Editor's note: This month, Stable Management is tackling the issue of hiring outside instructors who come to your facility to teach riding lessons. There can be pros and cons to this decision, and we'll give you tips to help you decide what might be right for your equine business.
Hiring outside trainers and instructors is different than hiring an employee. The IRS requires business owners to file a W2 and pay employment taxes for temporary, part-time or full-time workers. The IRS also allows businesses to hire 1099 contractors, workers for whom a business does not pay employment taxes.
The IRS gets irritated when businesses hire 1099 contractors instead of employees to avoid paying employment taxes. The government can and does impose fines if workers are not reported appropriately. But there are legitimate situations when it makes sense to hire a 1099 contractor rather than an employee. The key is understanding the difference between the two. That might mean a visit with your CPA.
Working with outside trainers and instructors is a genuine reason to classify them as 1099 contractors based on the amount of autonomy the individual is granted for scheduling riders or lessons and making decisions regarding training, teaching and equipment used.
Finding the right outside trainer or instructor is equally important as having the right tax structure established. Expertise is part of the equation, and so is the individual’s fit with the facility.
“A lot of it depends on if you know the person and how you want the relationship to develop,” said Kaitlin Curington, executive assistant to the president at Fasttrack Staffing, Inc. She is also a head trainer and stable manager and has experience working with outside trainers.
For example, some barns prefer to establish a long-term relationship where the trainer returns week after week. For other stables, inviting instructors in for a clinic is better fit.
In either case, decide in advance what type of arrangement best suits your current business model. Allow for flexibility so that as your business grows or changes over time, you can adapt how you work with outside professionals to best serve your clients. And make sure that you are following federal and state tax laws.