"independent contractor" - Cleaning Talk - Professional Cleaning and Restoration Forum
 
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post #1 of Old 01-22-2010, 10:53 PM Thread Starter
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"independent contractor"

I spent the past few months working for a solo-operator cleaning company. My first time in the janitorial business.

The boss gave me the option of being on payroll or getting straight pay as an "independent contractor," meaning I'd have to track my earnings and expenses for taxes.

The job was supposed to go from part time to full time, and since I started a few months before the end of the year, I went with the non-payroll option for 09 so's I could make ends meet in the short-term.

Well, after doing the job a while, I realized that my boss had been using a single off-payroll employee to do accounts that established local companies had been using crews of two and three to do. He outright stated that he was targeting the business of one established company that I see sending a company van and crew out to do offices in the same complexes I work in by myself.

I feel awful, especially since I know the owners of the one company he's poaching from and know that they put a lot of people in my neighborhood to work. I finally found another night job and put in my notice, and I feel like I have to do something.

Is there any way I can make boss man pay back social security taxes for me? I worked for hourly pay at his direction using his materials and had never done janitorial work before going to work for him, so there was nothing independent contractor about my service.

And could there be any kind of unfair competition law or something that his competitors could use to make him play fair in the local market?

At the very least, I have to go to the company whose business he took so I can apologize and tell them what I know.

Is there anything else that can be done? The guy's shown repeatedly that he's a scumbag. (He keeps saying it's just business, but I say you reap what you sow.) I did real good work for him, so hopefully he won't be able to find another sucker to work as hard for so little pay. But the clients seem happy to have a rock-bottom-price service, so any decline in quality might not even matter to them.

Last edited by Spicnspan; 01-22-2010 at 10:56 PM.
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post #2 of Old 01-26-2010, 02:24 PM Thread Starter
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I asked a lawyer about it (he charged me one Kit Kat bar for the advice), and he said that the only thing I'll do is get myself sued if I try to do anything myself. So I'll mention how he works if it ever comes up, but I gues I'll have to rely on karma to do the dirty work.
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post #3 of Old 03-07-2010, 04:00 PM Thread Starter
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Finally found a GOOD answer to my initial question above. Turns out it was a question for a CPA, not a lawyer.

Indep. contractor fraud's rampant these days, and my situation was clearly that of an employee.

Here's info from the IRS: http://bit.ly/DLM9O.

I found it as I was looking around for where to report my 1099 info.

So the feds have a nice little form I can send in to report Mr. Dirtbag employer. I'm positive they'll find that he owes them $ because I (and several previous workers) should have been classifed as an employee.
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post #4 of Old 03-07-2010, 07:29 PM
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Sad but true, there is a lot of this going on today. With the economy the way it has been I see it even more.
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post #5 of Old 03-08-2010, 03:12 PM Thread Starter
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It's really not all that big a deal on the employee side -- provided you don't break anything, get hurt, or want money going toward social security. The worst part is that Dude was able to do a pretty good job and way underbid established companies bc he didn't have to be bothered with insurance, workmans comp, taxes etc.

Last edited by Spicnspan; 03-08-2010 at 03:16 PM.
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post #6 of Old 03-08-2010, 03:19 PM Thread Starter
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Oh, before I send that form off, you don't know if there's some kind of exemption for a sole-proprietor operation? The company is Dude, his wife in the office (no idea how they classified and paid themselves) and one "subcontractor," usually a desperate neophyte like myself or an IRS/child support dodger who doesn't want anything reported.
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post #7 of Old 07-12-2011, 07:26 AM
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Exclamation You will owe taxes, too

Spicnspan, there are two sides to employment taxes. The employer portion and the employee portion. If you reported your income properly as an independent contractor and had a profit, you paid both portions on the net profit. These is still the question of whether or not you are entitled to deduct expenses from your income if you are an employee. Generally, if it was a requirement of your employer it becomes an employee business expense and the amount you can deduct may be limited. Check out the tax rules (www. IRS.gov) for employee business expenses, or consult a tax professional or CPA.

If you did not report your income or had a loss, once the IRS declares you an employee you are responsible for the employee portion of the Soc Sec Taxes and income taxes on your earnings. (You are always responsible for the income taxes, the employer is only required to withhold these based on the form W-4 you provide). Again, any expenses you deducted may be re-classified and your loss may disappear.

When IRS adjusts the employers account they will review and adjust your account as well to ascertain that you paid the proper amount of taxes. So you need to have a CPA or other tax professional assess the monetary consequences to you, also. IRS has a form you can complete (SS-8), but again, know the consequences to yourself before you contact the IRS. If you do, you would do well to set aside funds to cover you (including interest and penalties) if the IRS comes calling with a bill. You will have provided them with the necessary information and consent if you filed your complaint or submitted the SS-8 form.

It does not matter that you bring the situation to the notice of the IRS, the IRS will review both sides of the equation. Make sure you are on solid ground for yourself. IRS looking at you is not a headache you want unless you are thoroughly prepared.
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post #8 of Old 07-12-2011, 07:26 AM
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Exclamation You may owe taxes, too

Spicnspan, there are two sides to employment taxes. The employer portion and the employee portion. If you reported your income properly as an independent contractor and had a profit, you paid both portions on the net profit. These is still the question of whether or not you are entitled to deduct expenses from your income if you are an employee. Generally, if it was a requirement of your employer it becomes an employee business expense and the amount you can deduct may be limited. Check out the tax rules (www. IRS.gov) for employee business expenses, or consult a tax professional or CPA.

If you did not report your income or had a loss, once the IRS declares you an employee you are responsible for the employee portion of the Soc Sec Taxes and income taxes on your earnings. (You are always responsible for the income taxes, the employer is only required to withhold these based on the form W-4 you provide). Again, any expenses you deducted may be re-classified and your loss may disappear.

When IRS adjusts the employers account they will review and adjust your account as well to ascertain that you paid the proper amount of taxes. So you need to have a CPA or other tax professional assess the monetary consequences to you, also. IRS has a form you can complete (SS-8), but again, know the consequences to yourself before you contact the IRS. If you do, you would do well to set aside funds to cover you (including interest and penalties) if the IRS comes calling with a bill. You will have provided them with the necessary information and consent if you filed your complaint or submitted the SS-8 form.

It does not matter that you bring the situation to the notice of the IRS, the IRS will review both sides of the equation. Make sure you are on solid ground for yourself. IRS looking at you is not a headache you want unless you are thoroughly prepared.
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post #9 of Old 07-22-2011, 07:42 AM Thread Starter
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Interesting response to an old, old post. I can tell you how the situation actually played out now.

I paid the taxes for that year myself, saying I wasn't a contractor but got paid like one and asking the IRS to make that determination.

Took them more than a year, but they finally sent me a letter saying that I was indeed an employee and that my employer owed some taxes on me. I only worked for the guy a few months, so his part wasn't a lot of money at all.

I don't think it said anything about refunding the payroll taxes I had to cough up. Since it wasn't much money, I just put the letter away for reference this tax season. Unless the IRS tells me different, I'm happy and won't be in trouble for giving them too much.

I did worry that me buying lots of supplies would undercut my case, but seems it did not. I didn't make enough money to deduct them anyway.

I also reported a few dribs and drabs of contract work since then (odd jobs with no 1099s, less than $200 a year). I have good records in case of audit, but the IRS would have to be insane to waste their time on such small potatoes. We're talking $17,000 - $22,000 a year gross income here.


The only problem is one likely very unhappy ex-boss. A somewhat crazy Vietnam vet, no less. I actually kind of liked him and his wife and feel bad about bringing them to the IRS's attention. But dude was always whining about employees stealing his stuff and otherwise screwing him. Seems he made pretty good money taking advantage of them. Hopefully maybe he'll see the karmic connection.

I really had no choice. My alternative was to make up small business info despite not having a license or insurance and report the income as contractor income. Insignificant as my earnings may be, I don't ever lie on my taxes. I just don't.

Last edited by Spicnspan; 07-22-2011 at 07:47 AM.
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post #10 of Old 07-22-2011, 08:05 AM Thread Starter
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Glancing back over my previous posts, I was pretty mean about ex-boss's dirty business tactics. That ended up playing out well too.

I started working for a maid service by day a month into that job. Not long after that, first job dude's clients started cutting back because of the economy, so I started doing night janitor accounts for the maid service and ended up quitting the first janitor job altogether.

Unbeknownst to me, the office manager for my original boss's biggest client was the ex wife of my new boss. After I left, she said dude's work went to hell and that everything was dirty and employees were getting sick all the time. (I know she was right to blame it on the cleaner. Dude "trained" me to use ONE SINGLE RAG per cleaner, wiping the kitchen and bathrooms with the same rag and hanging it on the bottle to keep using for weeks at a time. No mention of changing mopwater or washing mopheads. I had to wash rags and mops myself to have enough to do the job.)

Second boss mentioned my name and got the contract, so I ended up doing that account's three sites again after a few weeks absence from quitting the first guy. How's that for a happy ending?

I imagine the first boss dude I'm talking about here is out of business now. He had two other clients, one that quit using him altogether and one who cut way back. He was using an office lady from the place that fired him to clean for his last client. I trained her, so she should have been doing a good job, but I don't imagine she could have stayed around long or kept doing a good job given the amount of pay and support the guy provided.

Small-town cleaning business sure is a trip!


The ultimate end of the story is that I've been out of the business for more than a year now. The maid service had me sign a contract saying I wouldn't go to work for any of their clients for two years after leaving, but I could consider picking up a little work on my own when that expires. The only way to get started is with people who already know my work, though who knows whether I'll want or need to this time next year.
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post #11 of Old 07-26-2011, 03:40 PM
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One thing I've learned...

When you haven't done anything wrong and you know the other guy did, go straight to the IRS, the feds, the Marines. Pulling you out of the mire and putting the other guy in the doghouse is what they do!!!

I hate taxes but I hate tax dodgers more.
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post #12 of Old 07-31-2011, 10:01 AM
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What's that old saying? Karma's a b***c!!

If you can't feed 100, feed just one.
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