The exact way yoga studios pay teachers varies between yoga studios. If you’re a prospective yoga studio instructor – or a yoga studio owner – it’s essential that you know all of the ways that yoga studios pay their instructors. Additionally, you need to know how much do yoga instructors make.
Yoga instructors make on average $31.11 per hour and the national average salary for yoga instructors is $59,183 a year. Despite these averages, yoga salaries vary significantly. Many instructors make less than $30,000/year while a select few make more than $300,000/year.
So, how do yoga studios pay teachers? Here are the top 3 ways yoga studios pay their instructors:
- Flat-rate wages (hourly or per class)
- Wages based on the number of students recruited
- Flat-rate wages with student recruitment bonuses
In this article, I will discuss everything you need to know about paying your yoga instructors. I will discuss the pros and cons of each way and when you should adopt a particular payment method over the other.
This post is part of a series of guides and articles providing in-depth information about how to start a yoga studio. Head to the main article to find a list of articles and guides covering the topic.
Top 3 Ways Yoga Studios Pay Teachers
Ever wonder how yoga instructors get paid? Are you going to sign a contract for a $50,000/year salary with a yoga studio, or are they going to pay you $50 per class? Whether you’re working for a small boutique yoga studio or one of the largest studios in the country – the salary agreement will vary.
Many yoga studios like to keep it simple by paying their instructors a fixed-rate per class. This method means the instructors get paid the same amount if 100 students show up or if ten students show up. Some yoga studios make a deal with their instructors to pay by the student, meaning their income depends on the number of students they attract to their classes.
What Do Yoga Studios Look For In A Teacher
Yoga studios want yoga instructors who are charismatic and skilled. Without instructors, the whole business model of yoga studios breaks down.
Some yoga studios find it hard to get established yoga instructors who specialize in a specific niche, and this could be your angle. Most yoga studios will be open to negotiating the payment style with you.
If you’re a people-person and you like talking to people and selling your classes, you should definitely opt to get paid by the headcount. This way, you can make a significant income by focusing on attracting in as many students as possible through social media.
If you’re shy and introverted, you should get paid a flat rate fee by the class. This option also shifts the risk of no-shows on to the yoga studio.
We’ll have a look at the top 3 payment methods that yoga studios use to pay teachers. The top 3 compensation methods are fixed wages (by the hour or class), wage determined by students, and combined bonus payments.
How Yoga Studios Pay Teachers #1) Fixed Wage (By The Hour Or Class)
Yoga teachers are freelancers or employees. They get paid by the class or by the hour. Example: The yoga studio might pay $50 per class, even if the class is 20 minutes long. The same yoga studio might also pay $30 per hour, calculating each minute you, the instructor, spend in class.
The difference in becoming an employee-instructor or a contractor/freelancer could be significant, depending on the studio. If the studio requires you to work at that particular studio only, they may ask you to sign an agreement stating you won’t be working for a competitor. This way, you can negotiate higher wages by the hour.
However, being tied to one yoga studio means you won’t be able to make additional income unless it comes from private classes.
Pros & Cons
The fixed-wage simplifies payroll for yoga studio owners and keeps all financial expectations clear before the instructor even starts classes. When you’re teaching, you’ll know exactly how much you’re getting paid for your classes in advance.
If you sign a contract for $50 a class, you’ll get $500 a week if you teach ten classes that week. And if the payment is by the hour, you’ll have to calculate the number of hours you’ve worked that week to get paid.
It’s also common that yoga studios pay instructors by the minute. The yoga studio owners will calculate the number of minutes an instructor spent teaching, and they’re on the clock the minute they enter the studio. This method could be a lucrative payment model for established yoga instructors at top yoga studios.
It’s your responsibility to represent the brand of the yoga studio, and some yoga studios will pay you for the time you spent between classes.
Should you choose to get paid per class or in measured time increments?
There are advantages to both methods of receiving payment. Example: In the “per class” models, you never have to worry about clocking in 30 minutes early and checking the clock every 10 minutes to make sure everything is in order. You get paid for the full class – period.
However, some instructors prefer to get paid by the hour as certain classes might take more time, and this allows them to charge the studio owners appropriately. If your classes vary in length, you want to opt for the per-hour flat-rate model.
How Yoga Studios Pay Teachers #2) Wage Determined By Number of Yoga Students
Despite the humble handshakes, yoga studios run a business that needs profits to survive. Some instructors can generate more income for the yoga studio, and they get paid more.
According to this model, the instructors pay is dependent on the number of students that attend the yoga class. This model is similar to running your own yoga studio, as you’ll only make money based on how many students show up.
- The average rate per student for instructors is $1-3/student.
- If the instructor brings in 30 students, they’ll make $30-90/class depending on how much the yoga studio pays.
In yoga studios that operate on a per-head model, the wages rate is equal, and all instructors are paid the same rates, with the variable being the number of students. If you pull in 50 students per class, you’ll make more than someone with 25 students per class.
Pros & Cons
There are many pros and cons to this model, and it’s more controversial than other models.
The advantage is that you’re motivated to become more social and outgoing to attract students to your class.
The disadvantage is that if you fail to bring in students, you don’t get paid, and this kind of competitiveness breeds toxic energy between yoga instructors working at the same studio. You will need to have a strong following or excellent sales skills to succeed with this model.
Studio owners who operate on this model tend to be more hands-on and communicate with their instructors throughout the entire day. The payment model is unique, and they have to be present in all classes to count attendance. Or they use a yoga studio attendance software like StudioGrowth to automatically take attendance.
The biggest issue with headcount based wages is that attendance tends to increase or decrease based on the time of day. Over 30% of all yogis show up during the early morning hours, and only 20% do so during the evening hours.
This variance means that even if yoga instructors are equally competent, the instructor working during the morning hours will make more money than the instructor working in the evenings.
This difference means certain instructors are more privileged in terms of the slots and time of day they’re allowed to work. If you are a yoga studio owner, make sure the class schedule splits fairly among the yoga teachers.
You might experience envy from other yoga instructors if you get better slots and more attendance, as you’re not only more popular, but you’re also threatening their monetary situation. This factor can increase tension in the work-place as the students can feel when there’s toxic energy going around.
How Yoga Studios Pay Teachers #3) Fixed Wage + Student Recruitment Bonuses
The performance-based model combines aspects from the fixed-wage per class and adds additional bonuses if the attendance exceeds the minimum required by the yoga studio.
This model is the optimal model as it guarantees payment for all instructors, and the top-performing instructors get paid more. It reduces the envy and competitiveness between instructors, and it allows the most enthusiastic instructors to rise to the top.
Example: The instructor is guaranteed a $50/class pay + $30 extra for every ten students they attract to the class past a specific limit.
If the yoga studio expects 50 people per class, and the instructor manages to bring in 20 more, they will get paid their base pay and bonuses for the extra attendance. This model motivates instructors to work harder as they’re guaranteed base pay, plus they can earn additional income by bringing more students.
You’re not walking around with excessive cortisol chemicals running through your body and worrying about bringing enough students to make ends meet. You’ll always know you have a base salary waiting for you, and this will motivate you to bring more students.
The downside of this payment model is that many studios will put a cap on the maximum attendance bonus. Even if a teacher is an absolute superstar and they bring in significant numbers of students to the studio, they’ll still get paid less than if they operated on a headcount payment model.
If you are a yoga teacher with a significant following and exceptional sales skills, consider opening your own yoga studio.
How To Set Up Automatic Payments To Yoga Teachers
Employees want to get their payment on time. The good news is that you don’t have to pay each employee manually, you can set up “direct deposit” systems at your bank that automatically credit their bank account on the 15th or the 1st of each month.
The only thing you have to do is approve each payment, and initiating direct deposit options is fast and straight-forward. The bank can even file multiple direct deposit requests at once, allowing you to pay different teachers simultaneously. Banks typically rely on ACH (Automated Clearing House) deposits for direct deposit orders.
Note: Each payment the bank sends to your teachers is an order, and you have to approve each order before it credits your employee’s accounts. The process typically takes a day, and once the balance hits your employee’s account, your balance reduces.
In certain cases, the process may take up to 2 business days, depending on how strict the bank’s security measures are.
Studio owners can tell their bank to send out payments at the exact time they want, and the bank will automatically send the payments on the marked date of choice. The bank will typically offer you payroll software from an online management panel where you can control the pay schedule and approve salary payments.
NOTE: StudioGrowth handles all payments for you, including paying your teachers. We work with Stripe as our payment processing partner, so you don’t have to worry about managing payments.
In StudioGrowth, simply enter the wages of your teachers and their bank details, and the teachers get paid automatically at the frequency you set. We have a free 14-day trial of our yoga studio management software. Do give us a try, I promise you will love it.
Information Needed For Yoga Studios To Pay Teachers
To utilize the direct deposit ACH capabilities at your bank, you have to obtain banking information from your teachers. When you’re hiring a teacher, you have to collect their banking information to pay them on time.
NOTE: You can easily collect this information in StudioGrowth when you set-up the yoga teachers class schedule. They receive an email and can enter all the relevant information within StudioGrowth.
Regardless of whether you hire one teacher or ten teachers, you’ll need their banking info to initiate direct deposits. The bank requires the following information:
- Bank account #
- Routing #
- Bank name
- Account type (typically checking or savings)
Reach out to your bank and request authorization forms that you can give to each one of your teachers. They will have to sign this form to provide you with permission to transfer ACH payments to their account electronically.
These forms are easy to fill out and only require basic information about the teacher, their bank account, and signature. Once they’ve granted permission, their bank will permit all incoming transactions arriving from your account.
How Often Should Yoga Studios Pay Teachers
Most states require business owners to pay teachers at an exact frequency interval. In effect, this means you can’t pay your teachers monthly and then switch to weekly – you must keep a consistent schedule. There are prevention laws to avoid employers abusing minimum wage laws and unreasonably delaying their payments.
The following are the main things you, a yoga studio owner, need to know in regards to paying yoga teachers:
There are no Federal frequency laws. Frequency laws are at the state level. Check your state’s frequency laws to determine when and how you need to pay your teachers.
- The only states without frequency laws are Florida, Alabama, and South Carolina.
- You can pay your employees monthly, weekly, or bi-weekly.
- If you wish to change the payment frequency, you can only do it if you have a valid business reason or if the change is permanent. You’ll have to prove this to your local tax authority.
How Yoga Studios Pay Teachers – Payroll Tax Information
The primary responsibility a yoga studio owner has towards yoga teachers aside from paying their wages is to pay federal tax, which includes Income tax, Medicare, and Social Security. Payroll taxes combined can amount to more than 50% of the net wage the instructor receives, depending on the state and income levels of the instructor.
They account for more than 70% of all revenue collected by the IRS. Payroll taxes are your biggest responsibility as a business owner. Yoga studio owners have to file multiple forms for each instructor, and there are ways to automate the process.
Payroll Tax Information For Yoga Studio Owners
- The IRS’s main form of revenue is payroll taxes that employers pay for employees. The IRS collects over $1.7 trillion in payroll taxes each year. This amount comprises 5.8% of the US GDP.
- The IRS Publication 15: Employers Tax Guide publishes the payroll tax table yearly. This guide includes the current rates for all federal taxes (Income Tax, Medicare, and Social Security). It is the official guide for payroll taxes, and updates yearly.
- Congress members determine the payroll taxes for each year. Lawmakers decide how much employers should pay by consulting with the IRS and the Department of Labor before they reach an agreement with the IRS. The next step is a new issue of Publication 15.
- Medicare payments total out at 2.9%, including the contribution of the employee and the employer (this splits in half – each party contributes 1.45%).
- Employees whose income surpasses $200,000 are subject to an additional 0.9% income tax. If your yoga teachers surpass this, you don’t have to pay the extra income tax.
- Social security totals out at 12.4% of the salary, split between the employer and the employee (6.2% each).
- A flat rate of 6% applies to other expenses such as FUTA (Unemployment tax) but the amount caps at $7000 regardless of the salary level. SUTA (unemployed state taxes) cap at 6%. However, if paid on time, each state offers a deduction of 5.4%, which brings the total down to only 0.6%.
In the U.K., the HMRC is responsible for taxes, and as a yoga studio owner, you will file with the HMRC.
State Income Taxes For Yoga Instructors
Each state sets an individual tax rate, and you have to estimate the payroll tax based on your state tax rate. States exempt from income taxes are the following: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
Income tax exemption doesn’t mean employers don’t have to pay for other payroll taxes. The state might impose additional taxes on state infrastructures, such as transportation taxes or school taxes.
Pro Tip: Once you’ve registered your business with the IRS, the IRS will automatically check which statements and rates apply to your business, and you will know in advance how much you owe.
Moreover, you can hand this statement down to your accountant and have them organize payments and handle all your paperwork for you. They can also help you with frequency reporting and making timely payments.
Forms You Need To File To Pay Yoga Teachers
For each yoga instructor you hire, you’ll have to file multiple forms before you pay off their salaries. The process can also be automated if the salaries are consistent, and you can hire accountants to file the forms for you.
Before filing any forms, you must register with the government to get an EIN. The EIN is an Employer Identification Number certifying you as the owner of a proprietary business. You can get the business insurance and file taxes for your employees when you have the EIN.
Pro Tip: Think of EINs like SSNs for businesses. The EIN is present on all forms associated with your business. To obtain the business license and insurance you need the EIN. The following are the forms you have to file with the IRS for each employee:
- Form I-9. This form verifies the legal status of each person you hire. The form analyzes the individual’s citizenship or visa status to determine whether they’re eligible to take up employment in the United States.
- Form W-2. The W-2 form includes all information in regards to the income the employee made within the previous year. File W-2’s on an annual basis.
- Form W-4. The employer completes and files the withholding allowance form. The W-3 form calculates the amount an employee owes in federal income taxes.
- Form 941. This is a tax return form for business owners, which has to be filed quarterly and makes them eligible for tax returns.
- Form 940. This form is for Federal unemployment benefits and needs filing on an annual basis.
- Additional forms. Each state or local municipality might require additional forms that add to the total payroll costs. Certain major cities have their own income tax that is usually within the range of 1-2%.
How To Know When To File Taxes
The tax filing period depends on your payment frequency. If this is your first year running a yoga studio, you can determine when you want to pay the taxes by consulting with your accountants or the IRS).
Most yoga studio owners file their taxes monthly. Still, it’s possible to file your taxes in shorter periods, such as quarterly, weekly, or twice per week.
Note: Pre-arrange your monthly payroll payment schedules, or you will have a monthly depositor status. This status assumes you’re paying your employees monthly, and you’ll have to pay the taxes accordingly. Publication 15 (Owner’s Tax Guide) includes information about possible schedules that you can arrange with the IRS.
In practical terms, the IRS will assume you’re going to file your taxes on the 15th of each month. It is standard for most businesses throughout the country. However, it’s possible to file taxes quarterly if you choose to do so.
Each deposit you make with the IRS must include your contribution to the yoga teachers social security as well as their share (which is typically split by 50%).
Once the tax year comes to an end, the IRS updates their payment frequencies, and if nothing changed, they notify business owners. Hire an accountant to keep up with the changes.
Do Payroll Taxes Affect The Net Salary?
Yes, payroll taxes are essentially the taxes that make the difference between the gross salary and the net salary.
Example: If the payroll taxes total out at 45%, a gross salary of $100,000 would mean an instructor takes home $65,000.
In the U.K., you also have to account for National Insurance payments, which go towards state benefits.
Paying Taxes For Bonuses
Many yoga studio owners assume that offering bonuses and commissions to their employees exclude that amount from payroll taxes.
If you offer your instructors a 13th salary, you will still have to pay payroll taxes to the tune of a regular salary. This rule also applies to other forms of irregular payments such as sick pay, overtime work, commissions, etc.
Fines For Missing Payroll Payments
The punishment for not paying payroll taxes on time can be exponential, as the IRS expects you’ll pay your payroll taxes the same day you pay your employees.
In effect, being late on your payments by even a single day could make you subject to monetary fines.
Typically the fines cap at 25% of the amount owed. After this, you have to pay interest to the tune of 3-6% per quarter, until you’re able to pay off the entire debt with interest. The troubles can stack up exponentially if you fail to pay your payroll taxes on time.
Here’s how much you’ll owe based on the time elapsed:
- 1-5 days late: 2% of the total amount.
- 6-15 days late: 5% of the total amount.
- 16 days+ late: 10% of the total amount.
The IRS sends you your first notice after 16 days, and once ten days have passed, they increase the amount up to 25%. Once you’ve hit 25%, the IRS adds 3-6% interest every quarter, depending on the total amount owed.
NOTE: All the information presented about payroll applies to yoga teachers who work at your yoga studio as employees. If a yoga teacher is working as a freelancer and merely offering their services, the yoga teacher will be responsible for paying their taxes directly.
How Much Do Yoga Instructors Typically Get Paid?
Despite these averages, yoga salaries vary significantly. Many instructors make less than $30,000/year, while a select few make more than $300,000/year.
If the yoga studio recruits students for you, you might make less than if you go out there and attract students yourself.
Example: You might get $35 per class as a beginner. As you become experienced, you might pull $50-75/class. However, some studios offer you $1-3/student if you recruit students, so 30 students would mean you make $90 a class. You can fix this arrangement with the yoga studio owner.
To conclude, there are three primary ways that yoga studios pay teachers:
- Flat-rate wages (hourly or per class)
- Wages based on the number of students recruited
- Flat-rate wages with student recruitment bonuses
If you run a yoga studio, you’ll also need to be aware of how to send regular payments electronically and how to properly file payroll taxes. The required forms, filing frequencies, and other necessary information are covered above.
And if you’re a yoga instructor looking for a job, you should understand how the yoga studios you’re applying to pay before signing a contract. While the three methods seem similar on the surface, the amount you make at the end of the year can vary significantly depending on which way your yoga studio uses.
This post is part of a series of posts providing in-depth information on everything you need to know to start a yoga studio. The other posts in this series include:
- Are yoga studios profitable?
- How much do yoga studio owners make?
- What is the cost of opening a yoga studio?
- Teach yoga without certification
- Do yoga instructors need insurance?
- How to name a yoga business
- How big should a yoga studio be?
- Best place to open a yoga studio
- Yoga studio decor
- What color to paint a yoga studio
- Best flooring for yoga studios
- Heaters for yoga studios
- Best plants for yoga studios
- Music in yoga class: do’s and don’t
- Candles for yoga studios
- Incense, scents, & essential oils for yoga studios
- Yoga studio marketing: Ultimate Guide
- Opening a yoga studio in a small town
- How to start a donation-based yoga studio
- Yoga studio grand opening ideas
- Why yoga studios fail
- Yoga studio franchise
- Yoga Studio Scheduling Software
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About the author
Naz Ahm is the founder of StudioGrowth and has spent a decade growing start-ups and venture-backed companies. He writes about sales, marketing, and growth, especially in the yoga, fitness and wellness industry.
Naz has an MBA from IESE Business School and started his journey in the wellness industry when he set-up an on-demand wellness business. Naz currently resides in London, U.K.