Legit gyms

tracy · Veteran Member

Legit gyms

CheerXperience · Member

Hey Tracy,

You are so right, there are many gyms and programs that are taking huge risks with most of these situations. I know when I started my gym, the county would not issue a final business license until the final gym was completed and inspected. The county allowed me to do my business as a DBA which got me through the final inspection process. Once the building was complete, I was issued my license. Parents freaked out though, when really there was nothing else I could do...

I hired an attorney to look at all liability insurance, liability release forms, gym contracts and it was his advice to not have actual "employees" but independent contractors that will be paid by session, not by the hour. Having "employee's" is such a Grey area, and CheerXperience is not nearly large enough to pay for employees through the state at this time.

Having a gym is tough work, complying with the rules is a must.... It does take a few months however to get all things in order...

People should understand this and offer help in some areas if they are so knowledgeable, don't you think? No time to criticize, help if you can...

Bladezmom · Senior Member

CheerXperience wrote:

Hey Tracy,

You are so right, there are many gyms and programs that are taking huge risks with most of these situations. I know when I started my gym, the county would not issue a final business license until the final gym was completed and inspected. The county allowed me to do my business as a DBA which got me through the final inspection process. Once the building was complete, I was issued my license. Parents freaked out though, when really there was nothing else I could do...

I hired an attorney to look at all liability insurance, liability release forms, gym contracts and it was his advice to not have actual "employees" but independent contractors that will be paid by session, not by the hour. Having "employee's" is such a Grey area, and CheerXperience is not nearly large enough to pay for employees through the state at this time.

Having a gym is tough work, complying with the rules is a must.... It does take a few months however to get all things in order...

People should understand this and offer help in some areas if they are so knowledgeable, don't you think? No time to criticize, help if you can...

As a previous Gym Owner and a Payroll Manager in my "real life", I must tell you to be careful with this practice. There are specific tests that determine who is an Independent Contractor and who is an employee. In addition, as an IC they would need to carry their own liability insurance. It's better to do business the right way from the get go otherwise you could end up in bigger trouble if anything should go wrong.

I know it's difficult to own a business in this industry. I wish you all good luck and prosperity!

fatrahrah · Member

I hate to tell you that paying people as "contractors" is highly illegal as they are usinig your facility teaching your customers with your equipment, providing nothing but their labor. And putting it on the message boards is also not quite a bright move. The IRS is everywhere. You may want to change attorneys if they think it is ok to pay employees under the table or as you call it contractors.
Just trying to help but when the IRS gets a hold of this you won't win.

tracy · Veteran Member

The issue with "contractors" is even more grey than having actual employees. I understand there is a salary limitation PER YEAR and then they must be converted to actual employees. I know you still have to report the wages at the end of each year and still issue 1099s. If this isn't happening than this is considered "under the table" money. Then guess what? The IRS will catch up with all parties involved.

It's best to play by the business rules and make sure you're in compliance with all levels. Running your own business takes a look of work and $$$. If you don't have the resources and you expect this all can be built after the clients walk through your doors you are sadly mistaken. It's all going to unravel on you. Documentation is a must and you MUST notify every governing body involved.

I do know that there are some gyms out there that aren't doing so. At some point, these gyms will be slapped with huge fines and a possibility jail time.

It's important that everyone know that your gyms are honest and can show the proper credentials that they are a business or non-profit.

If they are an non-profit keep in mind that there MUST be a governing board and that documentation is available to all it's members. Ask for them. If the gym can't product this information, you need to stop paying the the service and move on. You don't need to be involved in a scam. In a since that's all it is a big scam and the customers are getting played.

CheerXperience · Member

My Independent Contractor does! I only have one. I'm playing by all rules. But this is how I run my small gym, and it works for us. Everyone has a different program...No scam here.

Scat · Newbie

fatrahrah wrote:

I hate to tell you that paying people as "contractors" is highly illegal as they are usinig your facility teaching your customers with your equipment, providing nothing but their labor. And putting it on the message boards is also not quite a bright move. The IRS is everywhere. You may want to change attorneys if they think it is ok to pay employees under the table or as you call it contractors.
Just trying to help but when the IRS gets a hold of this you won't win.

I agree the IRS is everywhere, and they set the rules not the gym owners or their attorneys. Besides having a competent attorney you need a CPA who is thoroughly familiar w/Independent Contractors and 1099's. The IRS posts that it is critical for business owners to correctly determine the status of same. They can be very unforgiving.

cheerbusiness13 · Veteran Member

CheerXperience wrote:

My Independent Contractor does! I only have one. I'm playing by all rules. But this is how I run my small gym, and it works for us. Everyone has a different program...No scam here.

Your right, they don't really understand what they are talking about. I have two businesses, one is contruction, the other a cheer gym. You are legal. Both have independant contractors. Another thing, many of the schools, park and rec do the same kind of thing. hire cheer coaches as independant contractors. I have been in business for several years. I have an accountant and a very good attorney. I make sure I get good advice. They don't understand the government is still getting their money. It is when people get paid under the table that they can get into trouble. Mycheer business is a LLC for my own protection. My other company is incorporated too. You don't have to, it just protects you more. Because people like to get a little crazy at times! Good luck with your gym, you are doing it right!!!

rhinestonecrown · Veteran Member

Very good topic Tracy as there are a TON of gyms not only in Norcal but around the US that are suppose to be "non profit" and they truly are not....the goverment needs to regulate more who can actually be a non profit and provide a service for the community. If your business is a profit based business that is ok too, we all have to live but be honest about it. Don't put yourself in the non profit category, have monthly dues for your athletes as other for profit gyms then REQUIRE the parents to volunteer otherwise they have to pay a higher price. Not only that but then have un qualified and uncertified coaches teaching the kids when while misinforming parents that all coaches are credentialed.

I agree that this may be working now but eventually those gyms will get caught and rightfully so.

ACEDAD · GURU

There seems to be a bit of confusion about a few items.

Operating as a non-profit entity does not mean that no fees can be charged or that staff have to work for free. NP's are perfectly able to pay salaries and charge for their services. The difference is what happens to any money above what is needed to pay for expenses of the business. In For Profit business, this money belongs to the owners. In a Non-Profit business, the money is to be used to grow the business or in some charitable way. Again, the people running the Non-Profit and working for the Non-Profit are allowed to receive compensation for their time, effort and expertise.

The issue with independent contractor v. w-2 employee isn't limited to gyms. I run a retirement plan consulting division of a large CPA firm. We run across this ALL the time. Whether someone is one or the other ISN'T simply based on what the owner wants to do. The IRS has a detailed test to determine the correct category.

From the IRS:

"The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result."

So to use a gym as an example. If they hire someone to come in to do choreography, they will likely be an independent contractor. They get paid for the job, but can do it how they need to accomplish the job. They also perform similar services for other gyms.

But if the gym hires someone as a coach, I think they would be hard pressed to treat that person as an independent contractor. The coach is paid to do specific tasks at specific times and use specific teaching methods. They likely do not work for other gyms. This would be a very tough sell as an independent contractor.

So, be very careful about this classification. Big companies like Microsoft and Fedex have had issues even with all their legal backup.

cheer1 · Veteran Member

Okay Acedad so let me get this straight. If you are hired by a gym as a coach. They tell you how much you will be paid and which teams and classes you will teach. Times and hours you will work etc. .and If you do private lessons as part of your job and they charge x amount but you only get paid x amount and they dictate the hours and your pay. Is that considered a independent contractor? Cause they 1099 you. or Should they be doing the W2 stuff?

-- Edited by cheer1 on Saturday 1st of August 2009 02:57:14 PM

ACEDAD · GURU

cheer1 wrote:

Okay Acedad so let me get this straight. If you are hired by a gym as a coach. They tell you how much you will be paid and which teams and classes you will teach. Times and hours you will work etc. .and If you do private lessons as part of your job and they charge x amount but you only get paid x amount and they dictate the hours and your pay. Is that considered a independent contractor? Cause they 1099 you. or Should they be doing the W2 stuff?

-- Edited by cheer1 on Saturday 1st of August 2009 02:57:14 PM

I'm not an attorney or a CPA, but in my work with employees for retirement plans, I can't comprehend how that is an independent contractor. But the gym owner needs to get the advice of their own attorney/CPA.

tracy · Veteran Member

ACEDAD wrote:

In For Profit business, this money belongs to the owners. Closed deal don't have an issue with this at all.
I do have an issue with some "pretending" they have a true business. I can point to a gym's tumbling program that may be in trouble with this issue. I believe the cheer side is non-profit (no online documentation to provide it) and the tumbling program is profitable (again no public documentation to provide this either.)

In a Non-Profit business, the money is to be used to grow the business or in some charitable way. I totally understand that employees can be paid under the non-profit umbrella. We wouldn't have incredible programs like the United Way, Ronald McDonald's House, Shriners Hospital, etc.
The concern I have is that there are a few cheerleading gyms that are saying their are non-profit and yet, they don't have a governing board nor do they share the information with its members. Yet, they are hosting car washes, getting local business to sponsor profit exchanges, etc WITH another NON-PROFIT number and the other Non-Profit company is in the dark the whole time.
These gyms are taking advantage of the situation and skipping out on their yearly tax paperwork, creating a monthly, quarterly, yearly budgets for their members, not to mention they aren't paying wages under the local state requirements (all under the table) so that wages aren't reported properly nor do they have to pay all the employer fees that are needed to keep the gym honest.

Because they are getting away with not abiding by the rules, they can lower their fees and force legit gyms to lower their fees or ultimately close their doors.

"The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result."

The coach is paid to do specific tasks at specific times and use specific teaching methods. They likely do not work for other gyms. This would be a very tough sell as an independent contractor.This is often handled outside the gyms books. There is a different accounting system all together. It is up to the independent contractor to report his/her wages. Are they truthful? Of course not. Again this is all a pretend business and everything is all hush hush.

Do you know the telephone numbers to report Non-profit and business fraud? It's really time that we start making these calls and making sure the cheerleading world stays on the up and up. YOU KNOW!!!

americanmom · Member

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cheerbusiness13 · Veteran Member

If what you believe is not backed up with fact, you could be sued. It's called be held liable. So be careful, that you have all your facts in place before you start blowing whistles. I have watched customers, clients if you will try to destroy businesses without having all the facts. Some paid for it. Unless, you know by looking at payroll sheets, disbursement records, bank statements and all of the above it is a theory. Be very careful. The IRS does spell out a contractor. A contractor can be hired to do the same thing that an owner does. When you quote the IRS, and then respond to what you believe, it is not relevant. You may not agree with what is going on, but if you jump in to fast, you could get yourself in big trouble. Trying to destroy a business because you "think" the business is doing something wrong, is not your place. If you have a child in this so-called cheer business, than pull your child out. To destroy a business and try to scare everyone with the IRS is a little much. Especially when so many people aren't squeaky clean when it comes to paying their fair share as Pres O would put it. Most business owners know, and if they are doing shady stuff, the government will figure them out. And they will end up paying taxes, alot of taxes. If this business is running as non profit, they are headed for alot of headaches. That is alot of paperwork, and they have to prove everything. Something I decided to forgo several years ago.

POSITIVElycheer · Senior Member

cheer1 wrote:

Okay Acedad so let me get this straight. If you are hired by a gym as a coach. They tell you how much you will be paid and which teams and classes you will teach. Times and hours you will work etc. .and If you do private lessons as part of your job and they charge x amount but you only get paid x amount and they dictate the hours and your pay. Is that considered a independent contractor? Cause they 1099 you. or Should they be doing the W2 stuff?

-- Edited by cheer1 on Saturday 1st of August 2009 02:57:14 PM

www.irs.gov

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the workers job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

I know a lot of gyms try to pass of coaches as independent contractors because they do not or can not afford the taxes. I can see both side of this issue and why certain practices are carried out.

By definition coaches are employees. The owners DO dictate what the coaches can and can not do. They also often require them to wear the gyms clothing as a uniform passing them off to the parents as employees.

It is also not an accepted practice for coaches to coach at two different gyms at the same time. The gym they work at is usually there sole source of money for coaching.

Also there is no end to employment most coaches work for the same gym year after year with out any assumption of an end.

I think there is a bunch of coaches that are not covered in areas such as liability and injury.

If this issue was dug into I think a lot of gyms would be in trouble.

Cocoa · Member

I did take my daughters out of the gym that they were in that is a non-profit. These people had a car wash fundraiser and advertised that part of the money would be given to a charity. It was not! It was just a trick to have more cars pull in. They think being a non-profit makes people think they are on the up and up. This gym is anything but honest. They had all these beautiful first place trophies and second place trophies and banners all over the walls. Come to find out the hard way that all the first place trophies were given, because they were the only team competing!
And second place for only two teams competing and so on. The owner has been sued. The head coach has been fired from at least two high schools that I know of. Yet they present themselves as being the best in the area and the lowest cost. This gym is still in business, they moved and changed the name of the gym. I'm guessing, because too many caught on to them or the kids and parents got fed up with being embarrased at competitions. We are at a large gym now and the girls are happy and the cost is not much higher. I'm happy, because I know exactly where my money is going.

Simply a cheermom · Veteran Member

There is a gym in norcal that uses their gymnastic facilities non profit for their cheer program and they have been reported just recently. I guess they had been using it for a few years since they first opened. I am not sure what will be done. But i'm guessing that many gyms do not follow the rules for non profit after reading these post.
I love the gym we are at. I am never ever worried about where or what my money is being used for. I don't have any reason to ask any questions. I understand that there is overhead charges attached where they need to be, what we are getting is coming and am so comfortable with the owner and the gym in general.

My question is.... Do you find that more of the smaller gyms are being less upfront about non profit than the bigger gyms?
Do you think that if that is the case, is it because they are new and unfamiliar with what is needed?
Does anyone have suggestions to help these gyms stay in compliance?

I look at POWER and Cheergyms and they just don't seem to have the same money issues/concerns with parents that some of the other gyms do. When I say that... I mean in concerns of Non Profit satus and complaints of what is being purchased for how much etc..

How can the small gyms get to that point as well?

tracy · Veteran Member

POSITIVElycheer wrote:
I think there is a bunch of coaches that are not covered in areas such as liability and injury.

If this issue was dug into I think a lot of gyms would be in trouble.

I think its important that the consumer start seeking out those gyms that are playing by ALL the rules. It troubles me to hear that the employees aren't thought about and these gyms are popping up without a business plan or clear direction. They are stumbling though what they thing is running a business but in the end they are committing fraud with the public and governing bodies.

If you suspect that your gym may not be in compliance then you have a right to ask those questions. Especially, if the gym is claiming they are a non-profit gym. The books should be open to all their members. Take the time to seek out public websites that would verify if these gyms are truly non-profit. There are free sites out there that will let you know if the cheer gym is currently a non-profit and even show you the tax records that were filed in the previous years.

Its hard to believe that these gym owners (can they be owners of a non=profit?) aren't they at least worried about covering themselves if an employee gets injured? I certainly hope they are carrying liability insurance for any type of injury in their gym. Hope they have a guardian angel on their side because the unknown is going to creep up on them and it's going to hurt - financially.

It's just too big of a risk in this sue happy state of ours.

tracy · Veteran Member

tracy wrote:

POSITIVElycheer wrote:
I think there is a bunch of coaches that are not covered in areas such as liability and injury.

If this issue was dug into I think a lot of gyms would be in trouble.

I think its important that the consumer start seeking out those gyms that are playing by ALL the rules. It troubles me to hear that the employees aren't thought about and these gyms are popping up without a business plan or clear direction. They are stumbling through what they think is running a business but in the end they are committing fraud with the public and governing bodies.

If you suspect that your gym may not be in compliance then you have a right to ask those questions. Especially, if the gym is claiming they are a non-profit gym. The books should be open to all their members. Take the time to seek out public websites that would verify if these gyms are truly non-profit. There are free sites out there that will let you know if the cheer gym is currently a non-profit and even show you the tax records that were filed in the previous years.

Its hard to believe that these gym owners (can they be owners of a non=profit?) aren't they at least worried about covering themselves if an employee gets injured? I certainly hope they are carrying liability insurance for any type of injury in their gym. Hope they have a guardian angel on their side because the unknown is going to creep up on them and it's going to hurt - financially.

It's just too big of a risk in this sue happy state of ours.

-- Edited by tracy on Sunday 2nd of August 2009 10:01:44 PM