In a martial arts school, distinguishing between employees and independent contractors is essential. Employees must follow employer instructions, receive training, and provide services integrated into the business. They work set hours, often full-time, and at the employer's premises. Employees are also paid regularly, may receive reimbursements for expenses, and rely on the employer for tools and materials. They lack significant investment in their work facilities, cannot independently profit or lose from their services, and work exclusively for one employer. Misclassifying staff can lead to serious tax and legal consequences. Ensure you understand these distinctions to manage your staff correctly and avoid costly mistakes.