This is the 1st of a 3 part series to help you on your journey to Sugar Business Sweet Success! Whether you are new to the beauty industry or a seasoned pro, our goal is to guide you to make good decisions with your finances.
In this episode you will learn:
Episode 1: Employee or Independent Contractor
- Category of Workers in a Salon/Spa
- Employee
- Straight Hourly Wage or Salary
- Commission
- Hybrid
- Receives Form W-2 from employer
- Income and payroll taxes are withheld
- Employer pays half of federal and state federal tax
- Independent Contractor
- Straight Rate
- Commission
- Hybrid
- Receives Form 1099 from salon/spa owner
- No income or payroll taxes are withheld
- IC is responsible for all taxes
- Booth Renter
- Leases space from salon/spa owner
- Doesn’t usually receive compensation from salon/spa owner
- Issues Form 1099 to salon/spa owner for rents paid (if $600 or more)
- Responsible for all taxes
- Why this matters
- Employee Rights
- Tax Evasion: non-payment of payroll taxes
- How do I know if I am an employee or Independent contractor?
- It’s all about Control!
- General Tests:
- Do you have to abide by their schedule?
- Do you have to adhere to a dress code?
- Do you have to follow specific salon training (systems and structure)?
- Do you have freedom as to what services you provide and how you provide them?
- Do you have to honor the salon or spa’s discounts, promotions and coupons?
- Do you have to charge the salon rates?
Learn More from Kenesha Coleman, The Beauty CPA @thebeautycpa or on her info packed website The Beauty CPA!
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Cheers to your Sweet Success!