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pay employee cash

Discussion in 'Business Operations' started by causalitist, Apr 8, 2007.

  1. causalitist

    causalitist LawnSite Senior Member
    Messages: 610

    ok, i dont have employees, but i was thinking about it, and i cannot seem to find any advantage to paying employees cash. Im hiring temps, and am not going to pay employees cash, but i just want to know what the advantage is.

    you avoid paying half of Soc. security, the few percent of medicare, the workmans comp, the umemployment..

    BUT then you have an enourmous expense, ALL the wages the employee was payed, that you CANT WRITE OFF..

    so if you payed the part timer 5grand over the season, you get taxed on that 5 grand. thats a crapload of tax.

    seems to me to be a wash between the two... so why would anyone do it?

    u guys prolly been in the business longer than me, and know some shady operations, so hopefully you can tell me what the advantage is lol
  2. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    Most do it because they have a illegal.
  3. bigtex

    bigtex LawnSite Member
    from ma
    Messages: 151

    In This Biz There's A Ton Of Writeoffs. Get A Good Tax Guy, Tell Him Your Situation About Your Biz. The Gov. Gives The Small Biz Owner Some Space To Move Cause (your) Doing All The Work. A Good Tax Guy (for Around $150.00) Can Take Care Of All You Paper Work. With Out U Gettin Beat Up By The Feds.
  4. Frontier-Lawn

    Frontier-Lawn LawnSite Silver Member
    Messages: 2,955

    i was thinking of when i need to hire help i would hire them as a sub & give them a 1099 for the year end.
  5. desii

    desii LawnSite Member
    Messages: 193

    I'm no accountant, but under the tax rules, you can not hire a guy and then give him a 1099. The only way you can do that, as I understand it, is that he has to provide all equipment and supplies to be a sub-contractor. If he is using your equipment and you are directing him in his "daily duties" the he is an employee.

    Be careful, 'cause this can come back to bite you.

    Everyone would like to get around "matching" employees taxes, but it just doesn't work that way.
  6. Laurentian

    Laurentian LawnSite Member
    Messages: 52

    Personally I don't think the payroll taxes are that bad. I know any taxes are not popular to pay, but it is a cost of doing business. When I started I had some day labor who I would pay cash, but Like you said at the end of the year it was impossible to write off that amount. Now according to the IRS you have that money in your pocket. For all you guys that do pay cash another warning. If your employee gets hurt on the job you can be sued the property owner can be sued. Workman's comp in Minnesota protects you from a lawsuit from your employees for injurys. All it takes is one small accident and you could lose everything. Your house, business, equipment, everything! It's another way to protect you from your employees.

    Good Luck!
  7. Gene $immons

    Gene $immons LawnSite Bronze Member
    Messages: 1,028

    Your payroll is a tax write off - so are the payroll taxes.

    Whenever someone pays in cash, It appears that YOU made more money and then YOU pay more in income taxes.

    not worth it to pay in cash.

    A business owner needs every write off that they can get.
  8. dKoester

    dKoester LawnSite Gold Member
    Messages: 3,341

    I use Quickbooks and it is set up to take out all taxes and that money goes into a special accounts which is given to the government every quarter.
  9. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    Labor ready or some other day labor staffing firm is a good way to go. That is what I do.

    The illegals want $10.00 per hour cash and labor ready wants $10.25. They handle the workers comp and payroll taxes. That right there is worth about 20% plus the peace of mind I get. I love my country and I don't want to break the rules. I want to pay taxes and help keep America great!

    Granted most illegals will work circles around some poor fellow down on his luck at the labor pool.
  10. HVC

    HVC LawnSite Member
    Messages: 34

    Death and Taxes!

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