First Hire

[krzys555]

Originally Posted by cutman2000

Will doing all of this(workmans comp,payroll legally-rather than under the table) correctly help or hurt me with my income tax return?

there is no way to answer this, without knowing more about you, your situation(income, expenses, equipment) but most importantly talk to your CPA.
go and have a talk with your cpa. have a nice long talk. if your cpa ca not tell you what your benefits would be go find a new cpa.

i hate to say this, but you need a good cpa that knows the loopholes. he will be worth his weight in gold.

as an employer you will get certain tax breaks, other wise unavailable to you without employes. you can also deduct what you pay him and his taxes you pay for him, as well as wc.

paying under the table will not get you some tax breaks. it will save you a lot of time with payroll.
do you have any commercial properties as they require workmans comp for employes. residential clients will not ask you for wc, they most of the time don't even ask for insurance.
when i was smaller under 60k paying under the table was better. but after that i went official with payroll.

if you do hire them legally it will be harder to fire them, unlike paying under the table.

[cgaengineer]

Paying under the table and firing someone could actually be worse krzys...
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[cutman2000]

Harder to fire? Can't I just say... "I can't afford you anymore, have to let you go?"

[cgaengineer]

Originally Posted by cutman2000

Harder to fire? Can't I just say... "I can't afford you anymore, have to let you go?"

If he's not a legal employee it can come back and bite ya...both with IRS and with an "accident". Neither are cheaper than doing it right.
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[krzys555]

Originally Posted by cgaengineer

If he's not a legal employee it can come back and bite ya...both with IRS and with an "accident". Neither are cheaper than doing it right.
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he not taking you to the irs unless you are big. he create just as many problems for himself if he goes to the irs.
yes an accident can happen, but if you make the right hire( he knows what he is doing and has experience, you will have no problems. if he breaks anything it is covered under you general liability ans not worksmans comp.

[cutman2000]

Originally Posted by krzys555

he not taking you to the irs unless you are big. he create just as many problems for himself if he goes to the irs.
yes an accident can happen, but if you make the right hire( he knows what he is doing and has experience, you will have no problems. if he breaks anything it is covered under you general liability ans not worksmans comp.

Im making under 60k, would it benefit me more to pay under the table for a part time worker?

[krzys555]

Originally Posted by cutman2000

Im making under 60k, would it benefit me more to pay under the table for a part time worker?

i belive it would be better for you to pay under the table. your not going to get any real advantages by paying on the table. it is going to put a lot more paperwork for you, as well as mork headaches to deal with the irs ect. if it is a full time person driving your truck i would say make it legit, especially if you wont be with him working.

[GreenI.A.]

A warning about paying under the table. Yes you are opening up a chance for sever penalties. Here are two different things that have happened up here to guys I know, which put both companies out of business.
1) a mediam sized company was paying a couple of extra laborers under the table. There was a freak accident and one of the guys lost a portion of his foot. He went to the hostpital, when doing his paperwork the administrator asked if the injury was work related. He naturally said yes, as it was. After the hospital contacted the employer for their Workers comp info, they found he was not covered. The hospital then billed the employees personal health insurance and notified them that their policy holder was injured while working for a company. The insurance carrier then went after the landscaper for reimbursement, which included over a weeks stay in the hospital and multiple plastic surgeries, and eventually a prosthetic foot. The insurance company also notified the state. The company was investigated by OSHA, Dept of Labor, State Dept of Revenue, and IRS. They quickly went out of business with all of the fines and back taxes they had to pay, as well as the medical bills (which GL won't cover).

2) Another company had some guys working off the books. When it was time to let one of the guys go come winter the employee attempted to file for unemployment. Needless to say the unemployment office had no record of him working the last 8 months or so. He explained that while the employer paid him in cash, he was under the assumption that the employer was holding taxes and just handing him cash instead of cutting an actual paper check. He got his unemployment and the owner was fined heavily, but is still in business. The employee did end up getting a big tax bill at the end of the year though.

[cgaengineer]

Originally Posted by GreenIndustryAssociates

A warning about paying under the table. Yes you are opening up a chance for sever penalties. Here are two different things that have happened up here to guys I know, which put both companies out of business.
1) a mediam sized company was paying a couple of extra laborers under the table. There was a freak accident and one of the guys lost a portion of his foot. He went to the hostpital, when doing his paperwork the administrator asked if the injury was work related. He naturally said yes, as it was. After the hospital contacted the employer for their Workers comp info, they found he was not covered. The hospital then billed the employees personal health insurance and notified them that their policy holder was injured while working for a company. The insurance carrier then went after the landscaper for reimbursement, which included over a weeks stay in the hospital and multiple plastic surgeries, and eventually a prosthetic foot. The insurance company also notified the state. The company was investigated by OSHA, Dept of Labor, State Dept of Revenue, and IRS. They quickly went out of business with all of the fines and back taxes they had to pay, as well as the medical bills (which GL won't cover).

2) Another company had some guys working off the books. When it was time to let one of the guys go come winter the employee attempted to file for unemployment. Needless to say the unemployment office had no record of him working the last 8 months or so. He explained that while the employer paid him in cash, he was under the assumption that the employer was holding taxes and just handing him cash instead of cutting an actual paper check. He got his unemployment and the owner was fined heavily, but is still in business. The employee did end up getting a big tax bill at the end of the year though.

So see, paying under the table is a great idea!

If you think for a minute an employee would never what to turn you in after being fired or injured you have a lot to learn. This day and age people are looking for the cash cow.

I too know someone that was paying under the table and an employee was injured...cost him almost 30k out of pocket to pay to put a finger that was nearly cut off back on.
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[cgaengineer]

Originally Posted by krzys555

he not taking you to the irs unless you are big. he create just as many problems for himself if he goes to the irs.
yes an accident can happen, but if you make the right hire( he knows what he is doing and has experience, you will have no problems. if he breaks anything it is covered under you general liability ans not worksmans comp.

If he breaks his leg does your gen liability cover it? Why woul he only take you to the IRS If you are big? Do you think th size of the company means you are less likely to get fined or that th employee won't want to screw you over when he is fired one Friday afternoon?
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