This handbook is designed to keep your new 1099 contractor informed and also keep your business in compliance. You will need to add some of your own specific company information such as address, vision and mission, etc.
Important note to the lash salon owner
Be informed and always consult an attorney before hiring a 1099.
What you don’t know can hurt you!
As a reminder, independent contractors exercise independent control in how they approach and complete a project and that they are responsible for obtaining and using their own tools and equipment to complete their tasks.
A 1099 contractor is not a W2 employee and per employment law:
-CANNOT be required to wear a uniform
-CANNOT be required to clean the salon
-CANNOT be required to attend company meetings
-CANNOT be required to work certain days or times
-CANNOT be provided with their supplies
-CANNOT be required to only work for you
-CANNOT be provided any benefits.
-CANNOT be provided with extensive job training by you or have requirements upon them about how the service is to be performed. This is only something you can do with a W2 employee.
-MUST have complete control over making and managing their own schedules. They should not be requesting time off from you.
-MUST have complete control over managing their own supplies.
-MUST invoice the business for services provided before being paid.
-MUST carry their own professional liability insurance.
-SHOULD have a contract for a specific period of time (such as 6 months or 1 year)
-SHOULD have a dollar amount penalty for breaking the contract (You should provide a contract written by an attorney. Without this contract, they are not actually “contracted” and it could appear to the IRS or state government that they are in fact a W2 employee.)
-SHOULD be paid to their registered business name and not them as an individual. The best practice is to make sure they have a registered business with the state and pay their business name and not them as an individual.
Know the 1099 laws before you hire as failure to follow the laws can result in VERY expensive consequences. If you feel uncomfortable with giving the amount of freedom required of a 1099 by law, consider hiring a W2 employee instead. Once you fill in all your specific information in this guide, we recommend sending this to your attorney for a final review before giving it to your new contractor.
READ THE COMPLETE IRS GUIDELINES HERE: https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation
This guide does not constitute or substitute legal advice. Please consult your attorney about any specific employment law questions.