Renting space in a business or working on commission

How renting space works

You pay the owner a set rent, usually weekly or monthly, for a place to work in their business. In exchange, you run your own business inside theirs.

• You set your prices, your hours and how clients book you.
• You keep what you charge, and your tips.
• You pay for your own products and tools, and usually your own booking app and card fees.
• You owe the rent whether the week was full or slow.

How commission works

The business sets things up, and you get a percentage of what each service brings in. A 60/40 split, for example, means you get 60% and the business keeps 40%.

• The business usually sets the prices, and often the schedule.
• The business provides the products, the front desk and the booking system, and often brings in new clients.
• You earn more when you're busy and less when you're not, but there's no rent to cover in a slow week.
• Whether you're an employee or self-employed depends on how the work is set up, not on what anyone calls it. There's more on that below.

What to put in writing when you rent

A spoken agreement works until the first disagreement. Before you start, write down what you agreed, and both of you sign it.

What to put in writing on commission

Write these down too, and both of you sign them:

• The split: your percentage, and whether it's figured on the price before or after discounts.
• Products: whether anything comes out of your share.
• Tips: how they're handled, and when tips left by card reach you.
• Payday: how often you're paid, and how.
• Prices and schedule: who sets them, and how changes are agreed.
• Clients: who keeps the client list if you leave, and whether you can tell your clients where you're going.
• Notice to leave: how many days, from either side.

Taxes: dates and where to look

This is general information, not tax advice. Your accountant can tell you what applies to you.

• If you rent, you're generally in business for yourself. The IRS counts sole proprietors and independent contractors as self-employed. They pay income tax plus self-employment tax, 15.3% for Social Security and Medicare, figured on Schedule SE when net earnings reach $400.
• Estimated taxes: if you expect to owe $1,000 or more, the IRS generally expects quarterly payments, due April 15, June 15, September 15 and January 15 of the next year.
• On commission, it depends. The IRS looks at behavioral control, financial control and the type of relationship, and no single factor decides it. An employee has taxes withheld from their pay by the business. An independent contractor doesn't, and the business may report what it paid them on Form 1099-NEC.
• In Puerto Rico, for example, bona fide residents who don't have to file a U.S. income tax return use Form 1040-SS for self-employment tax.

State and local rules differ, and Puerto Rico has its own. Keep a record of every payment and expense, and talk to your accountant before the first due date.

How Bookeao Pro will handle each

Bookeao Pro isn't available yet. Here's what it's built to do for each way of working.

• Renting: Business with renters, $19.99 a month for any number of renters, with the owner's own Professional plan included. Each renter has their own Professional plan, $14.99 a month.
• A rent record both sides see: what's due, paid and late. The owner records each payment, whether cash, ATH Móvil, transfer or card. The renter gets a receipt and can dispute it. Reminders go out before rent is due, and both sides see the yearly total.
• Automatic rent charging only with the renter's authorization. The renter sees the amount and how often first, can turn it off at any time, and has to accept any new amount.
• A renter's clients and money are theirs. The owner can't see or export them, take their bookings or touch their payments.
• Commission: Business with employees, from $34.99 a month for up to 5 employees, the owner included, with commission splits. Employees don't need a plan of their own, and bookings and payments go to the business. It includes everything in Business with renters, so a business with both needs only this plan.