Two of the most frequented questions asked about mystery shopping is, “Does the mystery shopper work as an employee or a contractor?”, and, “What is a contractor?”
Many of you thinking about becoming a mystery shopper are not aware of details or have knowledge of the working industry. Many do not realize they will be in their own business. Most mystery shoppers are not an employee of the company.
Shoppers always review shops prior to acceptance. Mystery Shoppers then perform assignments as self-contractors, and not as employees of the company.
There are differences in working as a company employee versus a self-contractor.
When you complete mystery shops as a self-contractor, you are in business for yourself. The company will not pay you wages or withhold employee Federal Income, Social Security or Medicare Taxes. You are responsible for filing your own taxes.
You can learn more about (FICA), Federal Insurance Contributions Act on the Internet by researching, “answers.usa.gov.” Additionally, you can learn more by researching the IRS site at, “http://www.irs.gov/”. As a self-employed person, always learn more about your tax requirements. However, you should seek the services of a qualified and licensed professional when filing your taxes or setting up your business requirements. The references commented in this article are for information purposes only and should not take the place of a qualified professional CPA or Attorney.
Quote from wikipedia.org:
“In the United States, any company or organization engaged in a trade or business that pays more than $600 to an independent contractor in one year is required to report this to the Internal Revenue Service (IRS) as well as to the contractor, using Form 1099-MISC. This form is merely a report of monies paid; independent contractors do not have income taxes withheld from their pay as regular employees do.”
When you are a self-contractor and if you earn more than $600 from any one company, you will receive a 1099 IRS form. The form will provide a total of all your income earned from their particular company. If you work for more than one organization, and you earn $600 or more from any individual company, you should receive a 1099 with the total of your gross income earned from every one of the companies. The total of income earned excludes any reimbursements you may have received. Any reimbursement is not actual earned money, but funds you have previously paid out.
It is important you realize, being in business for yourself, you must adhere to the same requirements as other self-employed contractor or owner of a business. This will require you to learn more about your tax structure and common business requirements.
For example, you should record all activity and transaction expenses involved with performing any mystery shopping assignments. For instance, some of your expenses can be traveling to and from your assigned mystery shop, and any business office and supplies required for set-up and operation of your contracting.
In all probability, you will write and submit your mystery shop reports utilizing a computer. Additionally, you will have to print out your assignments on paper for records as well as information and instructions to complete your shops. The equipment and supplies are all expenses incurred to perform your assignments. Additionally, you most likely will require a digital camera and transportation. Using your phone will be a business expense as well. Depending upon your frequent phone usage, might require a separate cell or line for your business.
It is imperative you keep exact records and traceability for all your activity, events, mileage and equipment used in the operation of your self-contracting business.
Example: Mystery Shopper Contractual Agreement
Independent Contractor Agreement
•Under this agreement, as an independent contractor for Company X., you are and will be a self-employed independent contractor and not an employee of Company X. or any of our clients. As an independent contractor, you agree to objectively and accurately record your observations on an assignment that you have accepted from Company X. For performing and returning the filled out survey form, we will reimburse you up to a designated dollar amount for your meals. Company X. will disclose that dollar amount at the time of assigning. On other assignments, cash payments may be made available.
Scope of Work
•You, the independent contractor, agree to the following terms and conditions to perform work as offered on an assignment to assignment basis from Company X.
Terms of Payment, Tax and General Liabilities
•Company X. agrees to pay for the independent contractor’s work according to the compensation for each individual assignment. Each payment will vary from client to client. Performing an assignment for Company X. may require out of pocket purchases which Company X. will reimburse for and that dollar amount will be disclosed on the compliance requirement form. If there are any extra out of pocket purchases required to perform an assignment such as, but is not limited to, gas, mileage, or other travel expenses, these must be documented in writing from both parties to be valid.
Independent Contractor – Nature of Relationships
•As an independent contractor, you are responsible for reporting to the appropriate governmental agencies all the amounts you receive from Company X.
•As an independent contractor, you will not act as a company agent, nor shall be deemed an employee of Company X. for the purposes of any employee benefit programs, or be deemed an employee of Company X. for, but are not limited to, purposes of income tax withholding, F.I.C.A. taxes, unemployment benefits, workers compensation benefits, or otherwise.
•As an independent contractor, you acknowledge and agree that you are not eligible for any benefits provided to our employees. This includes, but is not limited to, any disability coverage or worker’s compensation provided to our employees.
•As an independent contractor, Company X. strongly suggests you maintain your own worker’s compensation policy at your own expense.
•As an independent contractor, you agree that your vehicle is fully insured or at least the minimum amount required by law.
•As an independent contractor, you agree not to hold Company X. liable for any damages you may incur while performing an assignment for Company X.
•As an independent contractor, you shall not enter into any agreement or incur any obligations on Company X.’s behalf or commit to Company X. in any manner without Company X.’s prior written consent.
•As an independent contractor, you can not make or bind any contracts with or on behalf of Company X. In addition, this agreement shall not be construed as creating any employment relationship, partnership, or joint venture between you, the independent contractor, and Company X.
•As an independent contractor, you understand and agree that you are solely responsible for the control and supervision of the means by which you, the independent contractor, perform your assignments. Such means are subject to you, the independent contractor, and are left up to your discretion, which discretion must be exercised consistent with the goal of completing the services on schedule and in accordance with the terms of this agreement.
•As an independent contractor, any supplies, which in the opinion of you, the independent contractor, may be necessary to perform the services required, shall be the responsibility of you, the independent contractor.
•As and independent contractor, you agree that all information provided from your assignment is correct and accurate. If the information is false or falsified, you forfeit your payment from Company X.
Subcontracting and Assignments
•It is understood and agreed that this agreement is for the rendering of consulting services by you, the independent contractor, who is acting as an independent contractor. You, the independent contractor, may not subcontract any part or all of the services to be provided without prior written consent of Company X. All covenants, stipulations and promises in this agreement.
Confidentiality – Proprietary Rights
•Company X. will release and disclose to you, the independent contractor, certain documents and information that are confidential. You, the independent contractor, agree to maintain the confidentiality of information that will be disclosed to you by Company X.
•All writings, analyses and related documentation created by you, the independent contractor, pursuant to the agreement shall become the property of Company X. You, the independent contractor, shall not copy or communicate any such documentation to any third party.
•Upon the expiration or earlier termination of this agreement, or whenever requested by Company X, you, the independent contractor, shall immediately deliver all files, records, documents, specifications, information and any other items in your possession to Company X.
•Except as permitted or directed by Company X., you, the independent contractor, shall not during the term of retention or thereafter divulge, furnish or make accessible to anyone or use in any way any confidential, trade secret or proprietary information of Company X., which you have acquired or become acquainted with during the retention of your services by Company X.
•As an independent contractor, you acknowledge that the above-described knowledge or information constitutes a unique and valuable asset of Company X. and represents a substantial investment by Company X. and that any disclosure or other use of such knowledge or information other than for the sole benefit of Company X. would be wrongful and would cause “irreparable harm to Company X.”
•As an independent contractor, you will refrain from any acts or omissions that would reduce the value of such knowledge or information to Company X. The foregoing obligations of confidentiality shall not apply to any knowledge or information the entirety of which is now published or subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of this agreement by you, the independent contractor, or a breach of a confidentiality obligation owed to Company X. by any third party.
•As an independent contractor, you agree that it would be difficult to compensate Company X. fully for damages for any violation of this agreement. Accordingly, you, the independent contractor, specifically agree that Company X. shall be entitled to temporary and permanent injunctive relief to enforce this agreement and that such relief may be granted without the necessity of proving actual damages. This provision with respect to injunctive relief shall not, however, diminish the right of Company X. to claim and recover damages in addition to injunctive relief.
Conflict of Interest
•You, the independent contractor, agree to immediately disclose any conflict of interest or potential conflict of interest that would preclude you from conducting an assignment in an unbiased fashion for Company X.
•You agree that after you have accepted an assignment from Company X. you, the independent contractor, will disclose to Company X. that you have a conflict of interest, if one arises, and are unable to perform the assignment.
Examples of conflicts of interest, but are not limited to:
•You, your spouse, family member, distant relative, friend have worked or work directly or indirectly with our clients.
•You, your spouse, family member, distant relative, friend have worked for another mystery shopping company in another capacity other than a mystery shopper (independent contractor).
•You, your spouse, family member, distant relative, friend have worked directly or indirectly with our client’s competition which creates a conflict for our client.
•As an independent contractor, you agree to indemnify and to hold Company X. harmless:
•From any and all third party claims against Company X. arising out of your, the independent contractor, performance under this agreement and,
•For any injuries to persons or property cause by the acts or omissions of you, the independent contractor, while performing work under this agreement.
•Company X.’s liability to you, the independent contractor, for damages, if any, shall be limited to actual damages and shall not exceed the amount then owed by Company X. to you, the independent contractor, for work performed by you, the independent contractor, under the terms of this agreement. Notwithstanding, you, the independent contractor’s, indemnity shall be limited to its comparative fault. The provisions of the section shall survive the termination of the agreement or the completion of the work under the agreement. In no event shall either party be liable to the other for any special, consequential, indirect, incidental or punitive damages, lost profits, or for any claim or demand made by any third party, even if advised of the possibility of such damages.
Risk of Loss
•As an independent contractor, you assume all risk of personal injury and all risk of damage to or loss of personal property belonging to Company X. when such loss is caused by you, the independent contractor, under this agreement. You, the independent contractor, assume all risk of damage to, or loss of, personal property belonging to you, the independent contractor, unless such loss or damage is caused solely by Company X.
•Any notices pertaining to this agreement or the work performed under this agreement shall be in writing and shall be sent via electronic mail to the last known address provided by you, the independent contractor.
Company X. reserves the right to terminate this contract and relationship at any point in time between the two said parties (you, the independent contractor, and Company X.)
These are several reasons for termination but are not limited to:
•Canceling assignments without notice
•Canceling several shops at a time or over time
•Reveling yourself to our client during an assignment
•Filling paperwork out while on an assignment
•Bringing children on a shop that specifically requires no children
•Falsifying your age to accept an assignment
•Conflict of interest with a client of Company X’s without disclosing it to Company X. either prior to accepting the assignment or after accepting the assignment
Violation or Breach of Contract
•If you, the independent contractor, violate or breach or threaten to breach the terms of this contact, Company X. is entitled to an injunction which restrains you from committing the violation or breach, without showing or proving any actual damage sustained by Company X. Company X. will be entitled to recover any and all damages resulting from the violation or breach of contract by you, the independent contractor.
•This contract is the entire and final agreement between Company X. and you, the independent contractor. All rights and provided herein or by law are cumulative. Minnesota law shall govern this contract. This contract may be waived, modified, or varied only by a writing signed by the parties in a separate document. Acquiescence in a waiver of and breach is not a waiver of another or subsequent breach. If any provision of this contract is held unenforceable, it shall be severed from the balance of this contract. You acknowledge and understand this contract is personal to you, and you may not assign this contact or any of my rights or obligations hereunder.
•Company X. may revise these terms by updating this posting at any time and without notice to those who may be responsible for reviewing these terms. By accessing this site after revision to these terms, you agreed to be bound by, without limitation or qualification, the revised terms.
•Company X. reserves the right to add, modify, correct or delete any information from this site at any time without notice. In addition, anything you transmit or post via this website will become the sole property of Company X.
•Company X. reserves the right to suspend, change, or discontinue any aspect of this site at any point in time. Company X. may also restrict your access to various parts of or the entire site without liability or notice.
The End of Contract.