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Booth Rental vs Commission

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Booth Rental vs Commission

Postby dalitedesigns » 18 Aug 2006 12:11 am

I have a question for jazz and sparklehair since you are both in the USA. I think you two disagree on the booth rental topic, so I will ask this question and let you two go at it...
I know that we are all in different states, but from what I understand the feds control booth rent laws when it comes right down to it. I realize some state laws are different and I am usually up on all of this. Since Feb. 2006 I have been in a salon as a booth renter, and I have never seen a situation like this.
First the commission side: The owner does not pay commission stylists any wages at all. Only 60% of everything they bring in. These stylists are also paying their own taxes. They also have to buy their own color. They have no schedule other than cleaning duties once or twice a week and a schedule for assisting booth renters with shampooing. The owner provides the backbar. The owner also provides a receptionist and all appointments are going through the front desk on a computer.
Now my situation: I pay a hefty weekly rent. I have no key to come and go as I please. Only the receptionist can open and close the door, and when the salon hours are over, you better be in the salon if you want to do hair because the receptionist chains the front door shut and when you walk out the back door it locks. I supply all of my supplies of course, however the owner supplies my backbar. I can not however sell my own retail, but the owner gives me 20% of any retail that I sell. Appointments are made through the front desk. I still have clients from my last salon call me on my cell phone, but if I don't tell the receptionist, then I could be double booked. There is also a rotation list for walk ins.
Now my question is simply what in the world is going on here? The only problem I have with my situation is the issue with the key. The salon closes on Monday at 5pm. Ok if I want to come in at 6pm and do hair, then I have a problem with that. The salon was closed for July 3rd. I didn't have any appointments that day anyway, but hey, if I am being charged that day for booth rent, then I think that I should be able to come in. I realize that the owner is not required by booth rent laws to provide my backbar. I truly appreciate the backbar expense. I don't have that big of an issue with the retail rules because I am not in a position right now to stock retail anyway. But this deal with the key is really getting on my nerves.
But I am really concerned about what the owner calls commission. How can you take 40% of someones money, make them buy their own supplies and call it commission? Plus have to pay your own taxes as if you were self employed. I don't understand all of this, maybe I am stupid or naive but I have never seen this before.
This salon is huge. Probably over 4000 sq. ft. It is the nicest salon I have ever been in and I fought tooth and nail to get in it. I don't want to leave it, nor is there a real problem going on. I am just curious how this owner pulls all of this off. The owner does not do hair, she and another woman are very savvy business women and own two of these salons. I hope I have made myself clear and am not off topic here, I just wanted to get the opinions of other salon owners....
dalitedesigns
 

Re: Booth Rental vs Commission

Postby Sparklehair » 18 Aug 2006 02:19 am

I really cannot answer the question.
I am not a commision or a booth rent salon.
I would comment that you are neither one or the other.If you are paid commision on retail, then you are employed.You can't be told that you cannot sell retail if you are a renter, only if you are commision only.Look into that.
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Re: Booth Rental vs Commission

Postby jazz » 18 Aug 2006 02:19 am

Is this a fictional story?

Wow , there are alot of different issues going on here.
I will look deeper into some of them but for right now i will answer and question some of your questions.

first off, suppling backbar shampoo and conditioner:She supplies it because this is what she retails? Good move on her part.

Retailing: I know you don't have a issue with it, but bells are going off here. She cannot not allow you as a boothrenter to have your own retail. Now if you chose not to carry retail and sell what she has, yes. she can pay you a % for selling it for her. It must be in the contract thou.
I have seen a few salons operate this way, but by IRS rulings she must allow you the option to carry your own.

Key to the door:
If you have a contract/ lease stating that you are a boothrenter, then you are renting the station that you work at.
Look at it this way, You are renting a space, just like a person would rent an apartment. Does the landlord of the apartment have the key to your apartment and tell you when you can live there and when you can't? Another thing that alot of Boothrenting salons do is post their hours of business. Boothrenters are allowed access to thier stations (business) 24/7. This is one issue that when the IRS agent came into my salon commented me on was the fact that I do not have Hours post of operation posted. In my lease with the BR's it is stated That the salon is accessible 24/6. sunday being cleaning day for my husband and I BUT, if anyone has a wedding party or someone that they just cannot get in on any other day, then it must be approved by me prior to the appt. I will not deny them it.

Rotation list for Walk ins:

Yeah okay, i do this also, I am booked solid ( as much as i want to be) and there are other BR's that might have a gap in their day and someone walks in, I do not charge the BR for that client. I should by law. but i don't. Any human that walks in the door to my salon and doens't have anyone they go to, is looked at by the IRS as a Salon Client and I should be paid by the BR for the client. Personally, I do not agree with this, as these people walking in are not for sale in my books.

So how does she get away with it?
Good question..maybe nobody has called her on it to the authorities that handle that type of thing?

Do you have a signed lease with her stating that you are a booth renter?

Jazz~

yea!! we have a edit button.
Here is another example for keys to business. (can't get this one out of my head)
This owner of the salon you work in...she leases the building?
If she does, how would she feel if the landlord of the building didn't give her a key to the salon and she only had limited access when he/she said she does?

I lease my salon space, and i know that if the landlord of the builing complex didn't give me a key, I wouldn't be leasing there. She is trying to have control over when and how much money you make.

Grrr this make me upset when i hear crap like this.
You need to learn the rules before you can break them
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Re: Booth Rental vs Commission

Postby chris the limey » 18 Aug 2006 02:19 am

For what it's worth hairtrigger I think your landlady is very smart! Learn as much as you can from her. If I did boothrent, I'd be looking to implement a similar system if I could!
God, she must be rolling in it!
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Re: Booth Rental vs Commission

Postby Sparklehair » 18 Aug 2006 02:20 am

Chris, did you read the article in the letters section Hairdressers Journal? about leveling the playing field with Booth renters.HAVE A LOOK.
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Re: Booth Rental vs Commission

Postby jazz » 18 Aug 2006 02:20 am

Very intersting article. Now last time I heard , florida was not legal to have boothrenting. I know not all states here are legal yet. And the only reason I know of is because the state government just doesn't know how to regulate it would be my guess.

The mall thing..I don't think it has hit here yet.

but there ya go..Boothrenting is on the rise.

Independant contractors vs. Boothrenters..
Independants here in washington are listed as:

A cosmetologists that has a license to work in multi salons or from a mobile station.

Boothrenter is a cosmetologist who is licensed to work in one salon.

jazz~
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Re: Booth Rental vs Commission

Postby jazz » 18 Aug 2006 02:20 am

All except the key issue..and giving the choice to the br to carry retail or not.

With her carrying retail, yes she would be making a good profit.

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Re: Booth Rental vs Commission

Postby chickie » 18 Aug 2006 02:21 am

Sparklehair,

I can't find the letters section to see the article Hairdressers Journal that you mentioned. Could you pls direct me?

Many thanks!
chickie
 

Re: Booth Rental vs Commission

Postby chickie » 18 Aug 2006 02:21 am

nevermind--I found it.
chickie
 

Re: Booth Rental vs Commission

Postby dalitedesigns » 18 Aug 2006 02:21 am

First off...
What she is doing is illegal...
Second...I turned my head at first because I wanted into this salon, to help build my clientele. She was having to turn away walkins. Considering how nice this place is, I tried to look at it from a salon owners point of view...She had a coffee-deli shop going on also when I came there. So I understood considering the capitol that she had in this place and I am not so sure I would want people coming and going if I was her. So I blew off the matter with the key.

AS it turned out, I got a lot of walkins. Then in the last month she has hired about 10 new girls and the walkins are far and few between. As I stated in the original post, there are times when I would like to be there, but with the front door chained shut, how can I build a business if nobody can walk in. The retail is not that big of an issue with me nor is anything else.

But one thing I despise is getting girls out of school who are naive and making them pay their own taxes, buy their own supplies and take 40% of their money and call it commission.. It's highly illegal

Now if I really wanted to be a turd about the whole thing, I could wait until Febuary when W-2 forms are due out and say...OH MY....well, whatever, I thought I was commission. And without a contract, she would have to pay my taxes....

It works both ways...

But today I walked in and noticed that somebody had stolen my digital scales that I measure color and developer with, so now we have an issue...And Chris you know where I am coming from...I can't afford to walk out and start over...
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Re: Booth Rental vs Commission

Postby SophieA » 18 Aug 2006 02:22 am

My understanding of IRS rules is that every Independent or Booth Rent Stylist is a separate business and as such has a separate phone and appointment book. If the salon is booking your clients Trigger...then the salon, in essence controls your schedule and in the eyes of the IRS you are an employee.

The key thing was discussed ad nauseam on BTC a few months ago and a couple of salon owners compared the key thing to a mall situation wherer all of the bussiness have a set time to open and close...if you have a contract stating this.

What does your rental agreement say?
Style On, Sophiea
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Re: Booth Rental vs Commission

Postby jazz » 18 Aug 2006 02:22 am

Hi sophie,

Yes in essence that salon booking appts is kinda of a no no in BR salons.BUT..when I had a IRS agent in my salon last year, I asked him about it.
He said as long as I the owner save the books for the 6 years, there really isn't any issue with it.
They insighted this rule so BR's couldn't run double books. (Put down clients on the salon appt book but if they paid cash or whatever other reason, they didn't write it down on their books they keep for themselves.)
But If you think about it...who is to say that appts don't get erased off of their own books or/and the salon appt book.

Now look at say, antique stores who have multiple people who lease a space to sell thier antiques. It is the same as BR's. and they collect all money for items sold in one cash register.
Also, You can have each BR have her own small appt book up at the front desk and when a client calls in, grab that stylists appt book and book the client for the stylist. In this case, receptionist come in handy.

The Key thing is very unethical on the owners part and I think they will come down on the owner quicker for that then a salon appt book. And the 40% commission is too grey of an area for the IRS also. This is showing too much control.

Jazz~
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Re: Booth Rental vs Commission

Postby dalitedesigns » 18 Aug 2006 02:22 am

I appreciate all of the input on this topic. I basically knew the answers, I wanted to hear it from someone else. To refresh and touch on something that I didn't mention, except between the lines in my last post, is that I don't have a written lease or contract. The truth is the owner refused to give me one. While I am somewhat embarrassed by this, I also know that without one, I am somewhat safe also. It can go both ways. It can hurt me also.

SophieA... I agree somewhat about the booking of appointments. But she really doesn't control me. If in fact all of the appointments being on her computer controls me, then I guess I am guilty as charged. But I have my own paper book that I keep track of. I tell them when I will be there and when I won't. As far as the phone, your right. The IRS is very specific about this and she is not obligated at all to provide me with a receptionist. Therefore, as jazz pointed out...too much control. I discussed all of these topics with her. I let her know that I knew the IRS BR rules and that I did appreciate her receptionist, buying my backbar and giving me free use of her credit card machine. These things benefit me. She just has too much control. She likes to shut down the salon too much in my opinion on Holidays. Call me a slave-driver, call me what you will, but I think closing this year on Tuesday after Christmas is a bit much. Sure a lot of people will be gone and taking off, but if I am obligated to pay for a full week of rent, then I should be able to book appointments. Here again, if I had a key, then it wouldn't be an issue. But I don't. So to me it is an issue.

I realize in our business that if you rent, a person needs to consider holidays and be prepared to pay the rent regardless of what days they fall on or how many days your there. I do realize this from an owners point of view and I am not an owner. She has bills to pay also. However, this is why the key issue with me is about to make me snap. If I want to come in and work when no else does, then I should be able to do so. I also think that the IRS would agree on that comment.

So now I am at a crossroads again in my career. Do I leave and start over and endure even more financial hardship? Or do I stick it out and put up with the BS. To some who have a clientele and the funds to do so, that choice would be simple. But without a clientele and being at risk of foreclosure on my home already, it's not a pretty picture for me. Therefore, every day that I walk in there the stress and tension builds. Am I unhappy there. No I am very happy to be there. My anger lies in the fact of how I got there and that I am somewhat helpless with my destiny and the fact that I mortgaged my home to pay bills and gamble with my career and clientele....now I have a seemingly losing hand. She is dealing the cards. I have to find a way around everything that I have mentioned and do it real fast. My children don't know anything about this and sometimes they believe that I am superman.
dalitedesigns
 

Re: Booth Rental vs Commission

Postby dalitedesigns » 18 Aug 2006 02:22 am

I would hate to disappoint them...
dalitedesigns
 

Re: Booth Rental vs Commission

Postby jazz » 18 Aug 2006 02:22 am

However, this is why the key issue with me is about to make me snap. If I want to come in and work when no else does, then I should be able to do so. I also think that the IRS would agree on that comment.

Yeppers.. I soo totally agree with you.and the IRS too.

It should be allowed that if SHE decides to close the salon on certain days and holidays, that it is a deduction from your rent because You as the BR cannot work even if you want to.

have you thought about doing a meeting with all stylists and owner or get the others opinions first then call a meeting?

there is power in numbers.

To refresh and touch on something that I didn't mention, except between the lines in my last post, is that I don't have a written lease or contract. The truth is the owner refused to give me one. While I am somewhat embarrassed by this, I also know that without one, I am somewhat safe also. It can go both ways. It can hurt me also.

May i ask one question..Why would having a lease hurt you if you were doing everything by the lease?
How can you be safe without one?
Think about this hairtrigger:
Without a lease:
she can pack up your stuff and have you out the door in 1 minute if she so choses.
A lease will give you protection from that. A good lease will give you options of when to leave and how to leave.

A lease doesn't give the owner the option of booting you out of there on your butt. So it protects the BR.

A lease will also make sure that she can't raise the rent on you whenever SHE wants to raise it. In my lease i have a 6 month lease. so every 6 months, when looking at the profits and loss,IF i feel that rent needs to go up i will raise it 2 or 3 dollars, but I csn't do this just whenever i want.

Okay, this is what I foundout..
As a owner of a BR salon , cannot run it as a BR salon without a lease. Period, plain and simple, do not pass go! Do not collect $200.

If you email the IRS about this and slightly point your finger in the direction of the salon..she will be running to get a lease made up.
Did you know that IF she is ever cuaght running that salon as a BR salon but not paying your taxes..that the IRS will go back 3 years on her and make her pay taxes and withholdings on ALL BRs that she didn't claim as employess?
Without a lease.. you are a employee in the eyes of the IRS.

have you thought about going to a attorney for a consultation? I know alot of them will do a 1/2 hours free consultation or charge a small fee of 50 dollars.

Hairtrigger, it is hard to be postive in such a negative world and to have to hold your chin up high for your kids is even tougher. My thoughts are with you. I wish there was more I could do for you.

Just don't trip on your superman cape. it is most embarassing to have people see that.
But truthfully:
Your kids need to see that you are human and not some super hero. They will respect you more in the end. Trust me, I have two boys ages 17 and 20. They have seen the trials and tribulations of life and i feel that it has better prepared them for life when they are out on their own.

They have seen us struggle to put together a few pennies for clothes for school, they have seen me put aside my own needs so they could have a new pair of kewl tennis shoes for school.
I did not hide it from them. they knew and they apprecitated the things they did get in the long run. Yes i did have to tell them "no " many many times, I thougth my heart would break watching their faces sag in sadness. I listened to them tell their friends that they couldn't do something because we couldn't afford it at that time.

I hate to dissappoint my family and friends also, but it a fact of life and the sooner they know how to deal with it, the better they will be able to handle life on their own.

chin up buck-aroo..Tommorrow is another new day.**HUGS**

Jazz~**
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