A few months back one of my best stylists resigned. She told me she was going to stay home with her kids. We threw her a going away party with hugs, tears and all that. Well now we find out that while we were bidding her goodbye she was putting a salon in her basement. Also, she took a copy of her client list, supposedly to bid them goodbye. She is now telling some of my other stylists what a good deal this is and that she doesn’t have to pay taxes on the income. Her leaving and taking clients’ has really hurt my bottom line. Is there anything I can do??
Oprah
Oprah, what a problem. First of all, this person is not really a friend. I assume that you did not have a Covenant not to Compete in your employee contract. If you did, then you should contact your attorney.
Secondly most cities have zoning regulations that usually prohibit having a business in your home. You will need to discus this situation with your city planner or city attorney. If she is breaking the zoning rules, the city can shut down her operation.
Next , check with the state licensing agency to see if she is practicing without a license. The agency can shut her down without her knowing that you turned her in.
Finally, you can turn her into the IRS. It would be helpful if you had proof that she is committing tax fraud by not reporting her income. But this is another avenue for you to pursue.
Good luck.
Larry Kopsa CPA
