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Sub Contracting issues

TeamLawnCare

LawnSite Member
I typically do all of my work myself, however this year I am being overloaded with aerations and will be hiring 2-3 people to run and aerating crew. They will be hired for 5 days a week 9-5 maybe 9-6 some days, for approximately 10 weeks. So can I just hire them on a contractual basis and 1099 them at the end of the year?
 

Sweet Tater

LawnSite Silver Member
I typically do all of my work myself, however this year I am being overloaded with aerations and will be hiring 2-3 people to run and aerating crew. They will be hired for 5 days a week 9-5 maybe 9-6 some days, for approximately 10 weeks. So can I just hire them on a contractual basis and 1099 them at the end of the year?
Thats what I do, and the CPA says its all kewl
 

utah skibum

LawnSite Member
I see that you’re in Utah. The state is looking closer and closer at Employers that are using sub contractors; they look to see if they are a true sub or need to be an Employee.
I would talk to your CPA to see what they think of it. If the State finds a sub that should be an employee, you will have to pay all back taxes and could be find.
 

M RASCOE&SONS

LawnSite Bronze Member
workers comp would be something you might look into .if your gonna have a contract with these guys and you dont have workers comp i would make sure they have a tax id and atleast have their own insurance (1 mil general,2mil agg),and photo copy their insurance and also verify that its current .always cover your ass.
 

motorscot

LawnSite Member
Location
Birmingham, Al
There are several things to check off for them to be contractors or employees.

IIRC, if they have all of their own equipment, license, etc, then they are contractors, if they use your equipment, then they are employees

Ex: my friend has a body shop, his "contractors" have all of their own tools, so they qualified as "contract labor" and got 1099. But, the IRS said, "who does the paint booth, frame puller, and lift belong too?". Because the items were the shop's and not the "contractors", they were considered employees and he was kicked in the nuts for unpaid wages and taxes.

Now for your situation, you might be able to have your "contractors" sign a lease with you for the use of your equipment. Don't know if this would work or not.

Google "employee vs contractor"
 

RCSindiana

LawnSite Member
If its your equipment and you tell them when to work and how many hours to work they would be classified an employee in Indiana. I went through this for years. They also would need liability insurance as a sub contractor. Its kind of hard to get a guy you pay 9 bucks an hour to pay a 500 dollar liability premium. One other thing, If you report to your insurance agent that you use subcontractors then be prepared for a yearly audit from the insurance company. They regularly audit for liabilty insurance on subs along with a workmans comp affadavit. Trust me, You will sleep better at night just biting the bullet and going with a workman comp policy.
 

KeystoneLawn&Landscaping

LawnSite Senior Member
Location
Erie, PA
Do you have people already or will you be looking for them? If you don't have anyone yet maybe a temp service would work for you. Those services cost a little more than hiring, but they handle all the work comp, taxes, etc for those employees. I may need help this year and if I do I'm using a temp service.You give them a description of the employee your looking for. If they send you someone you don't like, then you tell them to send someone else. Thats what I like about using the temp service. Save time interviewing and easy to replace a unsatisfactory employee.
 

BearWise Landscapers

LawnSite Senior Member
Location
Orlando, FL
You received a bunch of good advice. I would use a temp service or purchase a workers comp policy to cover them. You can still pay them as 10-99 employees, but they wouldn't be independent contractors. Talk with a CPA or look up the laws in your state. Here are rules in Florida for independent contractors that can be excluded from workers compensation insurance.

Congrats on your business growing. Let us know what you decide to do.
 

KeystoneLawn&Landscaping

LawnSite Senior Member
Location
Erie, PA
The temp agencies charge about 50% over what you are paying the employee.
 
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