Should You Be An Employee or an Independent Contractor? with The Beauty CPA

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

1. Category of Workers in a Salon/Spa
   1. Employee
      1. Straight Hourly Wage or Salary
      2. Commission
      3. Hybrid
      4. Receives Form W-2 from employer 
      5. Income and payroll taxes are withheld
      6. Employer pays half of federal and state federal tax
   2. Independent Contractor
      1. Straight Rate
      2. Commission
      3. Hybrid
      4. Receives Form 1099 from salon/spa owner
      5. No income or payroll taxes are withheld
      6. IC is responsible for all taxes
   3. Booth Renter
      1. Leases space from salon/spa owner
      2. Doesn’t usually receive compensation from salon/spa owner
      3. Issues Form 1099 to salon/spa owner for rents paid (if $600 or more)
      4. Responsible for all taxes
2. Why this matters
   1. Employee Rights
   2. Tax Evasion: non-payment of payroll taxes
3. How do I know if I am an employee or Independent contractor?
   1. It’s all about Control!
   2. General Tests:
      1. Do you have to abide by their schedule?
      2. Do you have to adhere to a dress code?
      3. Do you have to follow specific salon training (systems and structure)?
      4. Do you have freedom as to what services you provide and how you provide them?
      5. Do you have to honor the salon or spa’s discounts, promotions and coupons?
      6. 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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