Issue link: https://www.ascpskindeepdigital.com/i/556136
Create your free business website! www.ascpskincare.com 35 Accounting Running payroll, preparing tax documents, responding to creditors, and processing garnishments can be time-consuming nuisances. Make sure to keep your accounting routine organized: 1. Corporate taxes: Make sure your quarterly and annual tax filings accurately support the reality of your business's finances. 2. Employee taxes: If your worker base is W2, you should be providing them a W2 tax form at the end of the year. If you are using contractors and paid them at least $600, they should receive a 1099. And if you have renters, they should issue you a 1099 for all rent payments of more than $600. 3. Be accurate: Payroll is complicated and leaves a lot of room for errors. Finding a technology-driven solution will help eliminate the burden of crunching numbers late at night. Auditing Audits can make or break a business! Working with independent contractors and renters who are responsible for paying their own income taxes is a hot button with the IRS and state authorities. If you don't understand the complexities of the situation, you run the risk of reclassification. Here's how to avoid these risks: 1. Know the laws: The rules and guidelines for using independent contractors vary from state to state. For example, California's Employment Development Department has outlined 16 elements that define employee versus independent contractor relationships in the spa industry. 2 Spend time researching and developing systems so your spa complies with all guidelines. 2. Be proactive, not reactive: If an auditor knocks on your door, you want to feel confident that your contractors will not get reclassified as employees. If you're scrambling to answer an auditor's question or can't get documents together in time, it might be too late. 3. Create allies: In an audit, your contractors can be your biggest allies or your biggest nightmares. Being on the same page with your contractors—and having them understand their relationship with you—will strengthen your case in the event of an audit. 4. Avoid mistakes: Mistakes happen to everyone, but many times they are avoidable. For example, do you have contracts with your independent contractors, and have they all been signed? It's situations like this that can hurt your spa during an audit. Outsourcing Opening and operating a spa is a lot of work, and may raise questions and concerns about issues you've never considered. Hiring industry experts to effectively and affordably do the job for you will give you the time to focus on growing your business. 1. Full-service companies can help ensure all hidden risks are being handled well. These one-stop shops provide you with all the tools and resources needed to work with independent contractors and renters. With much of your work in the hands of professionals, you'll have peace of mind and save time and money. 2. Industry-leading payroll services can cover all of your accounting and payroll needs. But that's only one piece of the pie. There's a laundry list of other things you'll likely want to outsource, including insurance, administration, contracts, legal help, and more. 3. Hiring in-house accounting or human resource employees provides you with the opportunity to have daily support from professionals who know your business inside and out. However, these employees can cost up to nine times as much as outsourcing support and might not have the resources a full-service human relations company can offer. Follow these tips, guidelines, and rules when opening your first spa, and you'll sleep better knowing your operations are structured, documented, and properly implemented—and most importantly, not breaking the law! Notes 1. IBIS World, "Health & Wellness Spas in the US: Market Research Report," accessed July 2015, www. ibisworld.com/industry/health- wellness-spas.html; Bureau of Labor Statistics, Occupational Outlook Handbook: Skincare Specialists, accessed July 2015, www.bls.gov/ ooh/personal-care-and-service/ skincare-specialists.htm. 2. Employment Development Department, State of California, "Barbering and Cosmetology Industry," accessed July 2015, www. edd.ca.gov/pdf_pub_ctr/de231c.pdf. Amy Washle is CEO of The HR Salon Inc., the first and only full- service national human resources company that specializes in the salon and spa industry. Having previously worked in account management at DDI, a leading national HR company for delivery drivers, she combined years of human resources industry experience with a personal passion for the beauty industry to launch theHRsalon. For more information, visit www.thehrsalon.com. Know the laws Be proactive, not reactive Create allies Avoid mistakes