PDA

View Full Version : Labor


Meier
04-11-2003, 10:14 AM
I'm not to the point of hiring labor yet, but I have several questions about labor:

1.) Here in DFW, it is really easy to pull into a labor camp and pick up labor for the day. If the regular guy doesn't show, dozens of others are foaming at the mouth for work. Most can't speak english and you wonder if they're legal. But my accountant tells me that if they give me a social security number, I have to trust that it's valid because there is no way to call the IRS and verify someone's SS#. If I pull in and get one of these guys for labor, I could pay them cash at the end of the day and 1099 it with the IRS. Obviously, this is the simplist solution for labor, but could cause problems down the road.

2.) If I do the 1099 on labor, the IRS may come ask me questions about this down the road concerning contractor/employee relationship. Are there any 'valid' stories supporting the contractor relationship that will fly with the IRS? I was considering setting up my labor on a percentage of revenues as opposed to hourly wages such that if nothing breaks down and the drive time is low and we work efficiently they make a lot more money than if we work inefficiently and have lots of drive time and stuff doesn't flow smoothly. Hoping this would lend support to the "they're a contractor" arguement with the IRS.

3.) If I do hire an employee and W2 the expense, I would withold about 20% for SS, Med & Fed Taxes and then kick in another 6.7% for SS & Med. So, in order to pay a guy $7/hr, He would only get about $5.60/hr after with-holdings and I'd pay another $.49/hr to the SS & Med fund. Am I pretty much on target with these numbers?

4.) If I hire an employee and W2 the expense, I would also need to pay workmans comp. I read the other thread on this issue and it looks like that would run roughly another 6-10%...figure on 10% to be safe. So, to pay a guy $7/hr, I'd have to pony up yet another $.70 per hour for workmans comp.

5.) Unemployment insurance. I really have no idea how much this costs. I'm in Texas and I'm sure it varies from state to state. How much is this expense running in other states?

1099 - $7/hr costs $7/hr
W2 --- $7/hr costs about $8.19/hr and the employee only gets about $5.60/hr on his pay check

Do I have this about right? I appreciate all comments. Haven't hired any labor yet, but hopefully I'll need to before the end of the summer.

Thanks,
DFW, TX

adrianvbarrera
04-11-2003, 12:01 PM
You need to with hold exact amounts from their pay.

There are some tax tables available for this.


Hope that helps.
Adrian

promower
04-12-2003, 01:47 AM
I'm not to the point of hiring labor yet either, someday maybe. The only thing I wouldnt like about getting help like that is you have new people coming and going. I would want the same workers to do each job the each week. They would be familiar with all the properties and be more efficient. I think the overall work would just look more the way you would want it.

Meier
04-12-2003, 10:51 AM
++++I'm not to the point of hiring labor yet either, someday maybe. The only thing I wouldnt like about getting help like that is you have new people coming and going. I would want the same workers to do each job the each week. They would be familiar with all the properties and be more efficient. I think the overall work would just look more the way you would want it.+++=

At the wage range that folks in our industry can afford to pay, combined with the dirty work and the summer heat, I doubt there will be much difference in turnover rate.

My gut feeling is that the guys in the labor camps will actually prove to work with less turnover than the guys you might find via an ad in the paper or via other 'legitimate' means.

Just my hunch.

Later,
DFW, TX

Gr grass n Hi tides
04-12-2003, 09:24 PM
Talk to a CPA. Takes the guess work right out of it. A guy I know, I have said this before and I'll say it again, he's a human computer. My question goes in one ear and he's telling me the solution 3 seconds later.

One of the members here at lawnsite, I think it's "bruces", is a CPA. He has put some incredibly great information into his posts regarding taxes, etc.

Lanelle
04-12-2003, 10:57 PM
You also need to have the new hire fill out an I-9 and show the required forms of ID. Make a copy of the ID for your file.

KDJ
04-13-2003, 11:45 PM
Try a temp service. For about 4.00 per hr plus the wage, they will take care of everything. Easy way to go.

Premo Services
04-14-2003, 07:58 AM
I have used a temp service, and this year, I will be using them more. The workers do a decent job. The last two I had worked real good!!! Both of them had worked for a landscaping company for some years, but the winters are a killer. Thats the boat I am in right now. I would have a hard time in the winter keeping them busy. I talked to my cpa and he laid out all the pros-cons on hiring a full time employee, and using a temp service. For now it will be the temp service.