Potential rental situation -- opinions needed please

[raider nation]

Here's the deal. I have been approached by a personal training studio to do massage out of a room in their business. I'm new at this, but it seems like a pretty good (might even say, sweet ) deal, but I'm looking for opinions as I'm afraid I might be overlooking something. The situation is this: 80/20 split with no montly minimum, I provide absolutely everything but the space. Their hours are M-F 11-7 pm, and Sat. 10-3 pm. I would be the only MT there. Their location is perfect, the studio is lovely, and her business is very busy. Her clients are mostly 30-something women, looking to get into shape. She will refer clients to me when she can, and I will market to draw in new business. I of course would refer to her, as well (the woman looks great -- you should see her -- WOW!) The room is nice and roomy, quiet, with a sink and countertop. There is a bathroom within about 10 paces from the room. The owner says I am free to paint and decorate as I see fit, as long as I don't make any structural changes (of course).

Just to be sure, is this a rental agreement or an IC situation? I have never done this before, and don't want to get pinched... I know several of you have mucho experience in these situations. Do you have any suggestions of things to watch out for, and things to definitely put into writing right up front? One of the things I want to address immediately is how to handle clientele. My initial thought is that in addition to the split, I give her a one time finders fee for anybody who hears of me through her business, but doesn't end up booking there (I also do outcall and work out of my home a bit). Does this sound fair?

I am thinking that this sounds like a great opportunity. Does anybody see anything here that I am missing, or any big questions that I have overlooked?

Thanks so much for your time in advance. =)

Justine

 

[Emilia V]

That sounds wonderful to me! Good luck! It sounds more like an IC position than rental, but that is because there is no monthly minimum. Either way, you take full responsiblity for your own taxes, and you get to claim the same expenses.

 

[ABakeLite]

It all depends on who the client is paying:

If you are receiving payments from your client, and paying 20% to her, you are paying rent (be it hourly, daily, weekly, monthly, etc...)

If she is taking the payments in and then paying you 80% you are an independent contractor, if she pays you over $600.00 a year, you will receive a 1099.

Either way, you need to track and report your business expenses/income.

Sounds to me as if its a rental situation (supplying everything but the space) and assuming you are receiving payments directly.

Good luck, it sounds like a great opportunity!

heather

 

[Auto]

That is interesting, Heather. I was an IC - and yes, the fitness club collected the money and paid me my %. But I never got a 1099 or a tax form of any kind, nor did my accountant ever ask for one. I made WAY over $600 per year there.

It is amazing how many variations there are to the definitions and rules of IC. I wonder if the tax laws are that open to interpretation, or if millions of us are doing it wrong? That wouldn't surprise me, it's not like the government speaks English. :roll:

 

[Caps Lock]

Thanks for your responses. Evidently, nobody else has much to say... so, thanks for taking the time. =)

I'm going to try it out. Wish me luck!

 

[hey_uk2000]

IC Relationship

I hope this helps.

Independent Contractor Status
‘Under common-law rules, anyone who performs services subject to the will and control of an employer, as to both what must be done and how it must be done, is and employee. It doesn’t matter that the employer allows the employee discretion and freedom of action, so long as the employer has the legal right to control both the method and result of services’. - from IRS Publication 937 Business Reporting

Employer-Employee relationships-
• Employer has the right to discharge the employee
• Employer supplies the employee with tools and a place to work

He/She may be considered and employee if…
• Is required to comply with company instructions about when, where and how to work
• Has been trained by the company to perform services in a particular manner
• Has her services integrated into the company’s operations because the services are critical to the success of the business
• Must render services personally
• Utilizes assistants provided by the company
• Has an ongoing, continuing relationship with the company
• Has set work hours established by the employer
• Is required to work the equivalent of full time
• Works on the company’s designated premises
• Must perform services in the order or sequence determined by the employer
• Must submit regular progress reports
• Is paid in regular intervals such as by the hour, week or month
• Is reimbursed for all business and travel expenses
• Uses tools and materials furnished by the employer
• Has no significant investment in the facilities that are used
• Has no risk of loss
• Works for only one person or company
• Does not offer services to the general public
• Can be discharged by the company
• Can terminate the relationship without incurring liability.
*You can still qualify an individual as in independent contractor even if some of these factors are present in your working relationship.
• The key elements to differentiating between employee status versus independent contractor status
o Who regulates the type of work done and how it’s performed
o Where and when the session occur
o Who determines the fee structure
o Who receives the money from the clients
o Who provides the equipment and supplies
o Who pays for the client related expenses
o Who generates the clientele

Good luck in this opportunity
~Cheryl

 

[Rug B]

i think it sounds like a pretty great set up! one thing i'd say is that i'm not sure i'd pay the "finders fee". if it happens that she is referring you clients that you see outside of this space, i'd maybe send her a nice thank you gift every now & then just to make sure she knows you appreciate her sending you the business. people really like that. good luck with your new space!

 

[honeydipn]

Hi Pied Pipette, the only thing I would worry about in a health club is the noise level. I tried doing massages at a fitness studio - LOUD< LOUD< LOUD. Music, instructor yelling AND there was a child care down the hall. Also people banging weights on the floor and things like that. A friend owns a studio and they had to eliminate their MT b/c it was too loud and the members did not like it. I talked to other MT's who worked/rented at fitness clubs and they had the exact same complaint. I would investigate noise issues carefully.

 

[Pompal 09.]

From what I understand paying a perceneforum.xxxe as rent is a kick back and is illegal.

If they are paying you the perceneforum.xxxe then you are an employee on commission.

It sounds like you are renting the room as you are doing all of the work, supplying everything etc. Pay a flat fee depending on how many days a week you work there. If you don't have any clients in the beginning having the rent hanging over you will be more incentive to be successful.

I actually started in a health club 18 years ago and I still have clients from there today. I also worked at one of the branches for awhile and it was right next to tha aerobics room but no one seemed to care about the loud noise. They just wanted a massage!

But I do think that having a quite place can enhance your practice?

I don't understand why you want to pay her a finders fee - What will she give you when one of your clients joins the gym?

Julie
http://www.massagepracticebuilder.com

 

[Georgina.]

From what I understand paying a perceneforum.xxxe as rent is a kick back and is illegal.

I've heard this before, but never seen any legal back-up of the statement. Do you have some? Just curious...

 

[mandytandy]

From what I understand paying a perceneforum.xxxe as rent is a kick back and is illegal.

I've heard this before, but never seen any legal back-up of the statement. Do you have some? Just curious...

In WI this is the rule applied to chiropractors only. They can hire MT's or rent space to MT's, but if there is the % thing it's considered a kickback. Spas, salons, and fitness centers, though, can all do it with no problem.

I think it is bizarre. It's a business arrangement.

 

[Sax Man]

PiedPipette, I do not know what professional association you belong to, but the WA AMTA chapter is really pressing the contractor/employee situations. “cherpel” is right as I have been told (by the chapter lawyer) ANY time you do ANYTHING other than pay a flat fee for rent, you are an employee. That may not be a bad thing. As an employee she will take care of your taxes. You can still get most of the tax benefits for your expenses as non-reimbursed business expenses. As far as the noise level goes, I think it really depends on the type of practice you have. If you are relaxation based at all, the sound would interfere. If you do treatment, and want to work mostly with athletes, then should be ok with the environment.

 

[Nnifer]

“cherpel” is right as I have been told (by the chapter lawyer) ANY time you do ANYTHING other than pay a flat fee for rent, you are an employee.

The Chapter better get a better lawyer.

Paying a flat fee for rent means you are a lessee, not an IC. So, by this legal eagle's definition, ICs do not exist because you are either a lessee or an employee.

That may not be a bad thing. As an employee she will take care of your taxes. You can still get most of the tax benefits for your expenses as non-reimbursed business expenses.

It may or may not be a bad thing. Many MTs joined the profession so they could work for themselves, not be an employee. Being an employee means you have to play by rules made up by others - when you have to be there, how you do you job, what you do when you aren't massaging, etc. Having someone else handle you taxes is an administrative advaneforum.xxxe, but at the end of the year, your take home pay ends up being about the same if you are an IC or employee.

Plus, if you are an IC elsewhere or self employed, you still have to file your taxes each quarter for that income, so you lose the admin benefit.