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View Full Version : Salary vs. Hourly


NFLawn
10-09-2004, 08:27 PM
Ok folks before I ask my question here is my background:

Started my business in Nov '02 with a partner, learned that lesson quickly so in '03 I took it over by myself. I've gone from a meager 9k gross (annually) to 60k gross (annually). I have a 1 ton vehicle, 6x12 trailer, 60" Exmark ZTR, 36" Exmark walk-behind, all Shindaiwa power equipment. I am at a point where I'm going to add some workers before next spring. I would really appreciate your advice on paying hourly or paying by salary.

Kelly's Landscaping
10-09-2004, 09:02 PM
If he's just going to be a worker then he is hourly if heís management like a crew chief then salary is a possibility but it has to be good for both partyís I have one guy on salary and one hourly atm. And two who have no clue what they want so I get the call every 2-3 weeks when the drug money has run out and they are begging for cash its rather pathetic but they never learn.

paponte
10-09-2004, 11:42 PM
Hourly. If you pay salary and you eventually add more workload, they will feel like they are getting cheated by doing more work and getting paid the same. Eventually you will end up paying out more in the long run. :)

NFLawn
10-12-2004, 10:31 AM
Thanks guys I still have much to learn...

MMLawn
10-12-2004, 12:42 PM
Hey. Really it is already spelled out by the IRS Regs for you. If they are just an employee you really have to pay them by the hour. You "could" pay them a straight "salary" but you would have to base it on Mininium Wage at least and no more than 40 hours in a work week and with never any time above 40 so that you would really still paying by the hour still and only calling it a "salary". Also if you worked them less than 40 hours in any week you still would have to pay them for the 40 and you would be losing. I would personally never do that or suggest you do it that way.

Now, if they are management/supervisor then you can pay them a salary and not by the hour and not really have to worry about any overtime. HOWEVER, to be management they must actually be "managing" employees (and YOU don't count) so that means you would have to have more than just that 1 employee and yourself and even with 2 other employees I personally think you would still be hard pressed so to speak to prove to the IRS that he/she really was a supervisor/manager, esp if you are also on the site with them. Then, the OTHER test them any good CPA will tell you that they would have to meet by the IRS standards to "prove" they are managing/supervising they would have to actually have the power to "fire" an employee.

And the most important thing to remember with employees and the IRS is that in any audit or question on 941's, 940's, or whatever, is that the IRS DOESN'T have to prove that you did it wrong, YOU have to PROVE you did it correctly.

FrankenScagMachines
10-12-2004, 01:15 PM
NFLawn,
I cannot offer advice in this area that you ask about, but I wanted to ask you a question about your operation. Sounds like you have nice equipment setup there. What do you use the van for? I mean, not many people would prefer a van to a truck. I'm just curious of possible uses for one as my family has one that is just sitting that i would put to use if i could think of anything it could do. Do you use it like an enclosed truck/trailer, or do you haul plants in it? Small tools? My setup is now all self contained on the trailer, only thing i need a vehicle for is to pull the trailer and haul grass clippings when i have need to bag (one day a week). All equipment and tools, etc. are stored on the trailer.
Just curious about van usage.
Thanks,
Eric