This is the Transcript of the #WeddingMarket Chat on April 6th, 2016 with Michelle Loretta. The answers were made on Twitter so responses will appear different. IC stands for an independent contractor.

Michelle Loretta joined the wedding industry when she launched her stationery business in 2004: mmm… paper. She has a background in finance, having armed herself with a BS in Accounting from the University of Southern California and having spent her early career working for Deloitte LLP. She spent 5 years in the fashion industry as a sales manager for DDLA, and a visual merchandiser for Coach, Inc. In 2008, Michelle co-founded the not-for-profit Get Hitched Give Hope and served as President for 2 years. She continues to serve the organization as its Treasurer and Advisor.

Today, Michelle helps small business owners in the wedding industry with their business planning. Her particular strength is in financial analysis. Hidden in financial info are always opportunities for improvement and growth. She loves being able to help with the “mystery of numbers” and make business owners confident in their business finances, as this is a very important area in running a business. If your finances aren’t right, it could have huge ramifications for your company. Whilst many entrepreneurs find that hiring a small business accountant, like those you can find at BrooksCity, is the easiest option to consider when sorting your finances, many decide to go it alone, and learning how to confidently manage your own accounts could be a good skill for many industry professionals to have. People like Michelle could help you to make these great strides in running a successful business.

Learn more about Michelle Loretta at

Disclosure before we begin: Today’s discussion on independent contractors (ICs) are based on my experience, I know some use contractor management services to manage their customers, clients, etc. All IC questions relating to your business should be directed towards your tax accountant or attorney. If you do not have a tax accountant to liaise with, you may want to do an online search in your area to find one that suits you. Googling phrases such as ‘Tax Accountants Brisbane‘, for example, can yield better and more honed in results.

Q1: How did you get involved with the wedding industry?


Michelle Loretta: I launched a stationery comp in 2004. In 2009, I began the Sage Wedding Pros blog (based on my finance/Mktg background.)

Q2: Why is having a contract essential in having a contractor?


Michelle Loretta: A contract protects you and the IC in your relationship. It guarantees work being done at a rate. A contract also acts as an ‘audit trail’ should you ever be audited by the IRS to show the relationship of independence.

Q3: Should contractors fill out time sheets?


Michelle Loretta: An IC does not work for you. They should not fill out timesheets. They should invoice biz owners for an agreed-upon fee. Perhaps using the top rated scheduling app to manage invoices could also ensure that businesses are being paid for the time they have worked. It can also be used to make sure there are no schedule overlaps and to make sure you know when each vendor is coming to do their job.

Q4: Can contractor contracts have open-ended and/or long-term agreements for them to work?


Michelle Loretta: You want to show INDEPENDENCE with an IC. Therefore, anything you can do to show arm’s distance is best. There is no ‘hard rule’ for what should be in the contract BUT you are better having a term of services in contract.

Q5: Can the contractor have a company email address for YOUR company?


Michelle Loretta: No ‘hard rule’. BUT – you will be better able to show independence if IC uses their email. (There are exceptions)

Q6: Should you share the employee handbook with a contractor?


Michelle Loretta: No. This starts to bleed into a lack of independence by IC. Only employees should be held to the handbook.

Q7: Can you prohibit a contractor from working for a competitor?


Michelle Loretta: No. The contractor can (and should) work for many companies doing what they do for you. You can protect your ‘secret sauce’ by having a non-disclosure clause in your contract with IC.

Q8: Should the contractor have their company name?


Michelle Loretta: This is helpful but not a requirement. If they have their company name = an easier way to show independence.

Q9: Should you train contractors?


Michelle Loretta: ICs are not trained by you. They should be experts in what you hire them to do. I should be skilled enough to hand over the recipe or event sheet and they can run with it on their own.

Q10: How should contractor fees be recorded in accounting?


Michelle Loretta: Contractor fees should be separate from payroll. (An account ‘contractor expense’ or such is best.)

Q11: How are the rules different between a contractor and an Intern?


Michelle Loretta: Intern has 6 labor board HARD rules: #weddingmarket Intern needs to be completely educational. (Think of creating a classroom environment in your office.) The contractor works for themselves, not you.

Q12: Why might the IRS audit your business over contractor or Interns?


Michelle Loretta: IRS generally finds ICs that are misclassified when the IC files something wrong on THEIR taxes. Typically biz owner is doing everything right, but IC doesn’t fully understand what it means to be an IC. An error on the IC’s 1040 (or filing for unemployment) can draw attention to the business that hired them (you). Intern error isn’t typically found in an IRS audit. Intern investigations are typically the result of a whistleblower.

Q13: What are the benefits of having an employee vs. an Independent contractor (IC)?


Michelle Loretta: For ~10% in taxes (NOT MUCH) an employee is yours to develop. They can follow your systems, protocol, culture. #GOLD! Employee does NOT have to be full-time and you don’t need to pay health insurance (unless you have 50-100 employees). You can build a stronger brand and culture if you have employees because they work for you. Investment is 10% in taxes. You do need to invest time in training employees… but – the payoff can be wonderful.

Q14: What other forms of paperwork should be completed before working with an Independent contractor (IC)?


Michelle Loretta: You want to have: independent contractor agreement, W9 (to collect their tax ID) and then in Jan send 1099 if PD $ 600+.

Q15: What are the benefits of having an employee vs. an Independent contractor (IC)?


Michelle Loretta: You don’t have a ‘decision’ by IC and employee: relationship with IC may have lost independence and you need to reclass as an employee.

Q16: What would you like everyone to take away from this #WeddingMarket Chat?


Michelle Loretta: I need to be INDEPENDENT! Ask yourself: does this person truly work for themselves or me?

Questions For #WeddingMarket Audience

@WeddingPen How do you enforce the work be done adequately if the IC does not ‘work for you’ then? Accountability?


Michelle Loretta: Work is done adequately by having a VERY specific agreement with the ‘scope of services’. Lay everything out!
It should be as specific as the agreement you have with a graphic designer (or as the ones your clients have with you.) If you want full control over there work then you should have them classed as an employee. SO many benefits to having employees.

@WeddingPen Have you ever had to replace an IC mid-job? If so, how to handle?


Michelle Loretta: If there is a breach of contract, then you can terminate the contract. (eg: if the contractor does not fulfill agreed-upon services)

@FrillsBridal In your opinion what is the biggest con to having an IC on your team when employers considering it should know?


Michelle Loretta: YES exactly! An IC isn’t ** on your team. They are independent. You can do so much more with an employee. Another con is that an IC cannot represent the core values/culture/brand in the same way as an employee. IC relationship is similar to what you have with your web designer – u agree to work and they do it on their own.

@Sister_Dora Mentoring… Best ways to be a mentor/mentee without unnecessary obstacles?


Michelle Loretta: The best way to mentor employees is to TRAIN and give them space to do the job. Give feedback and reward.

@Sister_Dora How common are these relationships when you are not an employee?


Michelle Loretta: 3 types of workers: employees, ICs, or unpaid workers (volunteer, intern, ‘shadower’). That’s it. Each has rules. An ‘unpaid worker’ (intern/volunteer) has to be EDUCATIONAL. It’s training for the benefit of an intern only.

@TaylorWed Suggestions for any paperwork for interns??? Maybe a contract?


Michelle Loretta: An agreement is good to ensure that both interns and biz are on the same page. BUT – intern doesn’t work. They learn. the agreement with an intern isn’t going to show any commitment of work they do – but more a commitment from you. Here’s more info:

@TaylorWed Got it! Do some interns make $$? If so, does that change their status?


Michelle Loretta: Yes! Great question. A paid intern is an employee. This would likely be phrased as a PT paid internship. YES! most people don’t realize paid interns = employees. IRS only has 3 types of workers: employee, unpaid worker, IC.

Thank you for having me! If you want more info find our HR toolbox and workshops here:

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