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Taxes - Scary stuff!
Old 03-28-2006, 11:07 PM   #1 (permalink)
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Are models employees or contractors?

My accountant says possibly. So does my lawyer. Good answers I suppose, but kind of tough to make a decision with. I read the IRS rules. Looks like it's a judgment call, depending on which agent is making the judgement. Any one with real world experience?

My business associate is an employee, pretty cut and dried. But when she models for me, is she a contractor? My MUA is an employee, no argument. But when she models?

Doc
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Re: Taxes - Scary stuff!
Old 03-29-2006, 12:14 AM   #2 (permalink)
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First check with your attorney and accountant for definitive answers.

Regarding your associate as a model. Does she model for others as well as you? Do you provide the place of work when she is modeling? Do you control the hours that she models? I.e. if she models only for you and you control the conditions of that modeling, then I bet she is an employee in the eyes of those who matter.

If she also models for others and the conditions of modeling (place, time, pay rate, etc.) are set by her or mutually negotiated then I bet she could be viewed as an independent contractor.

Thus the answer, I think, is "it depends". I bet that's what your CPA and attorney told you.

Again "please rely on your own CPA and attorney for specific tax advice."

I hope this cleared up any ambiguity, sort of.

Steve
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Re: Taxes - Scary stuff!
Old 03-29-2006, 01:09 AM   #3 (permalink)
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Always a questionable area.

This is a link to the large government agency's (IRS) position, position being used loosley.

http://www.irs.gov/businesses/small/...=99921,00.html

Near the bottom is a link to a 160 page pdf training manual. Although there is a general explanation at the top.

If they model or do makeup for others on the side I wouldn't think it a problem in labeling them a contractor. Accountants and lawyers aren't always right, unless they play one on TV.

If this is causal payment, as opposed to say "family job wages", again I would think they could be treated as a contractor.

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Re: Taxes - Scary stuff!
Old 03-29-2006, 01:42 AM   #4 (permalink)
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OK, I'm not an accountant or an attorney, and some of this may be governed by the laws in your state, but: Models are usually NOT employees whether you hire them directly or through an agency, neither are MUAs unless they work exclusively for you. One of the determining factors is whether they work for other people, who provides their supplies/tools, how much indendence they have in how they do their work (if she turns on her own, you aren't directing her), etc. Unfortunately, the only person on a photo shoot who is almost always an "employee" (meaning deductions are taken) is the photo assistant. Of course a regular office assistant or any other person who works at your place of business regularly would be as well. My studio manager was an employee, but I've never had a model who was. If I hire them directly, I send them a 1099 at the end of the year if they make over $600 in a year. If I hire a model through an agency, same thing. If I pay the agency and they pay the model, I send the agency a 1099 covering all the models I've hired (unless they're incorporated in which case I don't have to send anything), and the model agency sends 1099s to their models (since they're usually not employees of the agency either). There is one exception that I'm aware of, and that's when there is a "production company", like for a movie, and they hire a bunch of folks who would normally be ICs. In that case they put eveyone on payroll as employees. Part of that is for insurance reasons, payroll expediency and also because as employees the employer owns the copyright to anything the employee does automatically. The downside is that the employer is then responsible for unemployment benefits charged against them. One more thing - no matter if the person is an employee or IC, you need to have worker's comp insurance to protect your butt.

Again, check this with your accountant (try to find one who is familiar with the photo/acting business, shouldn't be too hard in Dallas/Austin - wherever you are.

Regards,
Andy Pearlman
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Pretty easy really...
Old 03-29-2006, 08:20 AM   #5 (permalink)
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First off, the IRS really doesn't so much care as long as you make a good faith effort to follow the regulations. This isn't an area that is "ripe for abuse" as long you issue either a 1099 or a W-2 at the end of the year.

If you are telling a model to show up from 8-12 on Mondays and Wednesday for a set time (2 months, 2 years, whatever) and he/she does not work for anyone else then you have an employee. If that individual is actively working for others, is largely responsible for determining their market rate, and can tell you "no, I am not available that day" without jeopardizing future working opportunities you are 95% of the way home to calling them a 1099 independent contractor.

Of course your 1099's had to be in by January 31, as did W-2's so I would be more concerned about that if you're asking now.

And yes, I do play a tax and investment advisor in my "real life".
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Re: Taxes - Scary stuff!
Old 03-30-2006, 08:24 PM   #6 (permalink)
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Thanks for the info guys, really helpful.
Tom did you read all 160 pages? I was asleep by page 3.
Thanks for the caution, Carpe, but I have a little breathing room. If I can survive the next 6 months, I should be able to get to Jan 31 next year, so I can issue those 1099s and W-2s.
What I've learned after two months of a startup business is that you have to be pretty demented to try to start a business. If this life wasn't so much fun, I'd go back to being a cubicle drone. Well...no. Never again.
Thanks again guys.
Doc
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