to control the employee’s work schedule, job duties, and other aspects of their work.

    On the other hand, a contractor is someone who works for themselves and is paid on a project or contract basis. As a contractor, they are responsible for their own taxes and benefits. They have more control over their work schedule and job duties, and you have less control over their work. [Mod Edit To Remove Promotional Content]

    #1244338
    statustgl
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    Thank you so much for the post you do. I like your post and all you share with us is up to date and quite informative

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