Larry, I saw your blog and was very appreciative of the information given, but I have an additional question.
I am a booth renter at a salon and want to know about the w-9 form. The salon owner is asking us to complete one and I don’t think I should have to. I strictly booth rent, I purchase my own products, come and go as I please, and set my own schedule.
I will time to time receive a check from the salon as payment, but the payment is not for a service. It's that my client wanted to use a credit card to pay me and it was run through the salon's credit card machine. So the check that I receive from the salon is my money that they processed for me.
My questions are:
· can the salon charge me more than the credit card fee set by the merchant?
· Do I have to complete the w-9 since I am not receiving payment from the salon for this service per say, they are only processing the payment?
· should I file a w-9 for the booth rent that I pay to them?
· If I do have to complete the w-9 it is only for $600 or more, correct? So if they process more than $600 in payments for me.
· Can the salon take the credit card processing fee from my tips?
· Independent contractor vs. independent business owner as a booth renter. I believe I am an independent business owner so the w-9 doesn’t apply.
Thank you so much for your time.
Franki
Franki, thank you for your kind comments. In response to your questions:
Since you are a booth renter it is acceptable for the owner to charge you more than the credit card cost. Remember that the owner has other costs involved with the credit card machine, such as the purchase or rental of the machine, and there is also additional bookkeeping involved with the handling of the credit card. My answer would be different if you were an employee.
I am not sure why the owner is asking for a W-9. At the same time, there is no reason not to complete one for them. The W-9 just stays in their file. If it were me, I would not make a big deal about it.
You should have a W-9 on file from the owner. In addition, unless the owner is a corporation, you should file a 1099 form showing the gross amount of rent paid. I am assuming that you have paid over $600. See my blog posting on the necessity of doing 1099s.
It sounds like you are somewhat confused. The W-9 is the form that tells you the owner's name and ID number. The 1099 is the form that you give to the owner with a copy going to the IRS showing the amount of rent paid. 1099’s are only required if you pay over $600 for business purposes during the year. You do not have to give a 1099 if the owner is a corporation.
Regarding the owner taking a service charge out of your credit card tips, since you are a booth renter, that is allowable. If you were an employee, it would not be allowable.
Finally, since you are a booth renter, you would not think that the W-9 would apply, but it is not really a big deal. I would not be opposed to giving them a W-9.
Don’t forget to do your 1099. The penalty is usually $100 for every 1099 not issued.
Let me know if I can do anything else to help.
Larry Kospa CPA
