Paying your employees in cash???

[spitfire3416]

I have a friend who owns a small landscaping business and he pays his two employees in cash. I always thought this seemed kind of silly because than how can you claim that money spent on labor as a deduction, right? But what he does is, he makes sure he has enough cash coming in from his customers to cover his labor costs. So if he's paying out roughly $3k a month in labor, he makes sure he's pulling in $3k a month in cash. That way he never draws money out of business account. Same thing goes for his other business expenses. Stuff like, commercial insurance, mower payements, insurance etc. he pays out of his business account along with his own pay, and makes sure he has enough money coming in "on the books" to cover those costs. I'm pretty sure he has workers comp though in case someone gets hurt. Does anyone else do this or know of anyone it's backfired on? I keep telling him he's crazy but he's been doing it for a long time with no problems.

[Pietro]

I dont know if youll get anyone to admit to breaking the law...



BUT.....thats like having 2 sets of books. Workers comp can only be had for workers that you pay on the books. Otherwise you cant prove they work for you. Ive heard of people paying min wage on the books and then a few bucks more cash. Its unfortunate, but the tax on stuff gets out of control and this is how people (like your friend) try to recoupe profits. If the dept of labor or IRS found out, he could face fines I'm sure. Honestly, on a small level I dont see it happening, but you never know.

[wegomow]

[QUOTE=Pietro;4667971]I dont know if youll get anyone to admit to breaking the law...

I didn't think so either but at least one person did.

[nylesedwards]

I have a small business (40 weekly customers) and I pay my employee in cash
Posted via Mobile Device

[AI Inc]

Originally Posted by nylesedwards

I have a small business (40 weekly customers) and I pay my employee in cash
Posted via Mobile Device

You best hope you never get an unemployment audit.

[McFarland_Lawn_Care]

IF someone DOES get hurt on the job he is screwed......Honesty is the best route.

[Will P.C.]

This is very common in this business and small businesses in general. It saves the owner big bucks and most employees would rather get paid in cash.

Illegals, young workers, people with already destroyed credit/life aren't really concerned about showing taxable income to help their credit, buy homes/cars, etc. The lawn care business is a magnet for these types of workers.

Misclassifying workers is another way around the IRS which is also prevalent but illegal as well.

You get big enough to where the paperwork is out of control and you could be in some ****

[spitfire3416]

Originally Posted by McFarland_Lawn_Care

IF someone DOES get hurt on the job he is screwed......Honesty is the best route.

he claims the workers comp will cover him in case anyone gets hurt

[xclusive]

Originally Posted by McFarland_Lawn_Care

IF someone DOES get hurt on the job he is screwed......Honesty is the best route.

Originally Posted by spitfire3416

he claims the workers comp will cover him in case anyone gets hurt

All he has to say is he just hired them if they get hurt and he will be ok to submit a claim for workers comp.

[GravelyWoman]

Originally Posted by xclusive

All he has to say is he just hired them if they get hurt and he will be ok to submit a claim for workers comp.

My workmen's comp insurance performs an audit at the end of every year of my employee's and how much I paid out in salaries. Wow, I could not go to sleep at night having such bad business practices in place! He will eventually get caught, one way or another!!! Just not worth the risk to me!

GW