NON COMPETES ARE GOING TO BE THE RULE OF THE PAST
Many hairdressers and barbers, who earn an average of $35,000 per year, are bound by non-compete agreements that restrict them from taking a second job, freelancing as a stylist, or moving to a competitor for better pay. Surprisingly, approximately 20% of all stylists are subject to these non-compete agreements. In Missouri, many salon owners require employees to sign these agreements, which means that if you work in the metropolitan KC area and wish to work elsewhere, you won’t be able to relocate within a 5 to 10 mile radius. Non-compete agreements trap stylists and are not a good fit for industries that rely on readily available labor.
The Federal Trade Commission (FTC) set the tone for 2023 by proposing a new rule to ban employers nationwide from using non-compete agreements with their employees and independent contractors. They estimate that such a prohibition would increase wages by nearly $300 billion annually and expand career opportunities for over 30 million Americans. They are expected to rule on this April 2024.
There are currently five states that have completely banned all non-compete agreements, which are California, Colorado, Minnesota, North Dakota, and Oklahoma. Additionally, New York has passed a no-non-compete law, which is currently awaiting the governor’s signature. Moreover, 20 states have prohibited certain categories of non-compete agreements, such as laws that ban all traditional non-competes with employees who earn less than $100,000 per year.
I have to address the fact that the national average salary of $35,000 a year for salon employees is bullsh*t and needs to change. If your salon owner is paying you this amount, as well as making you sign a non-compete they are not supporting your growth but rather hindering it. With the evolving landscape of the salon industry, owners who continue to operate in this manner will be left behind which is why salon suites are popping up on every corner of every city.
OTHER BIG CHANGES TO OUR INDUSTRY
Corporate Transparency Act
The Corporate Transparency Act was originally passed in 2020 and became effective January 1, 2024. This act is part of the government’s effort to pursue corruption, money laundering, terrorist financing, and tax fraud and to identify anonymous shell companies that assist in those illegal activities. If you own a Limited Liability Company (LLC), C Corporation, or S Corporation, you are required to file certain documents to comply with the law and avoid hefty fines. We posted about this on our story recently, but failing to file could cost salon owners or independent contractors up to $500 per day in fines or even $10,000 in total!
What are the deadlines for CTA compliance?
This legislation mandates that American companies, whether they are LLCs or corporations, must submit a report to the Financial Crimes Enforcement Network (FinCEN). Even if you are the sole owner of an LLC, you are not exempt.
- A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
- A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
FILE HERE!
https://www.corporatetransparencyact.org
$600 VENMO RULE
Previously, if you conducted over 200 business transactions in a year through third-party payment networks like Venmo, Zelle, or PayPal and exceeded $20,000 in transactions for goods and services, you would receive a K-1099. However, starting in 2023, the threshold has been reduced to $600. Although it has been a complicated issue, the IRS is now treating 2023 as a transition period and keeping the $600 rule in effect.
Although starting January 1, 2024, if you receive $5,000 or more for services through third-party apps, you will receive a K-1099 form at the end of the year. This means that you will need to report that income.
For those stylists who don’t like to report their income, you are the reason we get such a bad reputation. You are the reason data shows we make only an average of $35k per year. Please do yourself and all of us a favor by playing by the rules!
Let’s keep inspiring, learning, and growing in this ever-evolving industry. Together, we can elevate the standards and passions within the salon community. So here's to creating a brighter future for the next generation of hairstylists and salon professionals!