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Replies to This Discussion
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Permalink Reply by Michelle Batac on
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Is this specified in a contract anywhere? If not, I would say to talk it out. Make sure all the facts are leveled and put on the table, so to speak. Tell them the issues, your time, expenses, yadda, yadda. Tell em your demands, try to work it out, then out it on paper and sign!
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Permalink Reply by Daniel Cohen on
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You are an independent contractor, unless there is a non-competition agreement you are under no obligation to pay when it is not performed on the premises. Paying 10% is compassionate and should be appreciated. As a massage clinic owner, I collect 20% when I send therapists out or make the arrangements. While I don't feel good about it when a Therapist does a home or other outside massage having met the person through my clinic, those are the breaks. I think in such cases it is the client who bypassed me more than the Therapist. As the owner I think common business practice at least requires a finders fee paid.
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Thank You for your response Daniel. It helps to know I am not out of line with my thoughts on this. I have a good relationship with the Salon's owner and want to keep it that way. Up until this point we have no contract between us at all. He has been my hair dresser for a long time before I went to massage therapy school. I am going to draw up a contract since my business is picking up that I feel will be fair to both of us. He has provided the space for me to build my business and I appreciate what he has done. I just feel I need to point out some things to him and we need to have a contract as i am adding other services to my Wellness program as well. We need clarification and need to behave like two business associates. So, I will see how it goes.
Thanks again for your input. It has helped me in making my decision. Linda
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Permalink Reply by Christine Richards on
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Linda, I don't know if you have already written up your contract, but maybe another thing ro tink about is now that you are busier, maybe it is time to lease the space by the month like Hair styilst lease their chairs. That is what I do in the salon I am in. In fact, the salon owner has all of us give her 4 or 5 checks (number of weeks in the month) at the beging of each month and she banks one check each week. Makes it easlier for the newer people without the client list yet. She makes a little extra on the months with five weeks, but I think it works out. This way you might feel easlier about the in home clients. Just a thought.
Chris
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Not necessarily, Daniel.
In the absence of a written agreement, existing practices are used in deciding such issues if it ever got to a legal situation.
If nothing states "on the premises" then you can equally argue % is paid for any services performed for "Clients of XYZ Salon"
I assume the in-home service is being charged at a higher rate, therefore the MT keeping 70% means they are being compensated for the extra effort, just like an 80 minute massage in the salon pays more than a 50 min in the salon. The precendent of being paid proportionally for more time/effort.
In any case, the importance of a written contract is paramount. How are you a "contractor" without a contract?
Daniel Cohen said:You are an independent contractor, unless there is a non-competition agreement you are under no obligation to pay when it is not performed on the premises.Paying 10% is compassionate and should be appreciated. As a massage clinic owner, I collect 20% when I send therapists out or make the arrangements. While I don't feel good about it when a Therapist does a home or other outside massage having met the person through my clinic, those are the breaks. I think in such cases it is the client who bypassed me more than the Therapist. As the owner I think common business practice at least requires a finders fee paid.
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Linda, do you feel you have received an answer you can work with? I too am a massage business owner and experience these same dilemnas with therapists who do out calls or who received a lead from my business.
What my question to all who have answered, is how do you determine if you want therapists to work for as an independent contractor, a subcontractor or an employee?
How does a business like ours that provides clients for LMTs and rooms to work in and provides lotion and makes the appts for them, handle this obvious problem? What if any are the rules about the above concerning taxes and other Federal requirements.
Our accountant seemed not to know the difference and it would benefit us tremendously to know accross the massage industry what the norms are.
We pay 50% for each massage and do not charge for lotion but do for laundry. We do not set work times as all these LMTS prefer to work around their family and personal schedules.
So if we were audited by IRS, what would be the best for me to specify with those who come to work at my business. I personally would prefer for any who come to work would be paid as contractors as that eliminates the tax paperwork and we would give them 1099 at the end of the year specifying what they made.
Lots of questions. Hope I didn't confuse the question that Linda had but felt this was the only place to get answers for my questions.
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Permalink Reply by Erica Olson on
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It's not what you want, it's what the IRS determines.
There's an IRS form (the SS-8) that either the employer or employee/contractor can fill out with the details of their work situation. The IRS is the final determiner as to employee/IC identity, and trust me, you do not want to fall on the wrong side of this equation. Many places categorize their workers as ICs, but in reality, they are employees. The default is to employee status; it can be quite difficult to prove IC status.
Contact the IRS. They're very helpful and extremely knowledgeable.
Laura K Dylla said:What my question to all who have answered, is how do you determine if you want therapists to work for as an independent contractor, a subcontractor or an employee?
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I disagree, it is what you want but you have to organize according to the IRS guidelines. Making a mistake can be very costly
Erica Olson said:
It's not what you want, it's what the IRS determines.
There's an IRS form (the SS-8) that either the employer or employee/contractor can fill out with the details of their work situation. The IRS is the final determiner as to employee/IC identity, and trust me, you do not want to fall on the wrong side of this equation. Many places categorize their workers as ICs, but in reality, they are employees. The default is to employee status; it can be quite difficult to prove IC status.
Contact the IRS. They're very helpful and extremely knowledgeable.
Laura K Dylla said:What my question to all who have answered, is how do you determine if you want therapists to work for as an independent contractor, a subcontractor or an employee?
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I think we're saying the same thing here.
An owner can "want" to have ICs in order to avoid paperwork, workman's comp, etc., but if things are not structured VERY carefully, the IRS gets rather . . . perturbed. Just because workers have signed a contract stating they are ICs doesn't necessarily make it so. In my experience, the majority of spa/massage businesses fall into the employer/employee category.
E.
Daniel Cohen said:I disagree, it is what you want but you have to organize according to the IRS guidelines. Making a mistake can be very costly
Erica Olson said:
It's not what you want, it's what the IRS determines.
There's an IRS form (the SS-8) that either the employer or employee/contractor can fill out with the details of their work situation. The IRS is the final determiner as to employee/IC identity, and trust me, you do not want to fall on the wrong side of this equation. Many places categorize their workers as ICs, but in reality, they are employees. The default is to employee status; it can be quite difficult to prove IC status.
Contact the IRS. They're very helpful and extremely knowledgeable.
Laura K Dylla said:What my question to all who have answered, is how do you determine if you want therapists to work for as an independent contractor, a subcontractor or an employee?
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The IRS is, in fact, not very helpful in this matter.
The Form cited only offers "guidelines" but places no weight on any one factor that would render a determination one way or another.
You only get a final answer when you are sitting down with the auditor. No one from the IRS will sign their name to a document that outlines your working conditions and sign off on it that you qualify to have ICs or Employees.
You can only take your best shot at it, with the best advice you can get, and hope any potential auditor agrees.
You can never go wrong making everyone an employee, but given all the comments here about the administrative and financial burdens of having them, is it is any wonder job growth is stagnating in this country? Pizza joints, Massage practices, Hair salons, you name it...it is too hard and too painful for most folks to deal with the burdens of being an employer --- and then you get villified by politicians and the media for not hiring folks you don't need or laying off folks so you can not go under.
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