Question about hiring employess/taxes

Discussion in 'Lawn Mowing' started by lasher66, Sep 11, 2009.

  1. lasher66

    lasher66 LawnSite Senior Member
    Messages: 399

    Ive read alot of threads about how much it cost to hire an employee because of workers comp/unemployment/insuranse/matching social security. Anyways, after figuring what it would cost to hire a guy to work for me, doesnt being able to write off the payroll expense pretty much recover alot of you extras I have to put into hiring someone. I figured if I pay a part timer 10K a season and I am in a 30% tax bracket, that should be 3k in tax savings which should cushion all the extra bullcrap I have to pay for him. Am I missing something? Thanks

  2. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Messages: 7,661

    You're on the right track.
  3. tilawn

    tilawn LawnSite Member
    Messages: 112

    DON'T DO IT!!!!!! Stay solo life is much easier and simpler. Not only do you have to worry about all the tax and insurance side of it but remember you will have ALOT more money spent in repairs, broken windows etc. I had employees for 7 years and I have went back solo this season. WOW I cant explain how much the stress level goes down
  4. lasher66

    lasher66 LawnSite Senior Member
    Messages: 399

    I just wanted to hire one guy working with me. Not another crew or anything. I figured that way I would be with him to make sure hes doing the job right. I was just more concerned with how much on top of payroll I was going to pay. But I figured with the payroll expense write off, I could cushion that.

  5. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    I dont see how you solo guys stay in business
  6. delphied

    delphied LawnSite Silver Member
    Messages: 2,067

    If you are solo and in the 30% tax bracket, you wouldnt need to ask this.
  7. brucec32

    brucec32 LawnSite Platinum Member
    Messages: 4,403

    How do they stay in business solo? It's pretty simple, really.

    $35/lawn x 12 lawns/day (30 min/lawn, 5 min avg drive time between lawns, 20 min lunch, 8 hour days) x 4 days/week (allows a day a week free for other tasks, bad weather, etc) x 35 wks/year = $58,880 in mowing/leaf cleanup revenue.

    Then add in aerations/seeding in the fall, big leaf cleanups before and after the season, shrub pruning, re-mulching beds, and even if you don't do much of that there's another $10,000 (about $200/account).

    So your total sales are $68,880 working 4 to 4.5 days a week, 9 months a year. You have virtually no complaint calls, minimal time spent selling to keep crews busy, turnover is low due to you doing the work right, and even in peak season you're working 40 hours/week or less.

    You have no warehouse/shop to pay for if you have a good garage setup at home, your vehicle is your personal truck you'd have to pay to run anyway if you had a JOB. Your vehicle doesn't have to be some huge monster to carry crews and 6 mowers around, some guys use 4 cylinder trucks and a small trailer. No workers comp, minimal liability insurance, no commercial phone line required since you don't have to field dozens of calls a day. Maintenance and repair costs are low since unlike employees you don't bust up your equipment. You were going to need a cellphone anyway so even that isn't really an "expense" the way it might be for a company with supervisors and such. Billing and accounting is simple and easy so an educated person with a little work can do it at home for nothing. You don't need specialized software for routing and paperwork. You do your own maintenance but it really isn't much since you don't run the mowers as many hours per day as a crew would.

    Overall I wouldn't complain about a business where you work just 3/4 of the year, bankers hours, for yourself, with very few hassles or stresses, and net more than the national median household income. You also can write off that truck as a business expense, unlike an employee who has to pay to commute in a car. You work smart and avoid rush hours so you're not dealing with that hassle. You can make more or less than the example above, depending on what you WANT to make and how much you want to work.

    I'm guessing the average guy running crews isn't waking up at 8am, rolling out of bed, and hitting the road at 8:30, returning home by 4:30, doing a little equip maint or paperwork and watching the news by 5pm.

    I haven't had a complaint call in so long I can't remember it. I get a call for an aeration job or whatever maybe once a month. Otherwise, I just do the work and collect the money. I'm ok with that. That money maid over $50-$60K a solo guy can do is well earned by those running crews, because it sounds like hell in comparison. Mowing the lawns and doing the work is easy to me in comparison.

    If your spouse has benefits, all the better.
  8. lasher66

    lasher66 LawnSite Senior Member
    Messages: 399

    I was using this figure as a round about figure. My accountant does my taxes, so I never really figured out what bracket I am in. I thought all self employed were in a 33% or something like that from what I heard. No need to get crazy about asking a question.
  9. brucec32

    brucec32 LawnSite Platinum Member
    Messages: 4,403

    The good news is you are probably in the 15% marginal tax bracket if you work alone and dont' have a second income. The first $10,000 of taxable income is taxed at just 10%, so you don't even pay 15% combined. To this add 15.3% self-employment tax and maybe 6% (OR ZERO in some states) state tax and you do pay about thirty percent overall after deductions

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