Paying your employees in cash???

Discussion in 'Starting a Lawn Care Business' started by spitfire3416, Feb 6, 2013.

  1. 205mx

    205mx LawnSite Silver Member
    Posts: 2,345

    But payroll tax (7-8% should be lower than his effective tax rate IF he owns a company that pays a high enough tax bracket. Which he SHOULD be if he's big enough to need help. Example my effective tax rate was 10% on 67,000 this year.

    Now, factor in your state income tax.

    I'm in TN so I don't know much ab state income tax :)
     
  2. 205mx

    205mx LawnSite Silver Member
    Posts: 2,345

    Sounds like you've ran all the numbers and know all the tax costs to a T
     
  3. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,080

    If he pays anyone over $400.00, he needs to give that person a Form 1099-MISC... Failure to do so results in a fine... and if the IRS determines that you are purposely defrauding the IRS so that your helper doesn't pay taxes of his income, I think they'll make you suffer for that, besides giving your helper a bill for what they believe the back taxes may have been... you can pay in cash, check or MO as long as the 1099 is mailed in January...
    It's called Sub-Contracting and perfectly legal... No Payroll taxes or Comp. required...
     
  4. Greg78

    Greg78 LawnSite Silver Member
    Posts: 2,010

    No it is not. For legit subs it is but not for employees .


    http://www.irs.gov/Businesses/Small...ndent-Contractor-(Self-Employed)-or-Employee?
     
  5. ToddH

    ToddH LawnSite Silver Member
    Posts: 2,184

    I guess you could do like the topless bars and charge the guys a fee to use your equipment and a percent of their tips. :D

    These guys are employees and what is being done is against the law.
     
  6. clydebusa

    clydebusa LawnSite Bronze Member
    Posts: 1,660

    In the last 8 years I have hired some 17 to 20 employees. I have found that many of them only make it a few days. So about 2 years ago I started paying cash for the 1st 2 weeks. If they make it past that they go on the payroll.
     
  7. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,080

  8. Patriot Services

    Patriot Services LawnSite Fanatic
    Posts: 12,536

    So many guys on here that really need to read up on business 101. Solo is one set of rules, adding even one pt employee changes everything and requires you to learn a whole lot more information.
    Posted via Mobile Device
     
  9. GravelyWoman

    GravelyWoman LawnSite Member
    Posts: 75

    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
     
  10. Pietro

    Pietro LawnSite Senior Member
    Posts: 857

    All cash would be sweeeet thou!
     

Share This Page