If you are self-employed for tax purposes, you follow another tax regime than people who are working for a chief. But you have to be careful, sometimes in the hair industry salon owners offer self-employed workers to work for them, but except for the monetary reimbursement, the labour circumstances are the same. The reason to call the contract self-employed is because it is more cheaper and less paper work for the salon owner.
In the hair business in the United States of America, for nearly every employee there is one person working as self-employed, making a total of 700 thousand hair dressers, hairstylists and cosmetologists.
You will not be the first one
For example, according to Sarah Leberstein, a senior staff attorney at the National Employment Law Project (NELP) (…) “It has become standard practice in many hair salons … to treat workers as independent contractors, to require them to even rent a chair or space in the salon, not to pay them an hourly wage and instead to have them subsist on tips or payments”. So you should not be surprised if you working as self-employed is not true in the eyes of the IRS.
What does the IRS think of this?
To avoid you only get the bad effects from being a self-employed worker make sure you have a good understanding of the working conditions.
According to the IRS overall, you are self-employed if any of the following apply to you:
•You carry on a business as a sole proprietor or an independent contractor.
•You are a member of a partnership that carries on a trade or business.
•You are otherwise in business for yourself (including a part-time business)
Therefore, it is very important that you correctly determine whether the services you provide are done as employee or as independent contractor.
Usually the salon, must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. If you are an independent contractor they do not generally have to withhold or pay any taxes on payments.
Your own hair business
If you get an offer to work as a self-employed, but the company who offers you the opportunity to work in the salon has a list of everyday issues you have to stick to and you have to follow the rules of the salon, there is a great chance your will not be considered as self-employed. It is important to take this into account before you start and to include this in your business plan.