Renting Verses Employment for Estheticians By Judith Culp Compensation and determining whether you are an employee or a renter, is an ongoing quagmire with benefits on both sides of the divide. Especially in tight economic times owners may be concerned about taking on the burden and responsibility of having employees. It is a tough dilemma and their concerns are well warranted.
Business owners fear having to pay out more than the technician is actually bringing into the business when all the costs are on the table. They fear spending time and money training a technician and building them to be profitable only to have that technician announce, “I’m going into business for myself so I can make more money.”
Most business owners have a vision for what their business is like, how it comes across to the client and the types of services to be rendered. They visualize what the staff looks like, what the music is like, and the ambiance of the setting. Successful owners know what days and hours they need to be open to meet the needs of their client base. They have learned the demographics of their clients and know what the pricing structure needs to be. When hiring, they are concerned with the new employee meshing in with existing staff and with the client base.
Those who have been in business for themselves know that there is no free bonus. There are many extra responsibilities and risks for any benefit that may be gained.
The understanding of IRS terminology and definitions of workers continues to be a cloud that hangs over the industry. All industry professionals need to be familiar with the information in IRS publication 4143 – Cosmetology – Learning the Art of Doing Business. This is a Federal Taxation Curriculum for those specifically in the cosmetology field. It is clear and complete. With less than 40 pages it can be printed off the IRS website: www.irs.gov free of charge. Chapter 2 covers “worker classifications”. Do you know the difference between a “booth renter” and an “independent contractor?” You’ll find it here. Booth renters may be classified as employees where independent contractors are always self –employed. The booklet discusses everything you need to know to operate your business in a manner to keep you out of trouble with the IRS.