Employee contracts

Discussion in 'Business Operations' started by StBalor, Mar 8, 2006.

  1. StBalor

    StBalor LawnSite Senior Member
    Posts: 798

    I need an employee contract. you know, the info you get from someone when you hire them.
    Also, i was thinking about paying them by check every fri and handing them a 1099 at end of year. Rather then messing with their taxes. what do you think about this? how do you guys do it?
     
  2. bigjeeping

    bigjeeping LawnSite Senior Member
    Posts: 903

    You can only 1099 contracted labor. It is very easy to categorize your workers as subcontractors.

    Here are a few steps you can take to be safe:

    (always check with your state laws as they may vary)

    (1) Have each of your workers get a DBA
    (2) Have them file their DBA for a workers comp exclusion so you won't get busted for not paying there workers comp!
    (3) Contract their labor in writing
     
  3. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Posts: 3,465

    Your better off hiring a payroll co. they not much and if any of the withholdings are wrong they usually take responsibility.
     
  4. amar

    amar LawnSite Member
    Posts: 203




    Are these workers using your equipment?
     
  5. bigjeeping

    bigjeeping LawnSite Senior Member
    Posts: 903

    I don't actually 1099 yet. But I am looking into doing it....
    I'm sure you can get around any equipment usage grounds?
    In their contract put they're leasing the equipment from you and it comes out of their pay.
     
  6. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    If it was so easy too ==> to categorize your workers as subcontractors...... than would they not really be termed an employee??

    I'm confused are the a worker fore only you ?? or as ALL subcontractor they can be .... an more than likely would have to show in an audit that they perform other work for other companies

    LEGALLY all these concerns of worker n subcontractor if in an audit will cause you much financial hardship & IRS fine's

    Do a goggle search .... go to the IRS website .... than go back n correctly set these "workers as employees"

    Quick story ... good local LCO been in business 10 years .... gave all his workers (2 of em) 1099's ....n got away with it .... back 5 years one of his "subcontractors" shot a good size stone out the side of a mower n into a 10 year olds mouth ....needless to say they "subcontractor" split .... the LCO being confronted with medical cost from the Childs parents ... got into "issues" when the parents lawyer found out of this "arrangement" got his pant's sued (think it was only like $15k but his liability company refused to cover" than the info got forwarded to the IRS n he was hit with an extra $8k .....

    Gotta luv subcontractors ... if you go this route you may get away with it fore few years ....but if issues come up either injuries, damage, traffic accident or such ....than it will hit the fan


    Heres some quick n lengthy info



    Compliance with instructions - Control is present if the person for whom the services are performed has the right to require compliance with instructions.

    Training - Training through meetings, attending classes, or apprenticeship with a more experienced worker indicates the right to control.

    Integration - Integration of the worker's services into the principal's business operations shows that the worker is subject to direction and control.

    Services rendered personally - If the services must be rendered personally, then the right to control is suggested.

    Hiring, firing, supervising and paying assistants - If the person for whom services are rendered hires, discharges, and pays workers, then that factor shows control over all workers. If a worker engages his own assistants, he may be an independent contractor.

    Set hours of work - Control is indicated if set hours of work are established by the person for whom services are rendered.

    Full time required - If the worker devotes substantially full time to the business of the person for whom services are rendered, then such person has control over the amount of time the worker can work and impliedly restricts the worker from doing other gainful work.

    Order or sequence determined by principal - If the worker performs services in the order or sequence determined by the person for whom the services are performed, the worker is likely an employee.

    Oral or written reports - A requirement that the worker submit regular oral or written reports to the principal indicates control.

    Payment of business and/or traveling expenses - If the principal ordinarily pays the worker's business or traveling expenses, then the worker is usually considered an employee.

    Working for more than one firm at a time - If a worker performs service for several unrelated persons or firms at a time, this is indicative of an independent contractor relationship.

    Making service available to the general public - If a worker makes his services available to the general public on a regular and consistent basis this indicates an independent contractor relationship.

    Competitive selection among subcontractors - If the principal uses some competitive means for reducing his own cost in selecting a subcontractor, then the principal may be a prime contractor instead of an employer.

    2. METHOD OF PAYMENT

    Payment on a regular, periodic basis - Payment by the hour, week, day, month or other regular periodic interval generally points to an employer-employee relationship.

    Realization of profit or loss - A worker who can realize profit or suffer a loss as a result of the worker's services (beyond the profit or loss ordinarily realized by the employees) is generally considered an independent contractor.

    3. FURNISHING OF MAJOR ITEMS OF EQUIPMENT

    Doing work on the employer's premises - If the work is done on the premises of the person for whom the services are performed, this shows control over the worker, especially if the work could be done somewhere else.

    Furnishing tools and equipment - If the person for whom services are performed furnishes significant tools, materials, or other equipment, this indicates a direct employment relationship.

    Significant investment - If the worker invests in facilities that are used in performing services and that are not typically maintained by employees, this indicates an independent contractor relationship.

    Realization of profit or loss - This factor overlaps the method of payment but addresses whether sale of the business assets would provide the worker with a gain or recovery. If so, he may be an independent contractor.

    4. RIGHT TO TERMINATE RELATIONSHIP WITHOUT LIABILITY

    Continuing relationship - A continuing relationship between the worker and the principal indicates a direct employment relationship, even if the work is performed at recurring irregular intervals.

    Right of employer to discharge - The principal's right to discharge the worker without liability indicates a direct employment relationship.

    Employee's right to terminate - If the worker has the right to stop working at any time without contractual liability, this is indicative of an employment relationship.
     
  7. ODwyerPW

    ODwyerPW LawnSite Member
    Posts: 72

    If they are using your equipment, they are employees. You'll loose any battle with IRS.

    Look into hiring a Payroll company. they take out insurances (workers comp, disability, unemployment) and taxes (fed, state & fed) on a pay as you basis (well of course with taxes, but with the insurance it's really nice). that gives you positive cash flow as you aren't estimating your payroll at the start of the season and parting with a large sum of money. I also do deductions for health insurance through a state funded program that helps small businesses throught this payroll company as well.

    Of course, I was just wickedly undercut on a few accounts. I can only imagine the folks were able to go that low becuase they 1099 everyone, which is basically paying under the table and gives them an instant 30% advantage in labor cost over me. Oh well.
     
  8. StBalor

    StBalor LawnSite Senior Member
    Posts: 798

    what is the monthly charge for payroll accountant?
     
  9. amar

    amar LawnSite Member
    Posts: 203


    Depends on how many employees you have. Shop around prices vary. I'm paying $90 an hr. Worth every cent. You should be able to get a cheaper $ than that. I use a larger firm annual cost for me is over 3k but they do more than payroll for me. Just payroll should be cheap its fast and simple.
     
  10. ODwyerPW

    ODwyerPW LawnSite Member
    Posts: 72

    With 10 employees our payroll company charged about $50 or so each pay period. Well worth it. We used Tech Valley Payroll in Clifton Park, NY.
     

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