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The LawnSmith
11-01-2004, 11:02 PM
I am pondering the idea of hiring an employee or two next year. I am currently a solo operation, except I have my brother-n-law help on occasion.
I pay him anywhere from 8-10 dollars an hour, but only for the actual hours worked. (Doesn't include driving time, lunch, etc). Realizing that I am a small operation, is this feasable? Are there any other businesses that have one or two employees, and how do you pay them? Should I pay less per hour and pay them for the full time they are gone?

Mike

lawnwizards
11-01-2004, 11:06 PM
we have 3 employess (all high schoolers) we pay them 6, 6, and 6.50..... this includes drive time... be sure and plan a tight route so you don't have to pay so much window time.... i'd say pay them less hourly and include the window time... lunch is their own time so i wouldn't pay them for that.... include a couple of perks every now and then and they wont bit$h over the pay scale...

The LawnSmith
11-01-2004, 11:14 PM
Thanks Lawnwizard,

I have a couple teenagers that want to work, and I think your idea of paying for the entire time spent away will work out at the 6 to 6.50 scale. I agree that the route is important to make money for all. Thanks for responding so quick.

v/r
Mike

SodKing
11-01-2004, 11:16 PM
"Should I pay less per hour and pay them for the full time they are gone?"

What do you mean by this? If you have an employee, even your brother in law, you must pay for all time worked, that includes windshield time. You must also pay all applicable state and federal taxes, unemployment compensation, and any other applicable fees. I suggest you speak with your accountant.

lawnwizards
11-01-2004, 11:22 PM
"Should I pay less per hour and pay them for the full time they are gone?"

What do you mean by this? If you have an employee, even your brother in law, you must pay for all time worked, that includes windshield time. You must also pay all applicable state and federal taxes, unemployment compensation, and any other applicable fees. I suggest you speak with your accountant.

ahh, sodking..... the glory of the 1099... you keep track of what they made, then you send it to them and they pay their own taxes. and most new guys don't have accountants...

lawnwizards.

lawnman_scott
11-01-2004, 11:27 PM
ahh, sodking..... the glory of the 1099... you keep track of what they made, then you send it to them and they pay their own taxes. and most new guys don't have accountants...

lawnwizards.There are rules for 1099's though. I see your point about the accountant though, seems like everyones awnser.

GreenMonster
11-01-2004, 11:29 PM
my accountant got me back much more $$$$ (legally) than I could have gotten on my own.

Precision
11-01-2004, 11:38 PM
Most people who don't value there money don't have accountants.

SodKing
11-02-2004, 07:46 AM
Two people you see before entering into business, your lawyer and your accountant. Even with a 1099 you still need to pay unemployment, workers comp, state and local taxes, and insurance. The 1099 is only a federal form which does not cover these other taxes, fees, and services.

kickin sum grass
11-02-2004, 07:56 AM
a 1099 is basically for a subcontractor in this situation. If you provide the tools, transportation, tell them when they start and stop, are their boss, and a few other things than they are employees, you must pay them as such. If you ever get audited you will find out this the hard way. The IRS will rip you apart. My buddy did this with his employees and almost lost everything after the IRS got finished with him. I also confirmed this with my accountant. Pay an employee the right way. All time worked, and pay them the correct amoount. Would you want to do this for 6 bucks, unless you are in high school I think not. I paid my highschool kids 8 bucks starting out no experience.
Look into the rules of a 1099 before you get yourself in trouble.

Mowing Mike
11-02-2004, 08:01 AM
With a 1099 that means the worker is a sub-contractor, the sub-contractor can not be told when to start work and when to take lunch they are hired to do a job. People use 1099 and a way around taking taxes out on thier employess all the time most people use it illegaly. One of my biggest customer told me when he started his own bussiness (wood-working) he had apartner, he paid the partner his share and 1099 him at the end of the year, a few years later the IRS came to him. The partner was not filling the 1099s just putting them in the trash. The IRS told him he was responsible for the partners taxes being taken out and was fined with back taxes for about 28000 dollars, he said it almost put hi out of business. Now he is one of the biggest wooden locker producer in the world. He has given me great advice in the past but the 1099 advice is probably the best.

Mike

Richard Martin
11-02-2004, 08:13 AM
Thanks Lawnwizard,

I have a couple teenagers that want to work, and I think your idea of paying for the entire time spent away will work out at the 6 to 6.50 scale. I agree that the route is important to make money for all. Thanks for responding so quick.

v/r
Mike

You couldn't get a 10 year old to work for that much money around here. Did you hear about the rumbling of moving the minimum to $11.00 plus an hour? I think that is too high but if you adjust for inflation the minimum should be about $7.75 compared to 1970 and 1980.

Oh, and the IRS will burn your azz for 1099ing an hourly worker.

No Lawncares
11-02-2004, 08:26 AM
Man you guys complain about not ever making enough in this business, then I start reading how you only pay $ 6.00 an hour. How do you not make money when your only paying $6.00 an hour. If you ask me you are not paying enough. Good employees should make atleast $10.00 an hour.

CathyLynn
11-02-2004, 09:11 AM
There's a lot of difference between a sub contractor and an employee. You get yourself into some real trouble trying to beat the tax system just to save a few bucks.

Employess have to eat and buy all the same things you do. If you plan on any growth find a good employee or 2 and pay them a living wage--pay them all year long--care about them--treat them better than any peice of machinery you have and your business will grow to be very strong.

All the equipment in the world is worthless without a skilled machine operator!
Many small business' die quick when all of the sudden thay have no competent employees!

Runner
11-02-2004, 02:41 PM
I don't understand how anyone is able to have high school kids running their power equipment. Here, it doesn't happen legally, and no insurance company would even touch you with it. What kind of liability do you carry? What kind of workman's comp - with the insurance company knowing that a 15-16 kid is operating a power mower? ou couldn't get a policy around here for that. The only thing they could do would be labor jobs and rake and sweep, basically.

gogetter
11-02-2004, 03:03 PM
ahh, sodking..... the glory of the 1099... you keep track of what they made, then you send it to them and they pay their own taxes.
lawnwizards.

LOL! Guess again!! LOL!

CathyLynn
11-02-2004, 06:00 PM
We had OSHA in our face many years ago about not even being able to permit my own son to operate anything motorized if under the age of 18. Our ins co has also always taken that stand so we have never had anyone under 18 touch a piece of equipment..

Had a guy hurt on my husbands crew almost 28 years ago--had no insurance--was paying the guys cash--(we all know the drill)---got our a** into big time trouble--took years to recover--learned our lesson...

It pays to follow the rules of the system....

MMLawn
11-02-2004, 06:10 PM
ahh, sodking..... the glory of the 1099... you keep track of what they made, then you send it to them and they pay their own taxes. and most new guys don't have accountants...lawnwizards.



Until you go to JAIL, because this is ILLEGAL!! You can only use 1099 on TRUE SubContractors, NOT your employees and this is what they are YOUR EMPLOYEES, and not subs no matter what YOU call them as it is what the IRS calls them!

Geez, don't give this guy that kind of sorry advice!

lawnwizards
11-03-2004, 12:25 AM
I don't understand how anyone is able to have high school kids running their power equipment. Here, it doesn't happen legally, and no insurance company would even touch you with it. What kind of liability do you carry? What kind of workman's comp - with the insurance company knowing that a 15-16 kid is operating a power mower? ou couldn't get a policy around here for that. The only thing they could do would be labor jobs and rake and sweep, basically.

all of my highschoolers are 18. not 15 or 16... i didn't say junior high.

as far as the whole 1099 thing.... it works for me... it may not work for everyone but it WORKS for me... i don't actually have employees. kinda like you all talking about subbing out work to the lowballer.... thats exactly what i do....

muddstopper
11-03-2004, 12:44 AM
Lawnlizard, you are going to find out the hard way because you dont wont to hear the truth. If these highschoolers are working for you, using your equipment, working under your supervision according to your hours and rules, they are your employees, not subcontractors. You are liable for withholding taxes, providing workerscomp, unemployment insurance and a 1040 not a 1099.

lawnwizards
11-03-2004, 12:53 AM
muddstopper,

actually its LawnWizards..... and heres my definition...
subcontractor
An individual or company hired by a general or prime contractor to perform a specific task as part of the overall project.

my employees don't work for me all the time... just when i need them.......hence the term subcontracting.....

Currier
11-03-2004, 12:57 AM
All I have to say is talk to an accountant BEFORE you put anybody on payroll!
I have brought in more $$ than ever before but have paid so much in payroll taxes that it isn't even close to being worth it!

I have less money now that if I was a single prop. I give up. Next year they will either buy a share and become their own bus (subcontractors) or they will be let go and I will make the real money as a single proprietor.

Geezer
11-03-2004, 01:06 AM
Hmmm...Let's review....YOUR Truck, YOUR equipment, YOUR Accounts... YOUR EMPLOYEE

His Truck, His equipment, YOUR Accounts....SubContractor

You might get by like this until somebody gets PO'd...you are probably the kind of operator that doesn't pay overtime, ride time, etc. Eventually you'll get Big Brother checking your books out....

Go ahead,but you're probably alot better off doing your gambling in Las Vegas.
There at least the IRS doesn't get involved unless you win. Here they will make sure you lose!

alpine692003
11-03-2004, 01:07 AM
I pay my guys $12/h x 2 guys..

Pay them what they are worth and keep em happy and they will work their ass off you..

lawnwizards
11-03-2004, 01:17 AM
Hmmm...Let's review....YOUR Truck, YOUR equipment, YOUR Accounts... YOUR EMPLOYEE

His Truck, His equipment, YOUR Accounts....SubContractor

You might get by like this until somebody gets PO'd...you are probably the kind of operator that doesn't pay overtime, ride time, etc. Eventually you'll get Big Brother checking your books out....

Go ahead,but you're probably alot better off doing your gambling in Las Vegas.
There at least the IRS doesn't get involved unless you win. Here they will make sure you lose!
o.k. geezer, my father inlaw is a subcontractor painter.... he gets flown in to his jobs, uses the contractors trucks, equipment, his accounts... and still gets a 1099.... according to your RULES he is an employee, yet he doesnt' work all the time with this guy.... so, what gives?

superiorlawns
11-03-2004, 02:16 AM
Lawnwizards,

i hate to say this, but you are being defensive and not offensive. Instead of denying it and backing yourself up, we are all trying to prevent you from getting screwed. No matter which way you look at it, these are your employees. Your father, is an employee...just a part-time employee...any part-time employee can have more than one job, they could have an unlimited amount. You are confused and trying to deny our help. I am unsure why you post a question if you cant handle what we tell you.

Please listen to our advice so you don't get screwed out of money or much less out of business.

moremowing4me
11-03-2004, 05:56 AM
why is it that everyone else thinks that they know how a person should run his or her buisness. I have three part-time employees and i dont pay for workmans comp. because I dont have to unless I have three full-time employees. I also am not required to pay time and a half if they work over 40hrs because I dont have enough full time employees and the law doesnt require me to. everyone talks about you got to do this and you got to do that but they dont even know the laws themselves they are just going off of what they were told. that is why most people spend more money every year than they really have to.

SodKing
11-03-2004, 07:59 AM
why is it that everyone else thinks that they know how a person should run his or her buisness. I have three part-time employees and i dont pay for workmans comp. because I dont have to unless I have three full-time employees. I also am not required to pay time and a half if they work over 40hrs because I dont have enough full time employees and the law doesnt require me to. everyone talks about you got to do this and you got to do that but they dont even know the laws themselves they are just going off of what they were told. that is why most people spend more money every year than they really have to.



You could not be more wrong. Back this up with the RSA's and I will believe you. You have to pay workers comp on every employee whether they work 1 minute or full time. You even have to guarentee that subcontractors are covered under a workers commp policy if they are subcontracted to you.

Show us the RSA and then we will shut up.

Richard Martin
11-03-2004, 08:22 AM
You could not be more wrong. Back this up with the RSA's and I will believe you. You have to pay workers comp on every employee whether they work 1 minute or full time. You even have to guarentee that subcontractors are covered under a workers commp policy if they are subcontracted to you.

Show us the RSA and then we will shut up.

Workers Comp laws vary from state to state. The threshold for a few states is very high as moremowing4me said.

For an example visit this link http://dir.alabama.gov/wc/faq.aspx and scroll down to the Compliance section.

You will see that the threshold for mandatory Workers Comp is 5 employees.

Richard Martin
11-03-2004, 08:36 AM
This is from moremowing4me's own state of South Carolina:

2. How many employees must an employer have before he is required to purchase workers’ compensation insurance?

The general rule of thumb is, employers who regularly have four or more part-time or full-time employees must be insured. There are a few exceptions, which can be outlined for you by the Coverage & Compliance Division at (803) 737-5706.

The web page is: http://www.wcc.state.sc.us/faq.htm

Richard Martin
11-03-2004, 08:48 AM
Here is the best page of all. This one outlines each states laws.

http://www.insuranceservices.com/workers_comp/index.html

CathyLynn
11-03-2004, 09:07 AM
good page link Richard! Thanks! This should put an end to this topic!

moremowing4me
11-03-2004, 09:59 AM
Thank you Richard!!!!!!! I just now was able to see the reply by Sodking. I know the laws where I live very well and do not need him to tell me that I dont. I also give the people that work for me 1099s as they take there lunch breaks when they want, work with me when they can, and sometimes use their own trucks and equipment on occasion. I compensate them well when they do!

MMLawn
11-03-2004, 11:25 AM
What you guys that are using 1099's are not seeing or grasping is that it is <b>NOT YOUR definition of what a Sub Contractor is but what the IRS Definition is</b> and you can find that at the IRS website. That as some of you will find out the hard way is the ONLY DEFINITION THAT MATTERS.

As to time and a half for hours worked over 40, that is Federal Law also, NOT State law and quite simply there is not anyway around it and the first person that complains you will find yourself oweing them and the IRS quite a sum. I bet that you guys using the 1099's either 1) aren't using a CPA or 2) if you are you are misleading them as any right out of school CPA knows better than this.

ALso you might want to know that because of the very issue of 1099's the LCO business is one of the most highly investigated by the IRS. You guys are playing with fire and will get burned.

Richard Martin
11-03-2004, 11:42 AM
I also give the people that work for me 1099s as they take there lunch breaks when they want, work with me when they can, and sometimes use their own trucks and equipment on occasion. I compensate them well when they do!

I did not comment on that portion of your arguement because I have read the laws concerning 1099 usage many times and received many, many opinions regarding their usage. As I read them about 99.9 percent of the LCOs that visit Lawnsite cannot use them to dodge paying their portion of the FICA and doing the paperwork.

Your employees (and you do call them that) are not subcontractors. A subcontractor chooses where and when they work, who they work for and must use their own tools on a regular basis. Your employees do not meet these definitions of a subcontractor just because they can choose when to take lunch and occasionally use their own vehicle. BTW, when they use their own vehicles are you reimbursing them at the rate of 35 cents for every mile they drive? That is the law and you must also keep a record of their miles traveled just like you would for your company vehicles. But...

There is a way to dodge the subcontractor laws when the IRS performs an audit. It is not easy but it may save you a ton of money in penalties, back taxes and fines. If you can prove that a majority of similar businesses to yours, in your area, utilize 1099s in leu of the tradional tax collection methods than you may also use 1099s to report employee income.

I can post the links to these also if you like.

Also remember that anything that you post on the Internet is forever, it doesn't go away even if Lawnsite were to close tomorrow. The IRS could potentially use any statements made here against you in a case.

DFW Area Landscaper
11-03-2004, 12:10 PM
The reality is that you can classify your employees as subcontractors and it is PERFECTLY legal if you qualify. The IRS cannot touch you for this. Why do I say this?

Back in the early 70's the IRS began to really crack down on employers who were misclassifying their workers. They would do an audit on a small business and then tell the business to pay all the back taxes and penalties. Small businesses were being bankrupted left and right. The IRS was completely out of control.

Naturally, these small business owners went crying to their congressmen. So, on November 6th, 1978, the Congress passed the Safe Harbor Provision, Section 530, of the 1978 Revenue Act. If an employer qualifies under the terms of the Safe Harbor Provision, the 20 point checklist, or "common law" checklist, used by the IRS in determining if a worker is an employee or sub-contractor, is irrelevent. It doesn't matter whose equipment is being used or how much control the employer has over the worker. These things don't matter for a business who qualifies for the Safe Harbor Provision of the act.

Everyone in our industry automatically qualifies for the Safe Harbor Provision unless you have screwed yourself in the past by classifying your employees as employees (and filing form 941). There are two requirements to qualifying within our industry:

1.) You have always treated the workers as subcontractors
2.) A significant segment of the industry also treats similarly situated workers as sub-contractors

This worked for a little while to keep the IRS at bay. However, by the 90's the IRS was interpreting the act to their advantage. They were defining "significant segment of the industry" as 90%. So in 1996, the Congress had to b!tch slap the IRS once again, with another Act of Congress. The Congress passed Section 1122 of the Small Business Job Protection Act of 1996. This section did several things:

1.) It defined "a significant segment of the industry" as being 25%
2.) It shifted the burden of proof to the IRS
3.) It mandated that the IRS provide any employer with a copy of Section 530 at or before the commencement of an audit involving worker classification
4.) It also requires the IRS to liberally construe Section 530 in favor of the taxpayer

Resources:
http://www.employerbook.com/Sec530.html
http://www.nysscpa.org/cpajournal/1999/1299/f261299a.html
http://www.taxlitigator.com/articles/57614.htm
http://www.jbartram.com/Relief_Programs_When_Workers_Are_Misclassified.html
http://www.kgkcpa.com/TaxNotes/RelProg.htm
http://www.cousinsaccounting.com/html/section_5.html

And finally, from the IRS' own websight:
http://www.irs.gov/pub/irs-pdf/p1976.pdf

We all know that many, if not most, of the folks within our industry are classifying their employees as sub-contractors. We easily meet the "significant segment" test.

If your accountant doesn't know anything about Section 530, it's time for a new accountant. I just fired mine. She's completely incompetent.

Later,
DFW Area Landscaper

Richard Martin
11-03-2004, 01:01 PM
The reality is that you can classify your employees as subcontractors and it is PERFECTLY legal if you qualify.

I believe that is what I said. I was, however, wrong about the qualifier. It is only 25%. But the original onus still rests on the back of the taxpayer. How would one go about proving that even 25% of LCO employees are currently paid with 1099s as is required before the onus switches to the IRS? Or do I read it wrong?

DFW Area Landscaper
11-03-2004, 01:30 PM
++++How would one go about proving that even 25% of LCO employees are currently paid with 1099s as is required before the onus switches to the IRS? Or do I read it wrong?++++

I think that once you prove a pima facie case, the burden of proof shifts to the IRS. They must prove that less than 25% of the taxpayers within the industry are classifying similarly situated workers as sub-contractors.

I've done hours and hours of research on this topic. I can't find the link, but one of the websights I visited recommended getting a letter from an accounting company or law firm stating that a significant segment of the industry in your area classifies employees as sub-contractors. In my area, it's a no brainer. I'd bet 90% of my competitors are classifying their employees as sub's.

In fact, I'd bet you could use Lawnsite.com as proof that a minimum of 25% of LCO's are classifying their employees as sub's. Heck, every other day some newbie is on here asking about how to pay employees.

The weird thing is, when I fired my accountant and went shopping for a new one, 90% of the accountants I interviewed had never even heard of Section 530 Safe Harbor. I really had to shop around to find one who wasn't like "Uh, what? What section? Well, uh, I just need to research it and get back to you."

In my opinion, it's malpractice for an accountant to charge someone in our industry for financial advice and not know a thing about the Safe Harbor Provision.

Later,
DFW Area Landscaper

MMLawn
11-03-2004, 01:41 PM
Okay I wasn't going say anything the first dozen times DFW BUT,

it is NOT websight: as in web (sight)vision ;)

it IS website: as in web (site)location :waving:


Tell me this, how many tens of thousands of dollars would it cost you to prove your 25% to the IRS and the Courts vs. the legal taxes it would have cost you on your ONE and a HALF EMPLOYEES anyone?

Island Lawn
11-03-2004, 01:43 PM
MM Lawn,
I believe DFW said the burden of proof is on the IRS

Sure sounds good!

DFW Area Landscaper
11-03-2004, 01:50 PM
++++I believe DFW said the burden of proof is on the IRS++++

I didn't say it. Congress said it.

http://www.taxlitigator.com/articles/57614.htm

Scroll down to the Safe Harbor portion. It's about 20% of the way down the page.

Fourth, the burden of proof is modified in Section 530 cases. If a taxpayer adequately responds to reasonable IRS information requests and establishes a prima facie case that it was reasonable not to treat an individual as an employee, the burden of proof shifts to the IRS.(25) An IRS request for information will not be treated as reasonable if (1) it does not relate to the particular basis on which the taxpayer relied for establishing its reasonable basis, or (2) complying with the request would be impracticable given the particular circumstances and the relative costs involved.

Later,
DFW Area Landscaper

Island Lawn
11-03-2004, 01:53 PM
Thanks for the link!

MMLawn
11-03-2004, 02:10 PM
MM Lawn,
I believe DFW said the burden of proof is on the IRS Sure sounds good!


IL and all others, hire a good CPA and do not take any LCO's opinion on here, there is a reason we cut grass and not prepare tax returns for a living. Also do a search and read some of DFW's previous post on busines and employees(including this same dribble on the Subs and his same arguement) and then tell me you still want to follow his lead.... :)

MMLawn
11-03-2004, 02:13 PM
=DFW Area Landscaper If a taxpayer adequately responds to reasonable IRS information requests and establishes a prima facie case that it was reasonable not to treat an individual as an employee, the burden of proof shifts to the IRS.(25) An IRS request for information will not be treated as reasonable if (1) it does not relate to the particular basis on which the taxpayer relied for establishing its reasonable basis, or (2) complying with the request would be impracticable given the particular circumstances and the relative costs involved.[/I]


and the SECOND that they learn that the "sub" is driving YOUR truck, pulling YOUR TRAILER, using YOUR Equipment, cutting YOUR Customers Lawns and doing so on a daily basis you are BUSTED as you have just proved they are an EMPLOYEE and NOT a SUB!

I tell you what DFW, YOU try it, give us your Business Name so that we can make sure the IRS is informed and then let us know from your jail cell how it worked out for ya....

DFW Area Landscaper
11-03-2004, 02:30 PM
http://www.taxlitigator.com/articles/57614.htm

++++In Section 530 of the Revenue Act of 1978 ("Section 530"), Congress provided a safe harbor that allows a taxpayer to treat a worker as not being an employee for employment tax purposes regardless of the individual's status under the common-law test.++++

Later,
DFW Area Landscaper

MMLawn
11-03-2004, 04:43 PM
Just for kicks and giggles below is this same mindless rant from DFW a couple months ago before he said he was out of here and outta of the business. I guess that didn't work out too well for him either.

Hey DFW you still have the illegal alien without drivers license and unable to speak english driving your companies equipment around endangering honest hard working folks? Why even bother with a 1099 at all since he is in this country illegally?

DFW Landscaper:I've got my steady hand out right now running my route with a Guatemalen guy. I'll have to pay the Guatemalen guy cash at the end of the day. And I have no workmans' comp on him either. My employee is driving my truck and he's got no drivers license. One serious wreck and I'm ruined financially.

I'll make sure that I take your payroll and tax advice. ;)


http://www.lawnsite.com/showthread.php?t=84535&page=1&pp=10

SodKing
11-03-2004, 06:26 PM
"Thank you Richard!!!!!!! I just now was able to see the reply by Sodking. I know the laws where I live very well and do not need him to tell me that I dont"

Wow what a response by moremowing4me. Here we are trying to keep our fellow landscape peer out of trouble and he has the audacity to impugn our responses.

If you don't want advice, don't post threads.

I can only hope that you meet the IRS man and afterward give us all an "I told you so" post.

moremowing4me
11-04-2004, 12:41 AM
Wow what a response by moremowing4me. Here we are trying to keep our fellow landscape peer out of trouble and he has the audacity to impugn our responses.

If you don't want advice, don't post threads.

I can only hope that you meet the IRS man and afterward give us all an "I told you so" post.

I wasn't trying to say "I told you so" Sodking ;those are your own words. I just know that alot of people on here don't knkow the difference in laws from state to state, and because I do not know the laws in your state I will not comment on things that you ask if they pertain to those laws because I do not know them. All I wish is that people would take this into consideration.
As for the other comment about the 1099s. If I had to I could get at least 25% of the lcos in my area to show that they use them, because in the market down here we all work with one another very well. i.e.(giving each other work,advice, etc.) I appreciate everyones advice on lawnsite but I also know that it all doesnt pertain to me. I dont post nearly as often as I am on here, because I know the stuff that I do may rarely pertain to someone elses area. I wasnt trying to offend anyone, I realize that it came across differently. I just wanted to let the guy that started the post to know that he needed to do as I do and take advice for what it is "advice" not law

Liberty Lawncare
11-04-2004, 01:10 AM
"Should I pay less per hour and pay them for the full time they are gone?"

What do you mean by this? If you have an employee, even your brother in law, you must pay for all time worked, that includes windshield time. You must also pay all applicable state and federal taxes, unemployment compensation, and any other applicable fees. I suggest you speak with your accountant.

YUP and the workers comp ins is expencive.

Geezer
11-04-2004, 02:27 AM
LawnWizard , they are not my rules.

Your father-in-law may BE a subcontractor using the other guy's equipment, accounts, etc ...IF... he meets the IRS definitions of a sub. If he is in a position to LOSE money or make a profit on the project, IF he has a substantial investment ..(although this in itself is not a determinant) and has to pay his travel and lodging expense without reimbursement he MAY be a sub.

OR he is being paid MISTAKENLY (or intentionally) on a 1099.

This can be a complex issue.

If you give extensive instructions on the work (When, why, how, where to do the work, what tools or equipment to use, what assistants to use, where to purchase supplies, etc) THEN YOU HAVE EMPLOYEES.

If you provide training about the procedures and methods to do the work, YOU HAVE EMPLOYEES.

DFW may be a bit misguided in his advice to you. The IRS determines the employee / sub relationship by the exsiting controlling statutes of FICA or FUTA or in the absence of statues, the common law test. The common law test involves all of the 3 above princilpes I mentioned
They are : 1) Behavioral Control
2) Financial control
3) Relationship of the Parties { contract? benifits}

I am sure that we would all stipulate that the IRS has more time, attorneys and $$$ than we do. Gamble in Vegas...here the house (IRS) has ALL the advantage.

But then again, what do I know? I cut grass for a living. Find an accountant and an attorney to get the definitive answer. Good Luck.

DuallyVette
11-04-2004, 02:52 AM
Once upon a time, a friend of mine was a building contractor. A sub-contractor ( framer)worked for him very regularly. This sub. didn't file his taxes for several years. After the IRS pounded the sub, they came after the building contractor for the balance. He HAD to pay .

Workers Comp: if an employee or sub-contractor is injured while performing service for you, you are liable. Make sure that your subs have workers comp on themselves.

Play by the rules, be safe, let your customers pay for it. Explain the costs and their liability if they use a contractor that takes these shortcuts to disaster.

turner_landscaping
11-04-2004, 12:00 PM
If you paid me 8 bucks only for the time I was actually doing work, I would tell you to take a hike I am not working for you. I mean you are hiring the guy to make money for you. Dont be a greedy employer and want all the money. Think of how much money the guy is making you an hour. I mean yea I know you got to pay all the insurance and stuff but come on dont be an gerk about not paying the guy for eight hours and lunch. Would you work for yourself if you only got paid 8 bucks and hour no lunch and only work time. I dont think so so dont pay him that way.

Island Lawn
11-04-2004, 09:51 PM
Gamble in Vegas...here the house (IRS) has ALL the advantage.

Find an accountant and an attorney to get the definitive answer. Good Luck.

can't blame a guy for wishful thinking.

I'd like to see how this 530 thing plays out...but I'm not looking to be 1st to try it...

Solo sure is simple...