Are you ready to hire an employee at your gym? Use these guidelines.
If you're a personal trainer thinking about hiring your first employee—whether that's another trainer, a front desk person, or an administrative assistant—I need to share something with you that could save you from financial catastrophe: most personal trainers get payroll catastrophically wrong, and the consequences can destroy years of business building in a matter of months.
I'm Shamal Asnani, CPA and founder of Fitness Taxes, and I've spent over a decade exclusively serving fitness professionals. I've seen the payroll mistakes personal trainers make, and I've helped clean up the messes afterward. The stories are brutal, but they're important because they illustrate why getting payroll right from day one is absolutely critical.
Let me tell you about Derek, a successful personal trainer in the Bay Area who built his business from solo training to a thriving studio with eight trainers working under him. Derek was earning about $320,000 annually and thought he was running his business intelligently. He classified all his trainers as 1099 independent contractors, paid them 60% commission on sessions they delivered, and avoided the "headache" of payroll by just cutting checks and issuing 1099s at year-end.
Everything seemed fine until the California Employment Development Department (EDD) showed up for an audit. Three weeks later, Derek received a bill for $47,200 in back payroll taxes, penalties, and interest. The EDD determined that his trainers were actually employees based on the level of control Derek exercised—he set their schedules, required them to follow his training protocols, mandated they wear his studio's branded apparel, and prohibited them from training clients at other facilities.
Derek's classification as independent contractors was legally indefensible, which meant he owed:
Derek had been so focused on building his business that he never consulted a CPA about proper classification. His "savings" from avoiding payroll costs turned into a $47,000 liability that forced him to take out a business loan just to stay operational.
This is not a rare story. The IRS and state agencies are aggressively auditing fitness businesses for employment misclassification because it's such a common problem. And when they find it, the financial consequences are devastating.
But here's the thing: hiring employees doesn't have to be complicated or risky when you understand the rules and set up payroll services correctly from day one. Let me show you exactly how to do this right.
Most personal trainers resist hiring employees because they fear complexity, cost, and loss of control. These fears are legitimate, but they often keep trainers from scaling their businesses beyond the income ceiling of what one person can deliver.
Let's talk about when hiring actually makes sense for your training business.
You're Turning Away Clients Because of Schedule Limitations
If you're consistently telling potential clients "I'm fully booked" or "I don't have availability during those hours," you've reached your personal capacity ceiling. This is the clearest signal that hiring another trainer makes financial sense.
Let's do the math: You're maxing out at 30 sessions per week at $80 per session, earning $96,000 annually from training. You're turning away 5-8 client inquiries monthly because you have no availability. If you hire a trainer at $30 per session and they deliver 20 sessions weekly at $70 per session (slightly lower pricing to maintain margins), you generate $72,800 in annual revenue minus $31,200 in trainer cost, netting $41,600 in additional profit before overhead.
Even after accounting for additional overhead (insurance increase, payroll costs, equipment access), you're likely netting an additional $30,000-$35,000 annually. And you've created capacity to continue growing rather than hitting a hard ceiling.
You're Spending 15+ Hours Weekly on Non-Training Administrative Work
Many successful personal trainers become victims of their own success—so busy delivering sessions that they spend every non-training hour on administrative tasks like scheduling, billing, program design, social media marketing, and client communication.
If you're spending 15+ hours weekly on admin work, hiring a part-time administrative assistant at $15-$20 per hour (10-15 hours weekly) costs you $900-$1,200 monthly but frees up time to deliver 4-6 additional training sessions weekly. At $80 per session, that's $1,280-$1,920 in additional weekly revenue, or $5,120-$7,680 monthly.
The ROI is obvious: spend $1,200 to free up time that generates $5,000+ in additional revenue. But this only works if you actually use that freed time to deliver more sessions rather than just working less.
You Want to Offer Services You're Not Qualified to Deliver
Many personal trainers recognize that clients need services beyond what they personally can provide—nutrition coaching, physical therapy, sports massage, or specialized training modalities. Hiring specialists who complement your services creates client stickiness and additional revenue streams.
This is where the independent contractor vs. employee classification becomes critical. A massage therapist who maintains their own client base, sets their own hours, provides services at multiple locations, and simply rents space from you is likely a legitimate independent contractor. A nutrition coach who works exclusively for your business, follows your client management systems, and is integrated into your service delivery is likely an employee.
Understanding this distinction is essential for legal compliance, and it's something we help trainers navigate during tax planning conversations.
You've Built a Brand That Can Scale Beyond Your Personal Training
Some personal trainers evolve into business owners who've built a brand and training methodology that can be delivered by a team. If clients are coming to your business because of your reputation, systems, and approach rather than specifically wanting to work with you personally, you've created something scalable.
This is the transition from being a self-employed personal trainer to being a business owner who employs trainers. It's a fundamentally different business model with different financial characteristics, different tax optimization strategies, and different business structure requirements.
Many trainers make this transition around $150,000-$200,000 in annual revenue when the math clearly supports hiring while maintaining strong profitability.
When personal trainers think about hiring costs, they typically focus only on wages—"I'll pay $25 per hour for 20 hours weekly, so that's $500 per week or about $26,000 annually." This is dangerously incomplete math that causes trainers to underestimate true employment costs by 30-40%.
Let me break down the actual cost structure of hiring employees so you can budget accurately.
Direct Wage Costs: The Starting Point
If you're paying a trainer $30 per hour for 20 hours weekly, that's $31,200 in annual wages. But that's just the beginning.
Employer Payroll Taxes: The 7.65% You Can't Avoid
As an employer, you must pay the employer portion of FICA taxes—Social Security (6.2%) and Medicare (1.45%)—totaling 7.65% of wages. On $31,200 in wages, that's $2,387 in additional costs.
This is non-negotiable. The moment someone becomes your employee, you owe these taxes. There's no deduction, no credit, no way around it. And if you don't pay them, you face penalties, interest, and potential criminal liability for failure to remit payroll taxes.
Federal and State Unemployment Taxes: The Often-Forgotten Costs
You must pay Federal Unemployment Tax (FUTA) at 6% on the first $7,000 of each employee's wages, though you get a credit of up to 5.4% if you pay state unemployment taxes, reducing FUTA to 0.6%. For most employers, that's $42 per employee annually in FUTA.
State unemployment taxes vary dramatically—from under 1% in some states to over 6% in others. California, for example, charges 3.4% for new employers on the first $7,000 of wages. For $31,200 in wages, you're paying approximately $238 in state unemployment taxes in California (calculated on the first $7,000 only).
Your state unemployment rate can increase if you have high turnover and former employees claim unemployment benefits, creating incentive to retain good employees rather than cycling through frequent hires.
Workers' Compensation Insurance: The Variable Cost That Can Shock You
Workers' comp rates for personal trainers and fitness businesses range from $2-$8 per $100 of payroll depending on your state, your claims history, and your specific business activities. For $31,200 in wages at a $4 per $100 rate, you're paying $1,248 annually in workers' comp insurance.
This cost is mandatory in virtually all states once you have employees. And it's one area where fitness businesses can face surprisingly high rates because of injury risk associated with physical training activities.
Health Insurance and Benefits: The Big Variable
Many personal trainers don't offer health insurance to employees, particularly part-time employees. But if you're hiring full-time employees (typically 30+ hours weekly under ACA definitions), you may have obligations to offer health insurance or face penalties if you have 50+ full-time equivalent employees.
For most personal training businesses, this threshold isn't relevant because you won't have 50 employees. But offering health insurance can be a competitive advantage for attracting quality trainers in competitive markets.
If you do offer health insurance, budget $400-$800 per month per employee for employer contributions to decent coverage, or $4,800-$9,600 annually per full-time employee.
Paid Time Off: The Hidden Compensation Cost
If you offer paid vacation, sick leave, or holidays—which many employers do to attract good employees—you need to factor this into cost calculations. Two weeks of paid vacation for a full-time employee equals 4% of annual wages as additional cost.
Some states mandate paid sick leave. California, for example, requires one hour of paid sick leave for every 30 hours worked, which adds approximately 3.3% to wage costs.
Administrative Time and Overhead: The Soft Costs
Managing employees requires time—creating schedules, handling payroll processing, managing conflicts, conducting performance reviews, maintaining records. Even with outsourced payroll services, you'll spend 2-5 hours monthly on employee management per employee.
If your time is worth $100+ per hour (and as a successful personal trainer, it should be), that's $200-$500 in monthly opportunity cost, or $2,400-$6,000 annually.
The True Fully-Loaded Cost
Let's add this up for our example employee earning $31,200 in annual wages:
That $30 per hour employee actually costs you about $37.80 per hour in fully-loaded costs—a 26% premium over the base wage.
Many personal trainers don't budget for this 25-30% premium, which leads to cash flow problems and unprofitable hiring decisions. When we help trainers with business planning, we always calculate fully-loaded employment costs to ensure hiring decisions are financially sound.
This is the single most important decision you'll make when bringing on help, and it's where most personal trainers get into serious legal and financial trouble. Let me be absolutely clear: you don't get to decide whether someone is an employee or independent contractor based on what's convenient or cost-effective. The IRS has specific tests, and misclassification can destroy your business.
The IRS Three-Factor Test
The IRS uses three categories of factors to determine employment status:
Behavioral Control: Does the business control or have the right to control what the worker does and how they do their work?
If you set the trainer's schedule, require them to follow your training protocols or programming templates, mandate they wear your branded apparel, require them to attend staff meetings, or dictate how they interact with clients, you're exercising behavioral control that suggests employment.
Independent contractors set their own schedules, use their own methods and programming approaches, dress as they choose (within professional norms), and operate independently.
Financial Control: Does the business control the business aspects of the worker's job?
If the trainer has no investment in equipment or facilities, cannot make profit or loss on the work, is paid by the hour or per session with no opportunity to earn more through efficiency, and only works for your business, these factors suggest employment.
Independent contractors typically invest in their own equipment, have opportunity to profit based on efficiency and business development, set their own rates, and work with multiple clients or businesses simultaneously.
Type of Relationship: Are there written contracts describing the relationship? Does the business provide employee-type benefits (insurance, paid time off, retirement)? Is the work permanent or ongoing rather than project-based?
If you've created an ongoing relationship where the trainer is integral to your business operations, you're treating them like an employee regardless of what your contract says.
The Real-World Application for Personal Trainers
Let's look at scenarios to understand how these factors apply:
Scenario 1: Clearly an Employee
You hire a trainer to work at your studio. You set their schedule (6:00 AM - 2:00 PM, Monday through Friday). You assign clients to them. You require them to follow your assessment protocol, program design methodology, and training philosophy. You mandate they wear your studio's branded attire. You prohibit them from training clients at other facilities. You pay them $30 per session or $25 per hour.
Verdict: Employee. You control when, where, and how they work. They have no independence, no opportunity for profit/loss based on their own business decisions, and no investment in the business. This person must be on your payroll as a W-2 employee.
Scenario 2: Clearly an Independent Contractor
A nutrition coach rents space in your facility 10 hours per week. They set their own schedule based on facility availability. They bring their own clients and set their own rates. They use their own assessment tools and nutrition protocols. They work with clients at multiple locations including their own home office. They invoice you monthly for space rental. They maintain their own liability insurance and business systems.
Verdict: Independent contractor. They operate their own business, have investment in their own practice, control their own methods, and work independently. They should receive a 1099 at year-end for space rental payments.
Scenario 3: The Gray Area (That Isn't Really Gray)
You have trainers who set their own schedules and rates, but they must follow your facility rules, use your equipment, work only with clients who come through your business, and follow your cancellation and payment policies. You pay them a percentage of what clients pay for sessions.
Verdict: Probably employees. While they have some independence in scheduling and rates, you control the fundamental aspects of their work—they can't take clients elsewhere, they must follow your business systems, and they don't operate independently. Most auditors would classify these as employees.
The IRS Publication 15-A provides detailed guidance, but here's the simple rule: if it looks like employment, smells like employment, and functions like employment, it's employment regardless of what your contract says.
The Consequences of Misclassification
When the IRS determines you've misclassified employees as independent contractors, they will assess:
For a trainer who paid $150,000 to misclassified "contractors" over three years, the liability can easily exceed $40,000-$60,000. This is why Derek's story at the beginning of this article isn't unusual—it's the predictable consequence of misclassification.
Many states are even more aggressive than the IRS. California's EDD aggressively audits fitness businesses and assesses penalties that can reach 30-40% of unpaid taxes. New York, Massachusetts, and several other states have similar enforcement priorities.
How to Stay Compliant
If you want to use independent contractors legitimately, structure the relationships correctly from day one:
If you can't structure the relationship to meet these requirements, accept that they're employees and set up proper payroll from day one. The short-term savings of avoiding payroll are dwarfed by the long-term liability of misclassification.
Once you've determined you're hiring employees (not independent contractors), you need to set up payroll correctly. Many personal trainers try to handle this themselves or use basic payroll software without understanding the complexity, leading to costly mistakes. Let me walk you through professional payroll setup.
Step 1: Obtain an Employer Identification Number (EIN)
If you don't already have an EIN from the IRS, you need one before you can hire employees. This is free and can be done online at IRS.gov in about 15 minutes. The EIN functions as a Social Security number for your business and is required for all payroll tax reporting.
Even if you're a sole proprietor personal trainer who's been using your Social Security number for business purposes, you must get an EIN once you hire employees.
Step 2: Register for State Payroll Taxes
Every state has different requirements, but you'll typically need to register for:
This registration process varies by state but typically requires your EIN, business information, and expected annual payroll. Many states have online registration systems, but some require paper forms that take 2-4 weeks to process.
Start this process before your employee's first day of work. Many states require registration before you make your first payroll, and penalties for late registration can be substantial.
Step 3: Collect Employee Documentation
Before you can process payroll, you need specific documentation from each employee:
Form W-4 (Employee's Withholding Certificate): This form tells you how much federal income tax to withhold from the employee's paycheck. Employees complete this based on their personal tax situation (married/single, dependents, other income, etc.).
State Withholding Certificate: Most states have their own withholding certificate similar to the W-4 for state income tax withholding.
Form I-9 (Employment Eligibility Verification): This form verifies the employee is legally authorized to work in the United States. You must examine original documents proving identity and work authorization, record the document information on Form I-9, and retain this form for at least three years. Failure to properly complete I-9s can result in penalties of $250-$2,500 per violation.
Direct Deposit Authorization: If you're paying via direct deposit (which you should—it's faster, more secure, and creates better records), you need bank account information and written authorization.
Many personal trainers skip the I-9 or complete it incorrectly, which creates serious liability during immigration audits. This is one area where professional payroll services add tremendous value—they ensure all documentation is compliant.
Step 4: Determine Pay Structure and Frequency
You need to decide several structural elements:
Hourly vs. Salary: Most trainers working for other trainers are paid hourly, which is appropriate. Salary is typically reserved for management positions or full-time professional roles. For employees earning under $58,656 annually (as of 2024, increasing to $61,392 in 2025), hourly is almost always required to ensure proper overtime payment.
Pay Frequency: How often will you pay employees—weekly, bi-weekly, semi-monthly, or monthly? Some states mandate minimum pay frequencies (California requires at least semi-monthly for most employees). More frequent pay periods mean more payroll processing but better cash flow for employees.
Overtime Rules: Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay (1.5x regular rate) for hours worked over 40 in a workweek. Some states have daily overtime requirements (California requires overtime for hours over 8 in a day). You must track hours carefully and calculate overtime correctly.
Commission or Performance Pay: If you're paying trainers based on sessions delivered or client revenue generated, these are still wages subject to all payroll taxes and withholding. The math is more complex because you need to calculate overtime on the total compensation including commissions.
Step 5: Choose Payroll Processing Method
You have three options for actually processing payroll:
Manual Processing: You calculate wages, taxes, and deductions yourself, write paychecks, deposit payroll taxes manually, and file all required tax forms yourself. This is the cheapest option (free except for your time) but also the most error-prone and time-consuming. We strongly advise against this for personal trainers because the complexity creates too much risk of costly errors.
Payroll Software: Services like QuickBooks Payroll, Gusto, ADP, or Paychex allow you to enter hours, and they calculate wages, taxes, and deductions automatically. They generate paychecks or direct deposits, file tax returns, and handle W-2 preparation. Cost ranges from $35-$150 per month depending on features and number of employees.
This is appropriate for trainers who are comfortable with financial software and want to handle payroll in-house while reducing error risk.
Full-Service Payroll: Professional accounting firms (like Fitness Taxes) handle everything—you report hours worked, they process payroll, deposit taxes, file all returns, handle all compliance, and provide tax planning integrated with payroll. Cost ranges from $100-$300 per month depending on business size.
This is the best option for most personal trainers because it eliminates compliance risk, integrates payroll with overall tax planning, and frees up time to focus on training clients rather than payroll administration.
Step 6: Process Your First Payroll
For each pay period, you'll need to:
Professional payroll services automate all of this, but even with automation, you need to understand what's happening so you can verify accuracy and catch errors.
Step 7: Deposit Payroll Taxes
Payroll taxes must be deposited on specific schedules determined by your total tax liability:
Monthly Depositor: If your total payroll taxes are under $50,000 for the lookback period (the previous four quarters), you deposit taxes monthly by the 15th of the following month.
Semi-Weekly Depositor: If your total payroll taxes exceed $50,000 for the lookback period, you must deposit taxes semi-weekly—by Wednesday for payrolls paid on Saturday, Sunday, Monday, or Tuesday; by Friday for payrolls paid on Wednesday, Thursday, or Friday.
All deposits must be made electronically through the Electronic Federal Tax Payment System (EFTPS). State payroll taxes have their own deposit schedules and systems.
Missing deposit deadlines triggers penalties that start at 2% of the amount due and can reach 15% for deposits more than 10 days late. For a $5,000 payroll tax deposit, a week of delay costs you $250-$500 in penalties.
This is another area where professional payroll services add value—they track deposit deadlines and ensure timely filing, eliminating penalty risk.
Step 8: File Quarterly Payroll Tax Returns
Every quarter, you must file Form 941 (Employer's Quarterly Federal Tax Return) reporting wages paid, federal income tax withheld, and FICA taxes. This is due by the last day of the month following the end of each quarter (April 30, July 31, October 31, January 31).
You'll also file quarterly state unemployment returns and any other required state payroll reports. Each state has its own forms and deadlines.
Step 9: File Annual Tax Forms
At year-end, you must:
Errors on W-2s are remarkably common and create problems for employees filing their tax returns. Professional payroll services catch these errors before filing, preventing correction headaches.
Even with good intentions, personal trainers make predictable payroll mistakes. Here are the most costly errors and how to avoid them:
Treating All Pay as Regular Wages (Ignoring Overtime)
Many trainers pay a flat hourly rate without tracking whether employees have worked over 40 hours weekly. When an employee works 45 hours at $25 per hour, you can't just pay $1,125 (45 x $25). You must pay $1,187.50—40 hours at $25 plus 5 hours at $37.50 (1.5 x $25).
Missing overtime can trigger Department of Labor investigations, back wage claims, and penalties. Employees can file complaints years after the fact for unpaid overtime.
Solution: Track hours carefully every pay period and calculate overtime correctly. Payroll software does this automatically if you enter hours correctly.
Paying "Under the Table" to Avoid Payroll Costs
Some personal trainers pay employees cash without processing payroll, hoping to avoid taxes and complexity. This is illegal, creates massive personal liability, and can result in criminal charges for failure to remit payroll taxes.
Beyond legal risk, it creates business problems: employees paid under the table have no proof of income for mortgages or loans, no Social Security credits, no unemployment insurance protection, and no workers' comp coverage if injured. This creates employee relations problems and potential lawsuits.
Solution: Always process proper payroll from day one. The long-term cost of non-compliance dwarfs any short-term savings.
Using Personal Checks Instead of Dedicated Payroll Checks
Some trainers pay employees from their personal bank account or write payroll checks from their business operating account without proper payroll processing. This creates tax compliance problems and makes it impossible to track payroll expenses accurately.
Solution: Set up dedicated payroll processing through software or a professional service that creates proper records, handles tax deposits, and maintains compliance.
Failing to Maintain Proper Time Records
The Fair Labor Standards Act requires employers to maintain accurate records of hours worked for all non-exempt employees. Many personal trainers rely on honor system time tracking or memory, which creates problems during audits or wage disputes.
Solution: Implement time tracking systems—apps like When I Work, Deputy, or Homebase make this easy. Require employees to clock in/out for every shift, and review/approve time records before processing payroll.
Misunderstanding Reimbursements vs. Taxable Wages
If you reimburse employees for mileage, equipment purchases, or continuing education, these reimbursements are not taxable income if they're properly documented and follow IRS accountable plan rules. Many trainers either fail to reimburse expenses (frustrating employees) or pay reimbursements without proper documentation (making them taxable).
Solution: Establish an accountable plan where employees submit expense documentation, you verify business purpose, and you reimburse within 60 days. Keep records proving compliance with accountable plan rules.
Ignoring Employee vs. Owner Payment Distinctions
If you're running as an S-Corp (which many successful trainers should—see our guide on S-Corp vs. LLC), you must pay yourself reasonable compensation through W-2 payroll, not just take distributions. Many trainers set up S-Corps but fail to process owner payroll properly.
Solution: Work with a CPA to determine reasonable compensation for your role, and process owner payroll through the same payroll system as employee payroll. This ensures proper tax treatment and IRS compliance.
If you're operating as an S-Corporation—which often makes sense for personal trainers earning over $60,000-$70,000 annually—your payroll situation is more complex because you must pay yourself reasonable compensation through W-2 payroll.
Understanding the S-Corp Payroll Requirement
S-Corp owners who work in the business must pay themselves reasonable compensation via W-2 payroll. You cannot just take distributions without payroll—this is tax evasion and triggers IRS audits.
The payroll you pay yourself is subject to all normal payroll taxes (FICA, withholding, unemployment), but then additional profit can be distributed without self-employment tax. This is the fundamental tax benefit of S-Corp status—you pay payroll taxes on reasonable compensation but not on distributions beyond that.
Determining Reasonable Compensation
The IRS doesn't provide a specific formula but requires compensation to be comparable to what you'd pay someone with similar skills, experience, and responsibilities in your market. For personal trainers, this typically means:
Setting this too low creates audit risk. Setting it too high eliminates the S-Corp tax savings. Working with a CPA who specializes in fitness businesses ensures you optimize this balance.
Processing Owner Payroll
Owner payroll in an S-Corp functions identically to employee payroll:
Many S-Corp owners try to process owner payroll themselves to save money, then make errors that create tax problems. Professional payroll services that specialize in S-Corps eliminate this risk while integrating owner payroll into comprehensive tax planning.
Avoiding S-Corp Payroll Pitfalls
Common S-Corp payroll mistakes include:
We see these mistakes regularly when trainers elect S-Corp status without professional guidance, then struggle with the complexity. The S-Corp election is powerful for tax savings, but it requires proper implementation.
Personal trainers frequently ask whether they should handle payroll themselves using software or outsource to a professional service. Here's the honest assessment:
Handle Payroll Yourself If:
Cost: $35-$100 monthly for payroll software plus your time
Outsource Payroll If:
Cost: $100-$300 monthly for full-service payroll including tax planning integration
The True Cost Comparison
Let's compare total cost for a personal trainer with 3 employees:
DIY Payroll with Software:
Outsourced Professional Payroll:
When you properly account for your time value and error risk, professional payroll services are often less expensive than DIY even before considering the tax planning benefits.
At Fitness Taxes, our payroll services are designed specifically for personal trainers and fitness businesses. We understand the unique situations trainers face—seasonal fluctuations, commission-based pay, 1099 vs. W-2 classification questions, S-Corp owner payroll—and we integrate payroll into comprehensive tax planning that maximizes savings.
If you decide to handle payroll yourself, here are the main software options and what to consider:
QuickBooks Payroll
Best for: Trainers already using QuickBooks for bookkeeping who want integrated financial management
Cost: $45-$125/month depending on features
Pros: Seamless integration with QuickBooks, good for combining bookkeeping and payroll in one system, handles multi-state payroll
Cons: Can be complex to set up correctly, requires QuickBooks knowledge, less hand-holding than full-service options
Gusto
Best for: Small businesses wanting user-friendly payroll with employee self-service features
Cost: $40-$80/month base plus $6-$12 per employee
Pros: Very user-friendly interface, excellent employee self-service portal, includes benefits administration, good customer support
Cons: Limited customization for complex pay structures, not ideal for S-Corp owner payroll optimization
ADP Run
Best for: Businesses wanting established provider with comprehensive services
Cost: $100+ monthly depending on features and employees
Pros: Very established provider, comprehensive compliance support, good for multi-state operations
Cons: More expensive than alternatives, sometimes overly complex for small training businesses
Paychex Flex
Best for: Growing businesses planning to scale significantly
Cost: $60+ monthly plus per-employee fees
Pros: Scales well as you add employees, strong compliance features, includes HR support
Cons: Can be expensive for very small operations, more complexity than needed for simple payroll
Our Recommendation
For most personal trainers handling their own payroll, Gusto offers the best balance of user-friendliness, cost, and features. For trainers already using QuickBooks, QuickBooks Payroll makes sense for integration benefits.
But for trainers operating as S-Corps or those who want payroll integrated with proactive tax planning, working with specialized professionals (like Fitness Taxes) provides better overall value through tax optimization that more than pays for the service cost.
Payroll compliance isn't optional—these are legal requirements with serious penalties for violations. Use this checklist to ensure you're meeting all obligations:
Before Hiring Your First Employee:
□ Obtain Employer Identification Number (EIN) from IRS
□ Register for state unemployment insurance
□ Register for state income tax withholding
□ Obtain workers' compensation insurance
□ Set up payroll system (software or service)
□ Establish recordkeeping system for time tracking and documentation
For Every New Employee:
□ Collect completed Form W-4
□ Collect completed state withholding certificate
□ Complete Form I-9 within 3 days of hire
□ Verify documents proving identity and work authorization
□ Set up employee in payroll system
□ Provide required state new hire notifications
□ Collect direct deposit authorization if applicable
Every Pay Period:
□ Collect and verify hours worked
□ Calculate overtime correctly for non-exempt employees
□ Process payroll with all required withholdings
□ Provide paystubs showing hours, wages, withholdings, and deductions
□ Maintain time records and payroll documentation
Monthly or Semi-Weekly:
□ Deposit federal payroll taxes on required schedule
□ Deposit state payroll taxes on required schedule
Quarterly:
□ File Form 941 (Employer's Quarterly Federal Tax Return) by deadline
□ File state quarterly unemployment returns by deadline
□ Review payroll records for accuracy and completeness
Annually:
□ Prepare and distribute W-2s to employees by January 31
□ File Copy A of all W-2s with Social Security Administration by January 31
□ File Form 940 (Federal Unemployment Tax) by January 31
□ File state annual unemployment returns
□ Reconcile all quarterly returns to annual totals
□ Review and update Form W-4s for employees
□ Review workers' compensation coverage and rates
Ongoing:
□ Maintain personnel files with all employment documentation
□ Keep payroll records for at least 4 years (7 years for tax returns)
□ Stay informed about minimum wage changes, overtime rules, and tax rate updates
□ Review employee classifications annually to ensure compliance
For S-Corp Owners:
□ Process owner payroll consistently throughout year
□ Ensure owner compensation meets reasonable compensation requirements
□ Properly document basis for reasonable compensation determination
□ Keep owner payroll separate from distributions in accounting
If you're a personal trainer ready to hire your first employee, here's your step-by-step action plan:
Week 1: Planning and Research
Week 2: Legal Setup
Week 3: System Implementation
Week 4: Employee Onboarding
First Payroll:
First Quarter:
Going Forward:
At Fitness Taxes, we built our payroll services specifically for fitness professionals because we understand the unique situations personal trainers face.
We know that most personal trainers start solo and gradually add help, creating questions about when to formalize employment relationships. We understand commission-based pay structures where trainers earn percentages of session fees. We've handled hundreds of 1099 vs. W-2 classification questions and know how to structure relationships compliantly while supporting your business model.
Our payroll services include:
Specialized Classification Guidance that helps you structure hiring relationships correctly from day one, avoiding the devastating misclassification penalties that destroy fitness businesses.
S-Corp Payroll Expertise that integrates owner payroll into comprehensive tax planning, ensuring your reasonable compensation is optimized for tax savings while meeting IRS requirements.
Seasonal Adjustment Strategies that account for the revenue fluctuations personal trainers face, helping you plan cash flow around slower summer months and busy January/September periods.
Commission and Variable Pay Expertise that properly handles percentage-based pay, performance bonuses, and other variable compensation structures common in fitness businesses.
Integrated Tax Planning where payroll isn't just compliance but part of holistic tax optimization—we're constantly analyzing whether your payroll structure supports maximum tax savings.
Fitness Industry Benchmarking that shows how your compensation and employment costs compare to similar successful training businesses, helping you make competitive hiring decisions.
We've helped personal trainers save an average of $8,200 annually through proper payroll structuring combined with S-Corp election and comprehensive tax reduction planning. The trainers who work with us consistently tell us that having payroll handled professionally eliminates the stress and time drain of DIY payroll while ensuring compliance.
If you're a personal trainer thinking about hiring your first employee, or if you already have employees but you're concerned about whether your current payroll is compliant, the time to act is now.
Schedule a tax and payroll analysis where we'll review your specific situation:
For most personal trainers, we find $5,000-$12,000 in annual tax savings through proper business structure and payroll optimization during this initial analysis. We'll also identify any compliance issues with current employment arrangements before they become expensive problems.
You built your training business to help clients achieve their fitness goals and to create a sustainable income doing work you love. Don't let payroll complexity, misclassification risks, or compliance headaches undermine that success.
The difference between doing payroll right and doing it wrong is the difference between profitable, sustainable growth and a business-destroying liability that appears when you least expect it. Let us help you build payroll systems that support growth, minimize taxes, and eliminate compliance risk.
Your training business deserves the same level of professional expertise you provide to your clients. That's what we deliver every day to personal trainers across the country.
