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The four legal questions every FitPro should be asking themselves

Most FitPros that I meet generally go about their daily work without thinking too much about the legal aspects of their business. With only 24 hours in a day, and about 10-12 actual working hours, FitPros focus their time and energy on clients, marketing and working rather than reviewing the management and operations of their business. Every FitPro faces some form of risk, be it personal risk, financial risk or other risks. Every FitPro should take a couple of minutes to review the below five legal questions in assessing their legal standing:

1.Am I a person or a business?

I do not pose this question in any philosophical way, rather to highlight the important legal distinction between whether you are a sole trader PT operating under your own personal name or whether you have registered a company. Is there any separation between personal and business bank accounts? Do you hold an ABN? Are you registered for taxation/GST purposes? Do you issue invoices and/or quotations to your clients? Are these compliant dependent on your structure?

The difference comes down to what business structure you operate in (or not). If you are a sole trader with no distinction between personal and business, then you are the business and all your liabilities both financial and personal rest with you. Not having distinction between yourself and the business provides significant exposure particularly to your savings and other assets in the event you are sued. Further you will not be able to apply for a business loan, protect your IP and assets, or obtain a line of credit.

2.How do I contract with my clients?

As a FitPro, you ought to have some form of signed document to establish the basic scope of work which will be undertaken and on what terms such work is being provided on. A good membership contract or agreement can protect you in the event a dispute arises and ensures that all parties are “on the same page” in terms of duration, expectations, payment and timeline. You should have a standard membership agreement which you work through with each client and modify accordingly to be reflective of the parties intentions.

3.Are you a contractor or an employee?

With more and more businesses of all sizes using contractor PT’s these days, it’s important to understand the legal distinction between contractor and full-time employee. Whether you are the one being hired or doing the hiring, the legal classification boils down to independence and control and this is critical from both an insurance and taxation perspective. Contractors often have the freedom to determine how a certain job should be done and when it is to be done. Ask the following questions: who decides when and where to do the work? Who chooses the venue to conduct the PT session? Who defines what PT sessions are taken and the hours?

Any contract (either employee or independent contract) agreement should clearly state the relationship between the parties to ensure there are no ambiguities and no later consequences from a superannuation or taxation perspective.

4.How do I manage and track income and expenses?

All FitPro’s are in business because of their passion for the industry and their desire to make money. Its all about the hustle right? Therefore, your businesses’ viability ultimately boils down to how much money comes in and how much goes out. There are countless reasons to have a firm grip on your businesses’ financials, including reporting requirements for taxes, as well as determining how much you owe or should charge a client. Keeping a log of your hours and expenses for each client, class and project, and keep/scan all relevant receipts and correspondence. That way, if there’s ever a client dispute over charges, you’ll have all the documentation needed to back up your side of the story. Further it ensures you are well across your business finances and can make sound financial judgment decisions.

The hardest part of being a FitPro is actually working for yourself and having to be accountable to yourself for your actions. It is however important to remember the legal implications of being a FitPro particularly dependent on the relevant structure you choose to adopt. Being a FitPro is exhilarating and often motivated by drive and passion, however be sure to not loose sight of the bigger picture to protect you and your business as much as possible.

At Law Squared, we partner with passionate entrepreneurs and businesses who need our technical help and expertise. We’d love to have a chat with you, so feel free to drop us an email hello@lawsquared.co

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