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View Full Version : Help me figure this out!?!


Duncan IN
01-17-2002, 02:05 AM
Ok here is my situation.

I am going into my third year of the Lawn Care Business, I currently have a guy in HS who has helped me partime the past two years. This year he is going full time working with me and I am adding another guy who is going to use his ton truck and I am going to supply the Mowers, Trailer, and Lawns that I have picked up over the past two years, etc... Do I have to have workmans comp for the new guy? I am trying to avoid it and was also wanting to know if I sub out the work to him would this be a way to avoid workmans comp. Example, he gets his own Liability Insurance, Business cards, etc. I give him the Yards and equip. but have him pay me for a certain percentage of what he brings in, say 55% He brings in $1,500 (100%) a week and I make $825(55%) of that and he makes $675(45%). All he does is supply truck and labor and he is on his own. I maintain the equipment though. Is this something that is possible or do I have to hire him under me and have to get workmans comp for both? Sorry if some of this doesn't make sense. I am just trying to figure out which way I should go. Any info given would be greatly appreciated. Is there also another way I could set this up?

Chuck Sinclair
01-17-2002, 02:10 AM
IMO Your looking for trouble here. I think i would just get the comp and pay him as an employee.

65hoss
01-17-2002, 02:21 AM
A dixie chopper flyer out about 1 or 2 years ago had a big article of a guy that does this. Has several crew that work this way. He was in upper middle TN I think. I remember I found his phone # to call him to ask some questions, but I never did. I'll see if I can find it before I leave for St. Louis in a few hours.

LGF, hold the snow off for me!;)

Duncan IN
01-17-2002, 02:34 AM
Hey!! I read that article 2 years ago in the Dixie Chopper Brochure. I remember the guy saying that he had people lined up to work for him. He gave them a percentage too. I tried to save that brochure but I lost it in moving, his # was on his shirt. If you find his # Let me know. Thanks Have a safe trip

strickdad
01-17-2002, 03:28 AM
Originally posted by Chuck Sinclair
IMO Your looking for trouble here. I think i would just get the comp and pay him as an employee. im with chuck i see trouble down the road i have already been there and it ended up costing about 60,000 dollars. stay away from this type partnership it wont work.....

bruces
01-17-2002, 09:47 AM
Do you need workmen's comp?

Ask your insurance agent, lay out the scenarios and find out your options. Probably very few people on here can give you an answer to an insurance question that would be accurate in various situations, given all the possible variables & different state laws.

That advice is part of what you are paying the insurance agent for.

As far as whether, the different scenarios will work from a business stand point, I'd stay away from the split arrangement, seems like you would lose control of the jobs but still be responsible.

walker-talker
01-17-2002, 10:26 AM
Technically, a sub contractor has to use their own equipment (from what I have heard). But on the other hand, you don't have to turn in the name of the subs to the IRS. I would not do it because they will not be covered on your insurance.

MATT

kris
01-17-2002, 10:58 AM
Give him a while to get to know your customers, property's and prices ....he already now has business cards and insurance.... next a bit of cash to buy his own trailer and mowers..
%100 for him % 0 FOR YOU. Good luck

65hoss
01-17-2002, 11:56 AM
Duncan, I left you a PM.

Duncan IN
01-17-2002, 12:03 PM
Got it, thanks 65hoss

gogetter
01-17-2002, 12:09 PM
I have that Dixie Chopper brochure if you didn't find it yet. Let me know.
But from your scenario, I see the guy just gettting his own equipment and his own customers (or taking yours!).

bobbygedd
01-17-2002, 12:56 PM
had something similar i was gonna do. #1 RENT THE EQUIPMENT TO HIM. #2 he has his own insurance, etc. he is a subcontractor. make him submit a bill to u each month etc.

RyanCanMow
01-17-2002, 05:36 PM
I don't think it will work out as well as you think. I have found that most guys that age figure that they do the work all by themselves and they don't get all the profit. I do realize you supply mower, etc. My experience is that they find out how much money is to be made and then go out on their own and get accounts and purchase equipment. Therefore, leaving you with one less worker. I would hire him as an employee per hour. Hope this helps.

Sincerely,
Ryan

Green Care
01-17-2002, 08:54 PM
TROUBLE!!!!!!!!!!!!!!!!

Hire he him and pay. NO need to get into why everybody already told you!!!

shawn'slawns
01-19-2002, 12:01 AM
"MORE MONEY MORE PROBLEMS". This is exactly what i dont want to happen. i do lawn care and landscaping and have done so for about 3 years. i do this part time and i am a detective for the sheriffs office full time. these 2 go hand in hand. i see myself needing someone else to help me with my load but also dont want the headaches of employees and paperwork. i also see these same type of calls coming in to my road patrol guys where people are wanting law enforcement to escort them to a residence to retrieve their property! however without court orders and such we cant get involved and these people are told to get a good attorney and hope for the best. if you are doing well enough and making $400.00-$1,000.00 a week by yourself keep it that way! otherwise do it right and cover your bases. very tempting i know but STAY AWAY!!!!! :blob2:

big james
01-19-2002, 12:50 PM
I don't know what state you are in but in mine you have to have a certain # of employees before you have to provide workers comp . I make my temporary help sign a release , it may not hold up in court but it;s better than nothing!

TotalLawn
01-20-2002, 03:35 AM
In Okla. the only way to keep from paying Workers comp is if you (he) is an officer of the company.

As a sub contractor he will have to provide his own equip. (not just the truck).

I'd be scared of 2 things:
1. He does a good job and takes the account from you.
(if you get $35 from the customer and pay him 45%($19.25) he can tell them he'll do it for $30...they both win, you lose!!)

2. He does a poor job and makes YOUR name look bad.

JimLewis
01-20-2002, 04:20 AM
Duncn, pay attention here...

Asside from the miriad of trouble this kind of relationship will cause, your biggest problem is going to be the IRS. Maybe you know them? A friendly bunch of guys who are kinda particular when it comes to things like independent contractors (or sub contractors).

It is VERY difficult to meet the requirements for an independent contractor. And in the situation you are describing it would be almost impossible. Asside from the more general control issues that the IRS looks at ( See THIS PAGE (http://www.irs.gov/tax_edu/faq/faq-kw65.html) for more) there are about 20 very specific requirements you have to meet ( see THIS PAGE (http://www.hasys.com/systems/20_factors.pdf) ) in order for this guy to be considered an independent contractor. If you brake more than 2 of these requirements, he will be deemed an employee and YOU will be liable for ALL back taxes. Not fun.

From what you describe here you would be breaking rules #1, 2, 3, 6, 7, 8, 9, 10, 14, 17, 18, and likely a few others.

If you want to expand your company, do it this way;
* Buy all of the trucks, equipment, etc. yourself.
* Make your trucks look the same (pro. lettering, brand imaging)
* Hire employees and manage them in a professional way.
* Pay their taxes or hire a payroll firm to do it for you (the latter is the best way to go, btw,)
* Pay hourly, not by commission. It's YOUR company. There are plenty of people who will do this work for a decent hourly rate. And in the beginning there's not really any room to share the profits.

Trust me, if you want to continue to grow, you'll need that money! And it's obvious that you already can't afford to share any profits. Otherwise you wouldn't be thinking of using someone else's truck.

No matter how good of a relationship you guys have now, his goals are not the same as yours. A few years from now he'll likely be off doing something else. And if you are smart and set up things correctly you'll be set up to just hire another person and move on.

You don't have to buy the nicest trucks around either. Just be sure they look sharp and run good. If you can't afford another truck right now, then you should wait to expand until you can. The rest (hiring employees, payroll, taxes) isn't really all THAT hard or expensive. And a good payroll firm will guide you through the entire process if you need help.

Best of luck. This is some of the best advice you'll ever get.

JimLewis
01-20-2002, 04:24 AM
Oops. A few typos in my message above. Lawnsite won't let me edit it for some reason. Oh well. :)

richard coffman
01-21-2002, 02:14 AM
Mmmm, I'd be very cautious with your future decisions, make the right & proper dicisions and you'll be all right in the long run, take the cheap rout and you'll wish ya had a get out of jail free card in ya wallet.Jim Lewis is right about the payroll firms, they'll take away a lot of your money worries(soory, they don't do lawns(LOL), Check them out and check out there reputation or call the better business bureau for info. On the average, it'll cost ya about $20.00 per week(depending on the size of your company). Even thou ya may know the guy from your church or been best friends for ever, be cautious, doing these kind of deals ya asking us all about spells nothing but trouble,and posably destroying a good friendship. I'd rather have my wife mad at me any day than be involved in a situation like that.

Remember, there's a wrong way of doing things and then there's the right way, I'm sure we're all confident that you'll make the right choice my friend.

Richard Coffman/owner
Special Needs Lawn Services;)

HBFOXJr
01-21-2002, 09:19 AM
Listen to Jim Lewis and the IRS rules. My favorite saying is "you don't get what you don't ask for" and that includes trouble.