Thuvy Ngotran

Moving your nail technicians from 1099 contractors to W-2 employees is a big decision. For most salons, it is the right one — and a recent string of federal enforcement actions against nail salons is prompting more owners to take the question seriously. Some owners make the change after receiving an audit notice. Others decide after hearing about increased enforcement from the IRS and the Department of Labor. Some simply want to build a stronger business and reduce risk before problems arise....

Right now, the advice going around is loud and simple: "Put everyone on W-2." And for most nail salons, W-2 is the right direction. But "everyone, all at once, the same way" is not a plan — it's a panic reaction. And panic reactions cost money. The truth is quieter and more useful: W-2 is right for most of your team, but not automatically for all of it. Before you change how you pay everyone, it's worth knowing what's actually right for your salon. Why "everyone on W-2" can be the wrong move...

If you own a nail salon, you have probably heard the news. The owners of a large nail salon chain — more than 60 locations — pleaded guilty to federal tax crimes for paying staff under the table. Court records describe more than $116 million in cash compensation that was never reported to the IRS. Since that news broke, we have heard the same reaction from owner after owner: "I'll just pay everyone 100% on check." We understand the fear. But that is not the fix — and reacting that way can...