I think your scenario B is more like a booth rent situation. In a booth rental situation, the renter subleases space from the salon owner. Simple. They are now both subject to landlord/tenant law, but essentially, the renter is entirely a sole proprietor of his/her own business. A true Independent Contractor falls into a somewhat hazy and more difficult to understand area. Largely because the terms of a contact are open to large margins for negotiation. In the case of a commissioned IC, the contractor gets a percentage and so does the salon owner-- it's much better for the IC to pay the salon, but I HAVE SEEN CASES where the salon has paid the IC and it has BEEN ACCEPTED BY THE IRS-- because determining status is based on SO MUCH MORE than just who pays whom. The important thing is that the salon owner still does NOT withhold money for taxes. The owner still does not contribute to social security, does not pay unemployment, and does not carry worker's compensation insurance on the IC. But the IC gets handed a nifty little 1099Misc at the end of the year for her taxes. Which makes it MUCH harder to under report her income and makes it much easier for the salon to show the IRS that THEY did THEIR part and cross their arms and stay out of it.
Maggie Franklin: Attitudes Salon; Visalia, CA "Visionary rebel dreamer; obviously way ahead of my time." Maggie's Website Maggie's Blog Maggie Rants [and Raves] Myspace Facebook --- On Sun, 7/5/09, Diana Bonn <[email protected]> wrote: From: Diana Bonn <[email protected]> Subject: NailTech:: taxes/ independent contractor To: [email protected] Date: Sunday, July 5, 2009, 9:03 AM I think many new techs/stylists don't understand the real diff. of an employee/Ic concerning taxes, the taxing issue is confusing. All they think of okay I get 20bucks when I perform a service. They either think, okay, I have to give the owner 10 bucks of this and I keep 10 bucks. I have 20 clients,okay that is $200.00, I can pay my house payment, car, food, clothing and rent those movies. Or they think, okay i get 20 dollars a service, times 20 clients, that is 400 bucks, I can pay my boothrent, my supplies, my house payment, car, food, clothing and rent those movies. But in both of these situations, they forget about taxes. In the first situation, the owner gives you a pay check, and subtracted your taxes from your check. Now that 200 dollars is down to 150.00. You don't have the paper work, the owner does it for you. But what you don't see, is the owner also paid money out of HER pocket to have you work there (why they can control you), because the OWNER has to pay half of your social security/medicare (7.65 %) of every penny you make. Think of it as a savings account, that the OWNER pays you over your life time. Also, if you get laid off or fired, the OWNER also every darn week paid for your UNEMPLOYMENT check that you will get. Not one penny of this comes out of your pocket. Now in the second situation, where you are in control of your money, hours, etc., you have to pay those taxes yourself, you do the paperwork. But remember the owner paying the little savings account (social sec/medicare) at 7.65%? Well now you have to pay that, plus your own share, which is another 7.65%. Now with unemployment you get zero, because only those that are employees receive unemployment. Now what is good about being an I/C, you are in control, but you don't get to pocket that $400, taxes have to come out. Now you do get to do write-offs. Now what does that mean? Let's say you made that $400, but you spent $50.00 on supplies. So now you only have to pay taxes on $350.00 not the $400.00. So I think the problem is that owners treat their I/C's like employees, and get by with not paying SS/Med. and unemployment taxes. Also I think techs/stylists don't understand the social security/medicare issues either. If no one (you and or your employer) is paying into this "savings account" there will be none for you when you retire. You just don't get a check every month because you turned 65, you get what you paid into it.(look at your grandparents right now) (of course who knows if it will be around, whole other issue) That is why a contract is so important. My best advice is go to an accountant and ask. JMHO diana from indiana --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "NailTech" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/NailTech?hl=en -~----------~----~----~----~------~----~------~--~---
