Are You A Booth Renter or Employee?

There seems to be an awful lot of "Independent Contractors" in the beauty industry. More commonly known as "Booth Renters." However, the IRS says that very few people working as hair stylists or nail technicians actually qualify as Independent Contractors, according to their definitions.

So lets be clear. An employee is not an Independent Contractor -- and a Booth Renter is not an Independent contractor. Even though a Booth Renter pays taxes in a manner similar to an Independent Contractor, the source of their income is very dissimilar. In addition, their obligations to the IRS for reporting income and expenses is quite different.

As a matter-of-fact, the Employee has more in common with an Independent Contractor than with a Booth Renter. Specifically concerning the Form 1099 Report of Income. Employers give the form 1099 to Employees and to Independent Contractors. Booth Renters give the Form 1099 to those they are leasing business space from.

Taxes
Employers withhold taxes, provide a paycheck and also pay Employer taxes. As an Independent Contractor, those who employed you, will pay your bill or invoice in full. You are responsible for paying your taxes. As a Booth Renter, you pay rent to who you rent business space from. The rest of the money you make is yours. It is solely your responsibility to pay taxes on it.

So remember, it is the IRS who can decide if you are an independent contractor or not. The same folks who can audit and fine you thousands of dollars! So if you really want to know whether or not you are an Independent Contractor, find out what the IRS has to say about it.

What Is An Independent Contractor?
An independent contractor is not someone who comes to work at the salon day after day, week after week, with a split commission pay plan between themselves and the salon owner. That sounds like an Employee, someone who is supposed to be on the payroll. You can be paid by the hour or you can be paid a commission and certain aspects of the minimum wage laws also would apply to you. Your Employer tells you when to come to work and when to go home. Your Clients are not really your clients, they are the Clients of the Salon Owner and you should receive a paycheck. Your paycheck should have deductions for Federal, State and Local taxes and deductions for Medicaid, Social Security, etc.

In addition, the Salon Owner as Employer, must pay their share of your Social Security and your Workers Compensation. And because the Employer pays you, at the end of the year the Employer is supposed to provide you with the Form 1099, which reports money paid to you and taxes deducted on your behalf.

Also, if you are an Independent Contractor, the Employer also is supposed to provide you with a 1099 Income Form, reporting money paid to you. But no responsibility for paying taxes. Do you see why some Salon Owners like paying you as if you were an Independent Contractor? When really, you are working as an Employee. They like not having to pay their share of ALL those Employee taxes.

Most people in the Beauty Industry who think they are an Independent Contractors, are actually Booth Renters. But as far as the IRS is concerned, you cannot be part Booth Renter and part Employee. For tax purposes you have to do everything expected of a Booth Renter, which would then place you in the Independent Business Person's tax classification.

A Booth Renter leases space within the Salon. Space in which to operate their own business for their own benefit. Not to work under the control of the Salon Owner for the benefit of the Salon Owner. You pay a specified rent, not a commission or a split of your income. You collect and control the money and give the Salon Owner a check for the rent amount. You must have your own key to the Business as proof to the IRS that you can enter and leave as you wish and therefore determine your own working hours.

So you see, if you are in a work situation where you are called an "Independent Contractor" or you are a Booth Renter, or you are a "Booth Renter" that is being called an "Independent Contractor," and they don't allow you to have a key, or they can tell you what time to come to work in the morning, or the Clients pay a central cashier or cash register instead of paying you, or they tell you which products you are going to use, or you're being paid some sort of split commission... well... maybe everything is just fine.

Unless the IRS comes knocking on the door. Then you're going to have to explain why you are NOT the Employee the IRS thinks you are.

And about the Form 1099. At the end of the year, a Booth Renter is supposed to provide a Form 1099 to the Salon Owner. Showing the untaxed income that YOU provided to the Salon Owner. And as for your own tax return, you file as the Operator, as an Independent Business.

Booth Renters should have a signed Booth Rental Agreement. For the protection of the Salon Owner and the Booth Renter.

Why?
For a lot of reasons! The main one being, IF the IRS ever knocks on your door or the door of the Salon Owner, it is proof of who is supposed to have been paying all those taxes!!!

So... As a Booth Renter, you lease a work space for a set period of time, at a specified price that does not vary as income varies. And you work as an Independent Business Person.

Everyone involved in Booth Rental NEEDS a signed Booth Rental Agreement. You can download a sample Booth Rental Agreement right now that you can print and use! Just click here now.

Despite Tough Economy Partners Open Second Salon and Have Eyes On More

‘We want to keep growing’
By Sandra Baltazar Martínez The New Mexican
4/27/2009

At a time when the struggling economy has many worried, Álvaro Holguín Valdéz and Javier Barraza Rodríguez decided to go against the odds to fulfill a dream. About one month ago, they opened their second beauty salon.

The couple has operated Salón d' Muah at 3569 Cerrillos Road for eight years and had planned to open a second hair salon sometime in the near future.

"The opportunity presented itself," said Holguín Valdéz, who is managing the new salon — by the same name — at 3022 Calle del Cielo. "You can't be scared of the economy, because if we all think that way, it'll never get better."

Barraza Rodríguez, a cosmetologist for 20 years, said he's confident they made the right decision.

"We know this isn't the best time, but we're going to give it our all. Confidence and trust in oneself is important," Barraza Rodríguez said.

Leveo Sánchez, Hispanic Chamber of Commerce president, said that recessions periods don't always have to mean shutting the doors of opportunity.

"I think they're right. Often during recessions, it's an opportune time to start a business," Sánchez said. "If it's a good time for an investor to invest in stocks right now, (the) same is true for a business. It's a good time to venture."

According to a study published by the Hispanic Chamber of Commerce in February — Baseline Demographics & Economic Data Report on the Hispanic and Latino Population in Rio Arriba & Santa Fe County, New Mexico — small businesses in Santa Fe County increased income, earnings, wages and employment for the total population between 2000 and 2006. By 2006, small-business owners had increased full-time and part-time employment by 11 percent, or by 90,883 workers.

Holguín Valdéz and Barraza Rodríguez said they plan to hire people once their second business picks up more clients. For now, they will each manage one of the salons. At the new location they will also offer manicures, pedicures and waxing.

"We want to open doors for others, like once someone did for us," Barraza Rodríguez said, referring to the first business they owned, in Juárez, Mexico. They opened up their salon after working a combined 20 years at the General Motors plant in Juárez. "After this, we want to keep growing and maybe open another salon in a town like Española," Holguín Valdéz said. "The important thing is to progress, to not come to a standstill."

The 1,600 hours each completed at Vogue Beauty College in Santa Fe and their years of experience in cosmetology shows, clients said.

Eduardo Ramírez, 73, said he visits Salón d' Muah every three weeks for a haircut.

"They are very efficient and very active in all aspects," Ramírez said while Barraza Rodríguez colored his hair and thick mustache. "They are also very respectful. I see them as part of my family."

Jasen Barbarich, 66, said she left her stylist of 15 years when she found Salón d' Muah. "These are people with much personality and much dignity," Barbarich said. "They are gifted and exceptional."

Salón d' Muah is open — both locations — from 10 a.m. to 7 p.m. except Wednesdays;
Walk-ins only.

The number for both is 310-9788.
Reach Sandra Baltazar Martínez at 986-3062 or smartinez@sfnewmexican.com

What Equipment Do I Need To Open A Salon Or Barber Shop?

Opening a barbershop or even a salon can be a challenging job. There are many rules and regulations governing the industry usually set by the state boards and by the city codes and ordinances. Many cities have barbering educators who are licensed to teach in their shop or school and who have a wealth of knowledge of what’s required in your city to be able to run a violation free shop. They typically love the business and love talking about it. If you can seek out their support you will have an advantage in getting started. Now lets talk about learning the old fashion way and researching it yourself by reading the rules and regulations. The best sources for finding information regarding specific requirements is from your State Boards or Regulatory Commission. But you still have to deal with your city or town building and occupancy codes to get a “C of O” approval (Certificate of Occupancy). We have compiled an alphabetical list by States and their web addresses related to the regulation of barbering and cosmetology.
Remember each state requires different things but some important safety items have been a
Sharps Container (used razor blade disposal), certificates / licenses displayed and have on file a MSDS (Material Safety Data Sheet) for every chemical you use.

Lets start with the Basics or MUST have items:

• A shampoo sink / chair combo with hot and cold running water
• A styling chair, all purpose chair or barber chair, one per person
• One hand held or hood dryer with or without the chair
• One work station (wall mount, stationary), per person
• A disinfectant container with disinfectant or sterilizing solution
• Seating accommodations in reception area
• Cabinet for clean towels and supplies
• A receptacle for used towels
• Reception Desk
• Floor Mats
• Child Booster Seat

The best places to get the information you need on the equipment requirements for a Salon or Barbershop is your local Chamber of Commerce and your state board.

The following links are to all of the State Boards:

1. Alabama www.aboc.state.al.us
2. Alaska www.commerce.state.ak.us/occ/pbah.htm
3. Arizona www.cosmetology.state.az.u
4. Arkansas www.arkansas.gov/cos
5. California www.barbercosmo.ca.gov
6. Colorado www.dora.state.co.us/barbers_cosmetologists
7. Connecticut www.ct-clic.com
8. Delaware www.dpr.delaware.gov/boards/cosmetology/index.shtml
9. District of Columbia www.asisvcs.com/indhome_fs.asp?CPCAT=2009STATEREG
10. Florida www.myflorida.com/dbpr/pro/cosmo/cos_index.shtml
11. Georgia www.sos.georgia.gov/plb/cosmetology/default.htm
12. Hawaii www.hawaii.gov/dcca/areas/pvl/boards/barber
13. Idaho www.adm.idaho.gov
14. Illinois www.idfpr.com/dpr/WHO/cosmo.asp
15. Indiana www.in.gov/pla/2302.htm
16. Iowa www.idph.state.ia.us/licensure/board_home.asp?board=cos
17. Kansas www.kansas.gov/kboc
18. Kentucky www.kbhc.ky.gov/schools.htm
19. Louisiana www.lsbc.louisiana.gov
20. Maine www.maine.gov/pfr/professionallicensing/professions/barbers/index.htm
21. Maryland www.dllr.state.md.us/license/occprof/cos.html
22. Massachusetts www.mass.gov/dpl/boards/hd/index.htm
23. Michigan www.michigan.gov/cosmetology
24. Minnesota www.bceboard.state.mn.us
25. Mississippi www.msbc.state.ms.us
26. Missouri www.pr.mo.gov/cosbar.asp
27. Montana www.mt.gov/dli/bsd/license/bsd_boards/cos_board/contacts.asp
28. Nebraska www.hhs.state.ne.us/crl/mhcs/cosindex.htm
29. Nevada www.cosmetology.nv.gov
30. New Hampshire www.nh.gov.cosmet
31. New Jersey www.state.nj.us/lps/ca/nonmedical/coshair.htm
32. New Mexico www.rld.state.nm.us/barber_cosmo/index.html
33. New York http://www.dos.state.ny.us/lcns/professions/barber/barber.html
34. North Carolina www.cosmetology.state.nc.us
35. North Dakota http://www.nd.gov/sos/licensing
36. Ohio www.cos.ohio.gov
37. Oklahoma www.cosmo.state.ok.us
38. Oregon http://www.oregon.gov/OHLA/COS/index.shtml
39. Pennsylvania www.dos.state.pa.us/bpoa/cwp/view.asp?a=1104&q=432561
40. Rhode Island www.health.ri.gov/hsr/professions/hair_barb.php
41. South Carolina www.llr.state.sc.us/POL/cosmetology
42. South Dakota www.state.sd.us/dol/boards/cos
43. Tennessee www.state.tn.us/commerce/boards/cosmo/index.html
44. Texas www.state.tx.us/category.jsp?categoryId=9.3
45. Utah www.business.utah.gov/business//starting.html
46. Vermont www.vtprofessionals.org/opr1/cosmetologists
47. Virginia http://www.dpor.virginia.gov/dporweb/bnc_main.cfm
48. Washington www.dol.wa.gov/business/cosmetology/lawsrules.html
49. West Virgina www.wvdhhr.org/wvbc
50. Wisconsin www.drl.wi.gov/boards/bac
51. Wyoming www.cosmetology.state.wy.us/

revised 5/16/08

By: Paul Keller
Article Directory: http://www.articledashboard.com
Keller International -Beauty Salon Equipment Supplier
www.kellerinternational.com

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