Independent Contractor question

[nicshred]

I was working out of a small grooming shop with wonderful clients. After a year of questions I did a bit of research online and found that , NOPE not an independent according to the IRS. I have been paying my own taxes ect. But now have to pay more due to failure of business claiming I was independent.

The shop owner seemed unfamiliar with the rules on independents and yes I no longer work there. Will miss the clients but I can not justify working in a shop that basically saves tons of dollars by not following the guidelines.

Just a note to all, be sure of the independent contractor guidelines and get a signed contract with the owner of the business.

[Helly]

Most shop owners AND groomers are not familiar with the rules for ICs. It seems to be a misconception that if you're paid commission they can call you an IC. Not true, and many groomers who are working as IC technically are not.

[Gracy Rose]

You are so correct... most shops are operating illegally whether knowingly or not. There is a list of 20 questions on the IRS website, if you can answer YES to any then you are not an IC. My groomers are employees but also commission. I also pay Workmans Comp (that is another area you will find not being done correctly.

[Gracy Rose]

If any of these are your rules, you are an employee.


Must comply with employer's instructions about the work.
Receive training from or at the direction of the employer.
Provide services that are integrated into the business
Provide services that must be rendered personally.
Hire, supervise, and pay assistance for the employer.
Have a continuing working relationship with the employer.
Must follow set hours of work.
Work full time for an employer.
Do their work on the employer's premises.
Must do their work in a sequence set by the employer.
Must submit regular reports to the employer.
Receive payments of regular amounts at set intervals.
Receive payments for business and/or traveling expenses.
Rely on the employer to furnish tools and materials.
Lack a major investment of facilities to perform the service.
Cannot make a profit or suffer a loss from their services.
Work for one employer at a time.
Do not offer their services to the general public.
Can be fired by the employer.
May quit work at any time without incurring liability.

[lolo77]

This is my first year as an "independent contractor" I was told by my boss not to worry, they will give me a 1099, and I won't owe taxes because I didn't make much this past half year that I've been there and because I'm a "poor single mother". And that it wasn't a big deal and easy to deal with. I've been grooming for 9 years and have always been a paid employee so all this was new to me and I've put blind faith into her hands. I went to the IRS site and its all spanish to me, but I haven't paid quaterly taxes or anything I didn't know you were supposed to do. I'm guessing I'm screwed, right?


Stephen Note: Really??? The things they say. Every dollar you make you have to pay Social Security FICA taxes on 2 times, whereas employees have 1 times deducted from payroll checks. Yes, you may not owe much income tax, but IC are liable for other state and federal taxes such as double FICA. You will need a good bookkeeper, HR Block type etc as you cannot file an EZ 1040 either in most cases and may need to file a Schedule SE and Schedule C etc. Remember state taxes vary by state so what is said here for one state can be extremely different. Get a tax person and stay out of trouble.

[Kim in SD]

Gracey Rose, those are the guidelines, here too. Unfortunately I had to learn the hard way. I was an employee, that was actually an independant. One thing to remember is, if theres a discretion, tell your tax person. There will be an automatic audit for the illegal owner.

[Mo-N-Me]

Theres a real fine line between IC and employee.

I have found more often than not that its the IC's that don't truly know their role fully, and shop owners take advantage of that by not giving them the full info before hand.

As an IC you yourself are a business, you should have a dba, you should do your own advertising, basically the only thing you should be using is the space, and basic supplies. This would include cleaning up behind yourself. You would also be required to carry your own liability insurance, as well as many other variables. They cannot tell you when to come in, or when to leave, etc.

We do a rental agreement. Example: rent due is 50% of sales total...before taxes...per day. I have no other agreements or arrangements with the other groomers. They schedule themselves, they book their own appointments. Basically, they are running their business within my location. Checking with a tax consultant AND a lawyer BEFORE signing any agreement with anyone is highly suggestable.

I don't know anyone else that does it the way I do. It pays to have an accountant that will represent you fully should you be audited.

[nicshred]

Agree with you totally. I have been to three interviews all three said , You will be IC, I said ok, so I listed all that I would be doing of course they said ..."Oh NO I set the appointments and they pay me , I pay you each week on commission. Also you work such and such hours."

Seems this is a big problem that many may not be aware of yet.

And the one shop I previously worked out of is now in a bit of IRS problems. Thank heavens I found out now , even though I will pay more in to correct this I will not be paying the fines ect.

Trish

[Gracy Rose]

changing %

How many shop owners have ever had a "disgruntled" employee? It only take one employee to call the IRS to make your dreams go down the drain. It is very hard for a shop owner to pay 50% to employees and keep their business above the law. Please realize that your commission may go down a little but it is WORTH it in the long run. You would be spending more in extra taxes and accounting fees, not to mention your own insurance, business license and costs of own advertising.

[Jengroomer]

Here's my question

I like the idea of renting space. I previously did that, though I felt since the person was a 'friend' I gave way too much and took way to little. Nothing was to my benefit in the longrun. The relationship ended with this person opening down the street from me with all the clients I handed over for free. Oh well, live & learn!
My question is, is it possible to rent space, collect a commission on gross sales, on the clients the renter brings in, and work something else out if they are grooming your overflow, so that you still keep the clients you bring in? Certainly the renter keeps the clients they bring in.
Does this even make sense?
I just felt really burned handing over clients for almost nothing in return.
Is there a way to benefit both me & the renter with me keeping clients, that I bring in? Or that these clients would not be groomed solely by either of us but belong to the salon? Again with the groomer keeping all clients as theirs that they bring in.
And all this done legally? Is this a possible scenerio?

[hairdevil]

personally, I've been in the same situ...this time around I have an I/C..I give her a list with the dogs first name only on it...what it gets and what time it goes out. Thats it. She does not have access to my laptop or client list or anything that she can take with her. Those were the terms..signed deal..

[Jengroomer]

My question though is, what do I have to do to be sure I'm following the rules of paying a groomer as an I/C and still protect myself.
Why can't things just be easy! LOL

Stephen Note: Why don't you draw up an IC contract prepared by a lawyer? Easy. It is often what other company's using IC's do, why not groomers, or are your people truly IC's??? At least you will know for sure.

[squirt]

What you all are talking about is what I am comtemplating on doing. I would like to have a space where groomers can come to rent space and basically have there own business. I would provide seperate rooms for each business and provide say tub, certain number or cages, basic grooming table, etc. I would charge them a certain amount for rent (to be determined, still doing quite a bit of research on this idea), in back I would like to have coin operated washer and dryer, and upon hiring is when I would explain everything there is to understand about being an independent contractor. I feel that if everything is explained up front and the groomer knows exactly what they are getting into there shouldn't be a problem. There would of course be a signed contract and I would possibly do one year leases. The reason I would like to go thru all this is because i would like to provide a reasonable rent for groomers who may be just starting and want their own business, but can't quite do their own shop or for others who may no want the hassle of finding a location and building their own shop from scratch. This way they would have their space, can make it their own however they would like, (painting, pictures, etc.) come and go as they please and make their own schedule, blah, blah, blah. I would be grooming my clientel here as well and would also like a small retail and lounge space up front where people walk in. There are many more details to be worked out, but i really think it could be kinda cool. I was talking with a hair dresser who has been renting space for 7 years and she said it was the best thing she could've done.

I think if the right steps are taken... talking with an accountant, lawyer, etc., there really shouldn't be a problem. I think the problem comes when someone is either completely uneducated about the ins and outs of IC's or they are trying to pull some kinda scam.

NOW....... question is, would groomers like this type of situation/environment????????
These forums are such a wealth of info, encouragement, and fun conversations with people who really understand what a groomers life is all about. What a blessing!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[luvmybabies]

Even though I work from home right now. I was thinking about renting a table, to try and build my clientele some more. I really did not know what that would mean for me, because no one does that here. So I went and talked to my hairdresser. She told me basically the samething that Mo-N-Me said. I need to carrying my own insurance, have my own accountant, supply my own supplies, set my own hours, pay a certain amount each week for the table rent, pay my own taxes, etc. She also told me that the clients I get would be mine and not the salon's. Is there anything that I missed? I am not sure if I am going to rent a table or not. I would much rather just move my own shop into an actual building. Yes I am working on my business plan. I can't wait until I have it done. So I can do things the way I want to do them.
My question is how do you get your clients to understand that they are coming to you with in another shop?

[Mo-N-Me]

Even though I work from home right now. I was thinking about renting a table, to try and build my clientele some more. I really did not know what that would mean for me, because no one does that here. So I went and talked to my hairdresser. She told me basically the samething that Mo-N-Me said. I need to carrying my own insurance, have my own accountant, supply my own supplies, set my own hours, pay a certain amount each week for the table rent, pay my own taxes, etc. She also told me that the clients I get would be mine and not the salon's. Is there anything that I missed? I am not sure if I am going to rent a table or not. I would much rather just move my own shop into an actual building. Yes I am working on my business plan. I can't wait until I have it done. So I can do things the way I want to do them.
My question is how do you get your clients to understand that they are coming to you with in another shop?

If you're already working from home...and working on a business plan to start your own shop...use the money you'd spend renting space from someone else on advertising for yourself instead.

Whether or not you are working for yourself or renting space, you'll have the extra overhead of accountant, lawyer, paying your own taxes, insurance, supplies, etc. The question is would you rather pay half your income out to someone else or keep it all within your own business?

If you do decide to rent tell your customers about your future plans. (ie: I'm planning on starting my own shop by such and such a date.) Make sure they know your name, and leave your name on everything...from business cards, to reminder cards, to phone messages. Leave YOUR name!

My mother was a beautician for 30+ years, and a business owner for a good part of those years. She is my best resource next to my accountant and lawyer as far as these issues are concerned.

Good Luck!