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HELP Please! On Commission and owner giving me a 1099? (1st Taxes questions)
#1
Hi everyone!

I had posted before about my job. Well, things have been going well and I've learned a lot and made good money.

Issue is that at first owner said she'd take care of taxes, so I did not worry. Now, she is saying she "reports and you have to go and pay your taxes" so I think she means she has me as an contractor?

Currently, my commission is 60 me and 40 her. I do not pay for implements or anything, but I am fulltime college student and this is the 1st year I do taxes on my own!

The owner says I should not worry since I can probably deduct stuff.
Is she right? or is she taking advantage of us? Other people have told me commission based employees should get W-2s.

Other people have also advised me that if she is giving me a 1099 then to claim a booth rent?

I am really confused.

Thank you all.
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#2
If she is paying you a commision and supplies everything, you are an employee and she should be taking taxes out of your paycheck. You should be receiving a W2. A boothrenter pays a flat fee weekly or monthly and takes care of all supplies, appts, ect but you take 100 % of your clients payment, you would be your own business entity and paying your own taxes along with receiving a 1099.
I have heard where owners try to pull this and you in the end are going to get hurt. There will be others on here that will chime in that can explain much better, but I think you are being duked.
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#3
You can deduct whatever you pay for supplies, gas for work and work related things (lunches, work clothes, etc). I learned that from my mother who is an accountant, but as far as I know, Jennie is right, you shouldn't get a 1099
T: mother of 1, nail tech/esthetician student

"You mustn't be afraid to dream a little bigger darling"
 Reply
#4
Nuni's Nails on Instagram posted that @cortniemua_nails could be asked about any and all tax questions. It made me think of you! Hope this helps.
T: mother of 1, nail tech/esthetician student

"You mustn't be afraid to dream a little bigger darling"
 Reply
#5
Thank you so much! I will keep it in mind.
 Reply
#6
Also, keep in mind for the future that if you receive all of the money you make, you must be prepared to pay taxes.
NY Licensed Nail + Waxing Tech
Owner/Developer Suite Tee
http://www.Facebook.com/TashawnaH
Instagram: @SuiteTee
 Reply
#7
Contact Diane at US Tax Aid. She was on Nail Talk Radio the other week and is an amazing resource. She is super helpful!
http://www.ustaxaid.com/
 Reply
#8
I work in a spa and everyone that holds a specialist license is a contract worker and we make commission and they buy everything except our metal implements. I'm considered a contract worker and get a 1099 Misc. Maybe it depends on the state laws but here in Louisiana it's perfectly legal to do it that way. I keep my receipts and deduct for EVERYTHING I buy having to do with work. That helps A LOT when it comes time to file and pay my taxes.
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#9
Booth renters should be providing their salon owners with a 1099 for rent paid . . .

Jaime Schrabeck, Ph.D. (yes, it's real)
http://www.precisionnails.com
http://shop.precisionnails.com
 Reply
#10
The deal with this is that as an employer who has an employee (commissioned or hourly) has to share with the employee the federal employment taxes to be paid. Employment taxes to the IRS are 15%. The employer pays 7.5% and the employee pays 7.5%. Many employers try to get around paying employment taxes by calling their commissioned, salaried or hourly employee an "independent contractor".

Independent contractors are just what it says- independent. You are not employed by the company in any shape or form. You collect the entire amount of the service from the customer and then you pay the company owner for the use of the space for the service. IC's are not on a schedule but are generally "on call" and are called in as the need arises. It is a very RARE occasion that we will ever see a cosmetologist or a nail technician as an actual independent contractor. If that were true then the cosmo or nail tech would be free to work at any salon they wish as they would not be on a schedule and would be called in as needed. Ask your boss if you can do that. I'm pretty sure you'd be let go immediately.

If a person is scheduled, and the company tells you what to do, how and when to do it, then no matter how your owner tries to spin it, YOU are an employee and federal employment taxes MUST be paid by both you and your employer.

The bad part is that many employers KNOW about this and use the IC excuse to get out of paying the 7.5%. So, if you are making 60% and your employer is making 40%, and they call you an independent contractor, then what's REALLY happening is you are only making 45% and your employer is still making 40%.

THIS IS AGAINST THE LAW! There is no way you can file your Federal Income Tax because you won't even have a correct form to file. There isn't one for what your employer is trying to call you. Your employer can face federal tax evasion charges if they do this.

I've been helping a fellow beauty industry worker sort this out because her employer has been doing this exact thing to her and she's lost as to how to file taxes. The worker can get into trouble because she has no feasible way to pay taxes because there is no way she can file the way she's supposed to. She's going to a tax accountant to find out what she can do but I'm pretty sure she may have to consult with a lawyer to fix this. There have been no employment taxes paid at all and she stands to not only be saddled with the entire amount (if she files as an IC) or, her deductions will be completely off and when she files her income taxes, she's be committing perjury.

I've included a few links to Tina Alberino's blog regarding this and also some links to the IRS website. Friend Tina on FB. She has a HUGE amount of information on this.

Booth renting is a completely different animal.

http://www.thisuglybeautybusiness.com/20...d-for.html

http://www.thisuglybeautybusiness.com/20...e-bad.html

http://www.irs.gov/Businesses/Small-Busi...r-Employee

http://www.irs.gov/pub/irs-pdf/fss8.pdf
 Reply
#11
Harmonysky makes accurate and valid points concerning federal tax law. I previously owned an independent representatives group and the laws are clear. Nail technicians are not independent contractors in the vast majority of cases. Now for the flip side......

The market has pretty much dictated 1099 arrangements. We won't talk about the "cash". The vast majority of Asian salon owners do this because the technicians demand it. Let's face it, the salons are doing whatever they can to keep techs who will leave for a nickel, steal customers and open next door.

Take your 60% and tips, pay your quarterly estimate taxes (Federal Form 1040-ES plus state) and have fun. Smile
 Reply
#12
Hello

I have a question i currently work at this salon where we get paid an hourly rate but we also have a 1099 form. I wanted to know if this is legal to be basically be on a under the table payroll? She doesn't pay the taxes we do she writes us a personal check based off the hours we worked that week.
 Reply
#13
I get a commission (because I don't have enough clients for chair rental). I purchase my own stuff and set my own hours, but I was told I would get a 1099? I am confused.
Angela
Angel
 Reply
#14
That makes sense because you are your own person you just give a percentage to the salon for the use-age of the salon, meaning, the power/electricity
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#15
Thx Stylzbyt. I figured she knew what she was doing! Lol. I don't want to be anyone's employee.
Angela
Angel
 Reply

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