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Commission: is this legal?
#1
I'm graduating in 3 weeks and was seriously considering a particular salon, but am not sure about the way payment works. It's a full service salon that has 3 or 4 stylists, many tanning beds, a fitness center, and hasn't had a nail tech in over a year. My thinking was that I could take advantage of the prom tanning and hair already going on. She is offering 50/50 commission, but says I would be considered an independent contractor, not an employee. This means I would have to pay into my own income taxes. She would provide supplies, but I don't think the 50/50 split would be worth it if I have to do the taxes. She said I set my own hours, but then set off a red flag when she said there are hours she wants me to be there. And then said what they charged. So any advantage I would have had as an independent contractor is gone. She probably wants to be able to fire me whenever she likes. And the main advantage of commission also gone. I think she is trying to claim me as an independent just to avoid paying taxes, while still controlling me as if I worked for her. A stylist who previously worked there said she would discover deductions to her paycheck. Like her percentage of the toilet paper used that week. Which is weird, because the owner says that 10% of the 50% she takes goes to supplies. What is this?
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#2
(02-03-2012, 11:05 PM)LizzieEllis Wrote: I'm graduating in 3 weeks and was seriously considering a particular salon, but am not sure about the way payment works. It's a full service salon that has 3 or 4 stylists, many tanning beds, a fitness center, and hasn't had a nail tech in over a year. My thinking was that I could take advantage of the prom tanning and hair already going on. She is offering 50/50 commission, but says I would be considered an independent contractor, not an employee. This means I would have to pay into my own income taxes. She would provide supplies, but I don't think the 50/50 split would be worth it if I have to do the taxes. She said I set my own hours, but then set off a red flag when she said there are hours she wants me to be there. And then said what they charged. So any advantage I would have had as an independent contractor is gone. She probably wants to be able to fire me whenever she likes. And the main advantage of commission also gone. I think she is trying to claim me as an independent just to avoid paying taxes, while still controlling me as if I worked for her. A stylist who previously worked there said she would discover deductions to her paycheck. Like her percentage of the toilet paper used that week. Which is weird, because the owner says that 10% of the 50% she takes goes to supplies. What is this?





This always draws differences in opinion on the forum however you can decide for yourself.

Personally I think this sounds like a win for the owner only. Here are some links to help you to decide.

http://www.irs.gov/pub/irs-pdf/p1779.pdf

http://www.irs.gov/businesses/small/arti...21,00.html

http://www.dol.gov/whd/regs/compliance/whdfs20.htm





Anna
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#3
Commission=employee; that owner would not pass an IRS or state labor board audit.
Jaime Schrabeck, Ph.D. (yes, it's real)
http://www.precisionnails.com
http://shop.precisionnails.com
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#4
DO NOT work for this person!! What she's doing is taking advantage of you. Either she's really dumb or she thinks you are......

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#5
I had this setup when I was doing nails while going through undergrad some 18 years ago. If my memory serves me right, I was 50% commission, owner covered all of my supplies, and would pay me weekly without any taxes taken out. I then had to put aside money for taxes. I don't recall it ever being a problem as long as I put money aside for the taxes which I did.
Lee
Bella Capelli Salon

"Anyone who keeps the ability to see beauty never grows old." Franz Kafka
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#6
No its not legal and I don't mind saying so. To be an ind. contractor you cannot work in the same location week after week. Ind. means working for yourself at different locations. Booth renter works in one location with a set rental fee. Not a % of income. The IRS site has great info on it. If a location wants to do a % they must meet certain requirements and they must charge a base flat fee first with % added on.
Booth rent also = a key for you, so you can work your hours. You provide every supply needed including a phone for appointments and keep your own books. Your renting space to run a business. The salon owner doesn't allow the building owner to keep a key, set their hours and run the schedule I imagine, and they shouldn't be doing any of that for you.
If you pay your own taxes you need to be completely on your own.
Salon owners do this for a few reasons. One, they don't know better, two they don't care, three they want the tax break of not paying taxes on employees while reaping the benefits of treating you like an employee. If they were audited, they would be penalized severely for not meeting the requirements outlined for them.
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#7
Thanks a lot everyone, very helpful. I had been reading the IRS guidelines and they were so vague. They listed degree of control in behavior, finances, etc without really defining. Does anyone think it would be worth trying to negotiate a legal system of payment with the owner? I guess it would depend on if she was doing it on purpose. Hmm.
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#8
The only thing she can do is legally charge you a set fee for rent which makes you a booth renter, and you'll be responsible for all your expenses.....or she can contine with the comm. idea, but she's going to have to pay taxes. If she tells you when to work, what product to use, makes appts. for you, you're an employee and that's how the IRS will look at it.

If you bring it up to her, a couple of things could happen, either she doesn't know the rules of the IRS and she'll realize she's got to revise her policy or she's aware of it, doesn't care and if you don't want to go along with it, you'll have to find work somewhere else.

I've heard that the owner can designate 50% of your income for the rent, and I believe you'd be able to do that as a Booth Renter....as long as it's understood. But that would mean the owner would have to know how much you're making so it might not qualify after all.
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#9
Okay, I went in to talk to her today to negotiate straight booth rental instead of this independent contractor nonsense. She did agree to booth rental, but I couldn't get her to give a rate. She said she charged her stylist $400/mo but that that rate was too low and needed to be raised (maybe hhinting that she wished to charge me more). She wanted to talk about getting me on the books so she could start scheduling prom nails now, but I ignored her and kept requesting the rate. I think she was trying to get me to agree to start without that information. No such luck. She's seen my work and she knows I am good at acrylics and great at art. By the end of our conversation she was talking about reducing the booth rental for me to begin with. She's got a couple of days to come up with a number. Prom season is weeks away and she has 10+ tanning beds and NO nail tech. I hope that she is scared she won't get me and that she will choose her numbers accordingly.

Thank you, everyone who posted on this. I have never felt so confident during an interview. It helped so much to know what I want and what she should be offering. Thank you. I'll post on how this all plays out in the end. =)
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#10
(02-08-2012, 12:03 AM)LizzieEllis Wrote: Okay, I went in to talk to her today to negotiate straight booth rental instead of this independent contractor nonsense. She did agree to booth rental, but I couldn't get her to give a rate. She said she charged her stylist $400/mo but that that rate was too low and needed to be raised (maybe hhinting that she wished to charge me more). She wanted to talk about getting me on the books so she could start scheduling prom nails now, but I ignored her and kept requesting the rate. I think she was trying to get me to agree to start without that information. No such luck. She's seen my work and she knows I am good at acrylics and great at art. By the end of our conversation she was talking about reducing the booth rental for me to begin with. She's got a couple of days to come up with a number. Prom season is weeks away and she has 10+ tanning beds and NO nail tech. I hope that she is scared she won't get me and that she will choose her numbers accordingly.

Thank you, everyone who posted on this. I have never felt so confident during an interview. It helped so much to know what I want and what she should be offering. Thank you. I'll post on how this all plays out in the end. =)


Be very very careful when she tells you how much she wants to charge you for rental. You should NEVER pay more than a hair stylist as they have the ability to make more money per hour than most nail technicians. I had a woman try to charge me double what she was charging her stylist, so I told her to stuff it and left. Smile
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#11
(02-08-2012, 03:50 AM)BornToBling Wrote: Be very very careful when she tells you how much she wants to charge you for rental. You should NEVER pay more than a hair stylist as they have the ability to make more money per hour than most nail technicians. I had a woman try to charge me double what she was charging her stylist, so I told her to stuff it and left. Smile


Haha, no way, really? I have a number in my mind and if she doesn't match it, I'll keep looking. Finally got enough supplies to be able to do booth rental, which is exciting! Sorry, salon owners. If anyone offered 50/50 or even 40/50 as a real employee, not an independent contractor, I would be on that like fumes on monomer.

Does anyone use one of those fancy smart phones with the credit card slider? She wants to charge me extra for using her machine. Which I think is fair. But who knows how much she is going to charge and maybe I could do it myself.
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#12
(02-08-2012, 10:24 AM)LizzieEllis Wrote:
(02-08-2012, 03:50 AM)BornToBling Wrote: Be very very careful when she tells you how much she wants to charge you for rental. You should NEVER pay more than a hair stylist as they have the ability to make more money per hour than most nail technicians. I had a woman try to charge me double what she was charging her stylist, so I told her to stuff it and left. Smile


Haha, no way, really? I have a number in my mind and if she doesn't match it, I'll keep looking. Finally got enough supplies to be able to do booth rental, which is exciting! Sorry, salon owners. If anyone offered 50/50 or even 40/50 as a real employee, not an independent contractor, I would be on that like fumes on monomer.
I use the Square card reader and have for the last year, LOVE it!! Just so you know, if she's wanting to charge you to use her machine, she's controlling part of your income...so, not allowed! You CAN work a deal with the cc co. she uses to add on a separate acct. at that location, and then possibly pay her a FLAT FEE to use it, just like rental on the room. Square charges 2.75% flat rate per charge and the money is deposited in your acct. within 3 days at the most. The charges are tax deductible at the end of the year, so you're not really loosing anything.


Does anyone use one of those fancy smart phones with the credit card slider? She wants to charge me extra for using her machine. Which I think is fair. But who knows how much she is going to charge and maybe I could do it myself.



my reply somehow got put in the middle of the other post above. Sorry about that.....
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#13
I use Square for credit cards using my smartphone. No problem.
Brenda
Brenda
Electrologist 30
Nail tech 3 years
Fairytale Nails (Bring on the bling)

http://www.facebook.com/pages/Brenda-Loc...1768602978
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#14
I use square also, it now deposits the same night & while they say it may take a couple days for the bank to process it, it showed up the next day
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#15
She cannot legally let you use her cc machine. THat it co-mingling funds and processing charges for a seperate business. Get a Square, they have great rates.
Ellen Torchia
Owner Too Much Fun
President SB&S Graphics, Inc
Replicator Graphics

Former Top 10 Competitor

"A mind once stretched by the imagination never regains it's original form."
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