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The costly classification mistake that could destroy your esthetics business and land you in serious legal trouble. As a spa owner who scaled to a 4,000-square-foot facility while others in my town struggled, I've learned the hard truth about 1099 contractors versus W-2 employees – and it might shock you.

Most estheticians hire 1099 contractors because they fear payroll taxes and paperwork. What they don't realize is this decision could trigger what I call the "hella trifecta" – simultaneous investigations from the IRS, Department of Labor, and State Unemployment Department. This isn't just about paperwork; it's tax fraud that can result in back taxes, penalties, and even jail time.

The wake-up call for me came when a 1099 contractor forgot about her appointments, leaving clients stranded. I couldn't require her to fix the situation because legally, she wasn't my employee. That's when I realized I had zero control over my brand's reputation – everything I'd built could be destroyed by someone I couldn't manage.

The truth is this: if you provide the tools, products, booking system, and expect someone to work primarily for your business, they're a W-2 employee. Period. When salon owners claim 1099 status benefits workers through tax write-offs, they're concealing the fact that contractors actually pay double the taxes because the business is illegally pushing its tax burden onto them.

Proper employee classification isn't just about compliance – it's about building a business that can actually scale. I've created "The Esthetician's Guide to a Profitable Pay Structure" to show you how a correctly structured compensation system makes W-2 employees more profitable than contractors while keeping you legally protected. Are you ready to stop being afraid of payroll and start building an empire that lasts?

Leave a review if this episode helped you – your feedback means everything as we continue our mission to help estheticians build businesses where passion truly meets prosperity.

To learn more about coaching please visit: https://www.karijopatterson.com

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Links You May Want to Check out:

Join the Client Building for Estheticians group: https://www.facebook.com/groups/clientbuildingforestheticians
Check out Kari Jo’s courses here https://esthelaunchacademy.com