Employees? - Cleaning Talk - Professional Cleaning and Restoration Forum
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post #1 of Old 06-29-2006, 10:13 AM Thread Starter
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Employees?

How does everbody here pay thier employees?

Do you treat them as Contract Labor?

Hourly? Salary? Commission?

How Much?

Michael Kreisle, First Choice Power Washing LLC
Lexington, KY 859-983-5955
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post #2 of Old 06-29-2006, 01:48 PM
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I ran an all sub business for about a year with great results. I know a lot of people worry about quality but I had no issues. My subs got most of their work through me and by using a survey that they had to get filled out with final payment at the end of each job kept them honest.

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post #3 of Old 08-18-2006, 10:24 PM
 
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I have two employees
and I pay them $10.00 per hour
and about contractors, I don´t know how to
do it, if put them like employees and get the worker compensation
or take them like subcontractors.
my busines just started.
what do u think me_
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post #4 of Old 10-10-2006, 02:31 AM
 
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i am very near to having to employ, so far i have been a sole worker.
my intentions is to employ some who can work as self employed, i guess a kind of contractor. but i will pay by the hour.
the reason for self employed is so i do not then get the added costs of additional insurance and everything else that goes with it.
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post #5 of Old 10-10-2006, 12:24 PM
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I find that paying by commission works best for me and my company. It makes payroll a breeze and there are no worrys about someone milking the time clock since they get the same about of money per job no matter how long they take to accomplish the work. Your only concern at that point is to assure that quality never slips, which is something that you would have to do if paying hourly anyways, so it is a win win situation for me
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post #6 of Old 11-15-2006, 02:26 PM
 
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I have 1 employee that I pay $10 per hour.
I keep records of all I pay her, and she will handle her own taxes.
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post #7 of Old 11-15-2006, 02:27 PM
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Quote:
Originally Posted by Karen View Post
I have 1 employee that I pay $10 per hour.
I keep records of all I pay her, and she will handle her own taxes.
So, is she an "Employee" then or a "Sub Contractor"? If she is paying her own taxes it shoulds more like a sub.

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post #8 of Old 11-15-2006, 02:37 PM
 
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Originally Posted by Nathan View Post
So, is she an "Employee" then or a "Sub Contractor"? If she is paying her own taxes it shoulds more like a sub.
Yes...I guess we can call her a "sub."
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post #9 of Old 11-15-2006, 02:59 PM
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Originally Posted by Karen View Post
Yes...I guess we can call her a "sub."
LOL

Maybe I sould have said "Contract Worker"

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post #10 of Old 11-15-2006, 03:18 PM
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Quote:
Originally Posted by Karen View Post
I have 1 employee that I pay $10 per hour.
I keep records of all I pay her, and she will handle her own taxes.
Hi Karen

I hope that you won't mind when I point out that your language (employee handling her own taxes) can get you into some serious trouble if you are ever questioned or audited.

Mis-classification of staff is one of the biggest downfalls of business, and can cause serious problems when caught since the goverment can and will go back and re-assess employment taxes as well as penalties and fines.

The reason I point this out is that years ago I watched a competitor/friend who mis-classified her staff (for 5 years) lose her home, 2 cars, her savings (including her childrens college funds), and still have to make additional payments to the goverment in order to repay her tax fines and penalities.

Whether a person is an independent contractor or an employee generally depends on the amount of control exercised by the employer over the work being done. Dictating how a job is to be done or limiting the actions of the worker may establish an employer-employee relationship.
An independent contractor:
  • Operates under a business name
  • Has his/her own employees
  • Maintains a separate business checking account
  • Advertises his/her business' services
  • Invoices for work done
  • Has more than one client
  • Has own tools and sets own hours
  • Keeps business records
An employee:
  • Performs duties dictated or controlled by others
  • Is given training for work to be done
  • Works for only one employer
The Internal Revenue Service relies on the facts in each case. It does not recognize the validity of any written agreement between the parties. Anyone can get a ruling from the IRS by completing Form SS-8.

For most small businesses, independent contractors should not be considered as substitutes for regular employees. Government agencies generally find that people in the work force are legally employees for tax purposes; the cost of being wrong, remitting unpaid payroll taxes, interest, and penalties can be very high.
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post #11 of Old 11-15-2006, 03:38 PM
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This is what I was getting at but I'm not as smart as T!

You should post this on ContractorTalk.com too!

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post #12 of Old 11-15-2006, 03:42 PM
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Quote:
Originally Posted by Nathan View Post
This is what I was getting at but I'm not as smart as T!
LOL - translation - I am not as brash as T
I just hate to see anyone lose so much in order to save so little in the long run
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post #13 of Old 11-15-2006, 04:51 PM
 
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Quote:
Originally Posted by t.peterson View Post
Hi Karen

I hope that you won't mind when I point out that your language (employee handling her own taxes) can get you into some serious trouble if you are ever questioned or audited.

Mis-classification of staff is one of the biggest downfalls of business, and can cause serious problems when caught since the goverment can and will go back and re-assess employment taxes as well as penalties and fines.

The reason I point this out is that years ago I watched a competitor/friend who mis-classified her staff (for 5 years) lose her home, 2 cars, her savings (including her childrens college funds), and still have to make additional payments to the goverment in order to repay her tax fines and penalities.

Whether a person is an independent contractor or an employee generally depends on the amount of control exercised by the employer over the work being done. Dictating how a job is to be done or limiting the actions of the worker may establish an employer-employee relationship.
An independent contractor:
  • Operates under a business name
  • Has his/her own employees
  • Maintains a separate business checking account
  • Advertises his/her business' services
  • Invoices for work done
  • Has more than one client
  • Has own tools and sets own hours
  • Keeps business records
An employee:
  • Performs duties dictated or controlled by others
  • Is given training for work to be done
  • Works for only one employer
The Internal Revenue Service relies on the facts in each case. It does not recognize the validity of any written agreement between the parties. Anyone can get a ruling from the IRS by completing Form SS-8.

For most small businesses, independent contractors should not be considered as substitutes for regular employees. Government agencies generally find that people in the work force are legally employees for tax purposes; the cost of being wrong, remitting unpaid payroll taxes, interest, and penalties can be very high.

Ok.....
It's me and my worker doing the houses together, I pay her, & keep records of all I make & pay out (which I will report to the IRS), she will be responsible for her own taxes....what should I call her?
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post #14 of Old 11-15-2006, 04:56 PM
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Quote:
Originally Posted by Karen View Post
Ok.....
It's me and my worker doing the houses together, I pay her, & keep records of all I make & pay out (which I will report to the IRS), she will be responsible for her own taxes....what should I call her?
Karen, please don't take the posts above as an attack or anything. We are just trying to make sure you keep yourself out of trouble because this can come and bite you if our not careful.

If you 1099 someone at the end of the year and they pay their own taxes then you shoudl refer to them as an independent contractor. It may sound like we are splitting hairs but it is serious and I've seen a lot of good contractors get taken out of business and end up owing the IRS a lot of money because they overlooked this issue.

There are actually a lot of little rules like this that you have to watch out for.
Although a trip to a lawyer can hurt it would probably be well worth it in the long run to make sure you get this right.

T... check my facts as you are much better at this than me.

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post #15 of Old 11-15-2006, 05:02 PM
 
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Quote:
Originally Posted by Nathan View Post
Karen, please don't take the posts above as an attack or anything. We are just trying to make sure you keep yourself out of trouble because this can come and bite you if our not careful.

If you 1099 someone at the end of the year and they pay their own taxes then you shoudl refer to them as an independent contractor. It may sound like we are splitting hairs but it is serious and I've seen a lot of good contractors get taken out of business and end up owing the IRS a lot of money because they overlooked this issue.

There are actually a lot of little rules like this that you have to watch out for.
Although a trip to a lawyer can hurt it would probably be well worth it in the long run to make sure you get this right.

T... check my facts as you are much better at this than me.
Not offended at all! Just trying to get the info.
Even though she works for me, in my business...I can call her an independant contractor? As T.Peterson said...

An independent contractor:
Operates under a business name
Has his/her own employees
Maintains a separate business checking account
Advertises his/her business' services
Invoices for work done
Has more than one client
Has own tools and sets own hours
Keeps business records
So...even if none of this is true of my worker...she's still considered an independent contractor?
I'm a little confused...I know several cleaning businesses in my area that operate in the same way as I do...as far as having their workers be responsible for their own taxes.
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post #16 of Old 11-15-2006, 05:08 PM
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Unless you are legally set up as Partners, the mere fact that she works with you the IRS will classify her as an employee since she works for only you and you determine when and where she works.

I see alot of cleaning companies who believe that they have IC's because they send cleaners into homes alone and claim that the home owner is the employer. The problem is - the worker does not have their own business license, their own customers (outside of this cleaning companies clients), their own equipement and supplies, etc.......
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post #17 of Old 11-15-2006, 05:12 PM
 
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Quote:
Originally Posted by t.peterson View Post
Unless you are legally set up as Partners, the mere fact that she works with you the IRS will classify her as an employee since she works for only you and you determine when and where she works.

I see alot of cleaning companies who believe that they have IC's because they send cleaners into homes alone and claim that the home owner is the employer. The problem is - the worker does not have their own business license, their own customers (outside of this cleaning companies clients), their own equipement and supplies, etc.......
Ok....should I be taking taxes out on her? She's only been employed with me for 3 houses....
I'm counting on you Pros to tell me exactly what I should be doing!
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post #18 of Old 11-15-2006, 05:35 PM
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You have a couple of immediate options -

1) set up a limited partnership agreement with her and agree to split the proceeds by percentage, then change your business structure to represent that change (sole prop. to partnership)

2) set her up as an employee and withhold taxes on her

3) have her go out and set up her own business, get some of her own clients and work for you as a sub contactor doing some of your clients on her own and billing you for her services.
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post #19 of Old 11-15-2006, 06:37 PM
 
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Originally Posted by t.peterson View Post
You have a couple of immediate options -

1) set up a limited partnership agreement with her and agree to split the proceeds by percentage, then change your business structure to represent that change (sole prop. to partnership)

2) set her up as an employee and withhold taxes on her

3) have her go out and set up her own business, get some of her own clients and work for you as a sub contactor doing some of your clients on her own and billing you for her services.
I suppose I will have to withhold....
My business is only PT, a few houses a week...I also have another career that I work on the weekends....
How can I find out how much I'm supposed to withhold out of each paycheck? She's only made around $100 so far....
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post #20 of Old 11-15-2006, 07:21 PM
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Originally Posted by Karen View Post
I suppose I will have to withhold....
My business is only PT, a few houses a week...I also have another career that I work on the weekends....
How can I find out how much I'm supposed to withhold out of each paycheck? She's only made around $100 so far....
I would call it piece work . Have her sign a basic contract stating she is in business for herself and she has to pay taxes .
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