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What to pay??

Discussion in 'Employment' started by millenium_123, Jan 27, 2009.

  1. tmc8524

    tmc8524 LawnSite Member
    Messages: 75

    Also, I work a day job and sometimes let a trusted worker mow for me during the day. In that case I pay them usually around 40%, but it's usually someone I know. If they are working with me then i pay hourly.
  2. JB1

    JB1 LawnSite Fanatic
    Messages: 5,903

    you have got to be kidding, one phone call and you will be paying a small tax.
  3. tmc8524

    tmc8524 LawnSite Member
    Messages: 75

    Hey i'm just saying for a small guy like me. I do about 40 accounts so there is no way i could afford to pay for employees. Sometimes u just got work with what you got.
  4. Stillwater

    Stillwater LawnSite Platinum Member
    Messages: 4,889

    Your done, you probibly already owe so much back tax that you will need 2 full time jobs and 20 years to pay up. The IRS has developed a list of 20 items it uses to test employee or subcontractor status.

    Does the business require the worker to follow their instructions on how work is to be performed? If yes, this indicates employee status. An independent contractor will generally decide how the project should be completed and use his own methodology.

    Does the business provide training to the worker? If you're hiring a person for a job they are not trained for and providing them with the training to carry it out, that person is probably an employee. There can be exceptions based on the facts and circumstances, but if you fail this test, you might lose no matter how many of the others you pass.

    Are the worker’s services a substantial or integral part of the business? This indicates employee status because it indicates the business maintains direction and control over the worker.

    Does the business require the worker to perform all services personally? Independent contractors may have their own employees or at least should have the option of hiring other contractors to perform their work. Agreements for personal services indicate employee status.

    Does the business hire, supervise and pay the worker’s assistants? If so, this is a strong indication of employee status. Let the independent contractor pay his or her own assistants.

    Does the business have an ongoing relationship with the worker? This one is a stretch since many businesses maintain lifelong relationships with contractors whose work they like. But the IRS views this as an indication of employee status.

    Does the business set the worker’s schedule and hours? Independent contractors generally set their own work schedules. If the contractor must work certain hours because of required interrelationships with your employees or to take advantage of down time for computer-related work, document these facts.

    Does the business require the worker full-time? This is an indication of employee status because the business controls their availability and prevents them from working on other clients.

    Does the business provide the workspace? Contractors who work off-site are more likely to be classified an independent contractor.

    Does the business determine the order or sequence in which work is completed? Indicates employee status. If specific schedules are required, document them in the contract with the reasoning for doing so.

    Does the business require oral or written reports? The IRS believes regular written or oral reports detailing the work completed indicates employee status. In reality, this is, and should be, expected from independent contractors as well.

    Does the business pay by the hour, week or month? This indicates employee status. See our comments at the end of this article on this issue.

    Does the business pay expenses? This is an indication that the business is directing the Independent contractor's business activities. Make sure the independent contractor pays the expenses and bills you for reimbursement.

    Does the business provide tools and equipment for the worker? Independent contractors would normally provide their own tools and equipment.

    Does the worker have a significant investment in their own facilities? If the contractor maintains his own office space, computer equipment, tools, etc., this is a good indication that they are an independent contractor.

    Does the worker have profits and losses independent of the business? This is an indication that the contractor is running his own bona fide business and is an independent contractor.

    Does the worker have multiple clients? Working with multiple clients generally indicates independent contractor status.

    Does the worker market their services to the general public? Employees do not generally market their services to the general public.

    Does the business have the right to discharge the worker at any time? This suggests employee status. An independent contractor would only be discharged for failure to meet contract specifications.

    Does the worker have the right to quit at any time? An independent contractor is under contract and cannot quit until the project is completed.
  5. Campbell Works LLC

    Campbell Works LLC LawnSite Member
    Messages: 9

    Form a LLC and make your laborers do the same. you wont have unemployement or work comp scams to pay for. just keep good books and 1099 at the end of the year. Try to find people with ther own health insurance. this way you can pay more without the beuaracratic BS.
  6. JB1

    JB1 LawnSite Fanatic
    Messages: 5,903

    some of you guys are really funny, with no clue.
  7. treegal1

    treegal1 LawnSite Gold Member
    Messages: 3,911

    isn't there a word for this , theft no that's not it.... oh I got it tax evasion!!!!!that's it tax evasion is the general term for efforts to not pay taxes by illegal means, from what the IRS tells me they are really down on that sort of thing.....
  8. AFH Sod

    AFH Sod LawnSite Member
    Messages: 8

    To get back to the original question, I would definitely pay by the hour. You'll be able to tell if the employee is fooling around by the amount of work they get done. If it is not getting done by your standards, find somebody else.

    To figure out how much to pay, I would talk to other landscapers in your area and ask them how much they pay their employees. Another good idea is to ask on the application how much the applicant wants to get paid. Of course some of them will be high but it should provide a good estimate on the amount of compensation people expect for that type of work.

    I, personally, wouldn't get into the habit of buying lunch. I don't think employees expect lunch to be provided. You might consider doing it every once in awhile to show your appreciation. I know we sometimes buy lunch if we know our employees are going to be working extra hard and long hours.
  9. millenium_123

    millenium_123 LawnSite Member
    Messages: 186

    Great advice. Thanks!
  10. sdk1959

    sdk1959 LawnSite Senior Member
    Messages: 909

    You can use independent contractors for your accounts but they have to use thier own vehicle to drive and do the work. This is key, and very important .

    It will take a little preparation to set up for a independant contractor.

    First you have to have a really good accountant who not only knows the IRS tax code but also knows what red flags the IRS looks for to audit a return. They don't have to be a CPA, but should have a business of doing tax returns, not just occasionally on a case by case basis.

    You will also need some type of agreement made up by a lawyer and signed EVERY season by the independent contractor stating they are a independent contractor and not an employee. This is important too, so they can't later claim they were an employee if they get hurt working and sue you for workmans comp.

    You will have to talk to your insurance agent and adjust your liability insurance to include your independent contractor(s).

    Your independent contractors will also have to pay their social security taxes every quarter,not yearly, also there is no employer contribution since they are independent so keep that in mind when you come up with the amount you want to pay them.

    While you can get some good advice on these boards the opposite is true also.

    Talk to a good accountant first before using any advice on this board.

    The IRS is to be repected but not feared. The people who fear them pay a lot more in taxes then they should because they don't use deductions they are entitled to, those that don't respect the IRS pay fines and penalties for filing false returns.

    Remember- proof is a two way street. The IRS has to have proof in a tax audit to prove thier case just like the taxpayer does.

    Practice tax avoidance- not tax evasion and you will be fine.

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