What about making employees into subcontractors?

Discussion in 'Business Operations' started by 4 seasons lawn&land, Mar 2, 2012.

  1. 4 seasons lawn&land

    4 seasons lawn&land LawnSite Gold Member
    from NY
    Posts: 3,587

    Anyone thought about having their employees get their own DBA and liability insurance and canning the whole workers comp, payroll, and all the BS. I could pay an employees liability for them, for alot less then their comp.and a paychex service would cost, and pay them some extra to make it worth their while. You might spend a little more overall but save on all the headaches. Is this illegal?
     
  2. shovelracer

    shovelracer LawnSite Silver Member
    Posts: 2,009

    There are all sorts of issues with this, but the short of it is that if they use your equipment than they are employees. If they have their own they don't need you.
     
  3. crazymike

    crazymike LawnSite Senior Member
    from Ontario
    Posts: 454

    Basically, the only people who do this are low life scum.

    It's not fair for your employees. I see guys do this all the time. They tell their employees it's going to be great. They can write off everything. It will be perfect.

    Employee thinks it's great.

    The problem is, an employee making $12 an hour, has no write offs. They end up getting raped in taxes at the end of the year.

    The guy cutting grass for a living, he's not a business person. He's probably not a financial guru. He's probably not capable of putting his tax money away until end of the season.

    Workmans comp, is there for a reason. To protect employees. Sure it would be nice to save some money for yourself, but if an employee gets hurt, making YOU money, why should they have to suffer?

    Your employees are your lifeblood. Without them, you are nothing. Treat them with dignity.


    The only plus side, is most contractors doing this get screwed in the end. Eventually an employee gets hurt, files a grievance, and the government deems that they are indeed an employee. Then the contractor gets back charged with workmans comp fees and then again with employee remittances. Personally, I love seeing this happen!
     
  4. 4 seasons lawn&land

    4 seasons lawn&land LawnSite Gold Member
    from NY
    Posts: 3,587

    You cant sub-contract operators?
     
  5. 4 seasons lawn&land

    4 seasons lawn&land LawnSite Gold Member
    from NY
    Posts: 3,587



    lol its funny because anyone with a regular job, has no write offs and IS getting raped on taxes!

    It sounds like you might be talking about doing a 1099 on employees and not taking out any taxes or insuring them which is illegal. Im talking about them getting their own business period. Any time they want to go off on their own they can. Im not saying this is legal. I am asking If it is. But them getting screwed by taxes is called a job! They dont have any write offs if they are on a regular payroll either.
     
    Last edited: Mar 2, 2012
  6. crazymike

    crazymike LawnSite Senior Member
    from Ontario
    Posts: 454

    how are they a sub contractor if you supply the equipment?

    Do you think you're really going to outsmart the government in supplying your staff, workmans comp?

    In Canada, you can pay someone cash so much a year as a temporary employee. But that's it.
     
  7. crazymike

    crazymike LawnSite Senior Member
    from Ontario
    Posts: 454

    Yeah, but you know inside, that this only benefits you.

    The guy making $20,000 a year, might have $1000 in write offs and have to hire an accountant to figure everything out. It will cost him as much as he saves. He will also have to put away money all year for tax time. A guy cutting grass for a living, is probably not capable of that.
     
  8. 4 seasons lawn&land

    4 seasons lawn&land LawnSite Gold Member
    from NY
    Posts: 3,587

    If it wasnt worth their while they would turn me down and work for someone else that could offer them a better job. Thats why I said originally that you would have to pay them a little extra to make it worth their while to have a DBA and insurance.

    I just want to know if its legal
     
  9. GMLC

    GMLC LawnSite Platinum Member
    Posts: 4,353

    If your employees open their own business so you can subcontract them they will eventually catch on and start taking business share in your area and can take your customers. It wont be long before they are a competitor.
     
  10. 4 seasons lawn&land

    4 seasons lawn&land LawnSite Gold Member
    from NY
    Posts: 3,587

     

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