10 | JUNE 2016 | OHIO STYLIST & SALON |WWW.OHIOSTYLIST.COM
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Judith CulpCLICK HERE Employee or Independent?
See theWhole Picture Before You Decide
Whether a person is an employee or an inde-
pendent contractor is a question that has per-
plexed people in the beauty industry for many
years. It is a major factor to consider when first
setting up your business. Look at the whole picture
before you decide.
Business owners have to consider many factors
to build a successful practice. First they have to
know who their clients are since those clients will
dictate what days and hours the business needs to
be open to meet their needs.
Then an owner uses client demographics to
select services and pricing. When hiring, they are
concerned with the new employee meshing with
existing staff and with the client base.
Throw in economics in this decision and that
makes this decision more complex. Owners have
to think about taking on the responsibility of em-
ployees. They consider whether they will be paying
out more than the technician is bringing into the
business. It’s hard reality to consider that when you
hire a new person, it will take a while before they
are profitable to the business.
New hires need mentoring and training. The
business owner spends time and money training
a technician and building them to be profitable.
Then, just when you get them trained, the techni-
cian may decide to go into business for themselves
thinking they can make more money that way.
When considering this concern, a salon owner
may decide to go with independent contractors.
Going this way comes with its own set of problems
including legal and tax issues if you don’t have the
right information to set it up correctly in the first
All beauty professionals need to know the
IRS worker classifications. The IRS has created
a workbook called, Employee or Independent
Contractor. The booklet is free to download atwww.irs.gov/pub/irs-pdf/p1779.pdf .
These are the three key areas the IRS looks at to
determine work status:
If you receive extensive instruc-
tions on how work is to be done, this suggests that
you are an employee. Instructions can cover a wide
range of topics, for example, if you are told how,
when, or where you are to do the work; or what
tools or equipment to use; or what assistants you
need to hire to help with the work; or where to pur-
chase supplies and services.
Less extensive instructions may indicate an in-
dependent contractor, that is being given direction
on days worked may not be a concern but direc-
tions on procedural “how-to”may indicate employ-
ee classification. The business may provide training
about required procedures and methods. This