Massage & Bodywork

November/December 2013

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As a massage therapist, you might decide to hire employees for many reasons. Perhaps you need reception or clerical help. Maybe you are so busy you would like to be able to refer clients to other qualified practitioners. You might want to diversify your practice's offerings by adding an acupuncturist, esthetician, or other service provider. Adding employees can seem daunting at first, but if you do your homework and seek professional guidance, it can be exactly what you need to springboard your practice to the next level. E MPLOYEES VERSUS INDEPENDENT CONTRACTORS The first decision you need to make when expanding your practice is whether to hire people as employees or independent contractors. It's important to choose correctly, both for ethical reasons and because there are steep financial penalties for business owners who improperly classify employees as independent contractors. In beauty and wellness businesses—such as chiropractic clinics, salons, and gyms—it is common for people to work as independent contractors. One benefit to the business owner is that this arrangement can save money in employment taxes. On the other hand, hiring someone as an employee gives you a greater degree of control over his or her schedule, compensation, and quality of work. The existence of a contract stating someone is an independent contractor is not sufficient to prove to the Internal Revenue Service (IRS) that this is, in fact, the case. The IRS looks at three main factors when determining whether someone is an employee or independent contractor.1 The first is behavior. Does the individual set her own hours, select her own menu of services, furnish equipment and products that she chooses, and have the ability to contract her work out to other individuals as needed? If the answer to these questions is "no," the individual may be considered an employee. The IRS also will look at how the individual is compensated. Do clients pay her directly? Does she set her own rates? Does she have a risk of financial loss? Does she carry unreimbursed expenses? Has she made a significant investment (i.e., furnishing an office, marketing expenses, etc.)? If the answer is "no," this person may again be considered an employee. The last thing the IRS will examine is your relationship with the individual. If the work agreement is intended to be indefinite and without a specified time frame, this could indicate that she should be classified as an employee. If you aren't sure whether the people you bring into your business will be classified as employees or independent contractors, you can complete form SS-8, "Determination of Worker Status" (available at, at no cost, or consult a human resources professional or an attorney. It is always better to err on the side of caution than to risk fines for misclassified workers. Many businesses have had to close because of these significant, unexpected expenses. B EFORE YOU HIRE Marilyn Manning, a certified human resources professional, recommends you have the following items in place before you consider hiring. First, develop an employee handbook. It is wise to have a human resources professional or an attorney look over your handbook or help you write one. The handbook will guide your employment relationship, address issues before they arise, and protect you should you need See what benefits await you. 99

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