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#186973 06/08/09 07:08 PM
Joined: Jan 2005
Posts: 71
I was looking for advise on hiring. I need a helper part time when the work come in. My question is what is the best way to pay this person, payroll company, cash, 1099......? I've paid a guy in the past cash, but there's no write off with that.

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Joined: Jul 2004
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Cash is a land mine. You might tap dance through the meadow for years and get away with it but when you step in it you are scrod.
1099s work if the guy is actually licensed as an SP but otherwise it may still have legal/insurance problems.

Are you set up for "employees"?

Greg Fretwell
Joined: Jul 2002
Posts: 8,426
Likes: 3
While I personally don't like the idea of people being employed for "cash", I think Greg has the right idea.

Over here in NZ, you can hire a person on a "casual" basis, as in "when needed", they are your employee, but you only pay them for the hours they work (obviously).

As a casual employee, you have no sick leave, no holiday pay,
but you do have accident cover under your employers contract, that is a given.

Some people I know work 2-3 jobs like this and strangely enough, they are actually happy with it.
Not my cup of tea, but different strokes for different folks, I guess.

Trumpy #186983 06/09/09 01:39 PM
Joined: Dec 2000
Posts: 4,289
Just as important as how you pay ......
Do you have any workmens compensation insurance?

Here in California, it's mandatory if you have even 1 employee.

Joined: Apr 2002
Posts: 7,323
Likes: 7
Workers Comp should be looked at the same as having the proper license to perform the work. It is very foolish (mild choice) to have 'workers/employees' and not WC. Here in could get some graybar hotel time, and/or a $$$$ fine.

That said; 'subs' need insurance, and you need to 1099 them.

A inexpensive 'payroll' system that works very well is Payroll within Quickbooks.

I started out with one guy...did the payroll with pencil & paper for a short while, then bought a PC; that had as much memory/speed as my old cell phone. The cash method may work in a pinch, but you (nor I) don't want to get pinched! With the general economy in the tank, both the Fed & local politicos are 'lookin hard' for funds.

Joined: Jul 2002
Posts: 8,426
Likes: 3
Exactly John (Hotline),
My wife is a Paramedic and she has seen so many Contractors that will call an Ambulance for the all but most minor workplace injuries, rather than take the worker into an emergency room.

These guys are ca$h workers that have no ACC (Accident Compensation) coverage, because they are under the radar.

Funny thing is, when you call an Ambulance here, you have to fill out the same forms you would normally do at an Emergency room anyway.

Some Contractors here have been burned quite badly when ACC gets to hear about it, especially when you consider that they give certain data to the Inland Revenue Department here.

{Hmm, pay a guy with cash?, have you declared that?}

Nice. grin

Trumpy #187019 06/10/09 07:24 PM
Joined: Jul 2008
Posts: 8
New Member
I couldn't agree more. You never can go wrong when you do the right thing. Do everything legit.
1. Pay workers comp.
2. Pay taxes
3. Have a good accountant and attorney.

Founder and creator of Precision Pricing Electrical Flat Rate Software.
Joined: Dec 2000
Posts: 4,289
Have you considered a temporary labor service?

They take care of all the workmen's comp, unemployment insurance, etc. and all you have to do is write a check to the temp service.
They will send you helpers on an "as needed" basis.

Joined: Jun 2004
Posts: 1,273
I'm with electure: unload the overhead.

More often than not, my customers are willing to be the second hand -- feeding wire into the hole and what not.

If it is anything serious...

I phone labor-unsteady or the competition labor-unready.

Anything to avoid the paperwork hell of a 1.2 man out-fit.

After that...

Use an administrative employer. You've got to do what ever it takes to keep headquarters overhead down, down, down.

For those who've never heard of it: an administrative employer is an outfit that is pure back-office. They handle all of the government submissions (taxes, etc.) and tack on a profit margin for themselves.

It is a VERY rare small shop that can compete with the automated efficiency of an administrative employer.

Operationally, it will be the EC -- that's you -- who hires and fires and calls all of the operational shots.

The AE only handles the back office.

Back in the day, my old boss related that shifting to an administrative employer saved him $ 100,000 per MONTH. Yeah, he had a large crew. Further, his W/C was crushing him. He should have gone out of business. Using an A/E allowed him to unload is W/C 'experience' (track record of horrific injuries and losses due to his management 'style') onto the naive administrative employer. That is, he went from a crushing -- business ending -- insurance rate to a normalized workman's comp rate by using someone else's experience ratio. Clever, no?

You need a mighty big crew/wife-slave to justify keeping the paperwork in-house.

The amount of forms that the government wants from a business are staggering and do not relent because you're a small guy on the make.

The goverment penalties for slipping up are unbounded.

The amount of time a small company has to commit to such rules is ALWAYS a choker: it's beyond belief.

And it only gets worse as time goes by.

For me, the worst aspect was maintaining the records dang near forever and ever. I didn't get into business to be a librarian or super clerk -- two totally different skill sets.

Paying cash under the table works right up until it don't: the fool gets hurt on the job. And do they ever.

Hence the number of players who think that they can get away with just calling an ambulance and thus duck the liability. NO WAY. The ambulance crew is going to require enough info to absolutely nail the employer to the wall.

That would be you.

Hence the reason why legal contracting is so expensive. The quote has to include the practically inevitable foul-ups and injuries that your 'help' will incur.

Last edited by Tesla; 06/15/09 08:59 AM.

Tesla #188577 08/18/09 11:37 PM
Joined: Aug 2009
Posts: 22
RH1 Offline
Here's how small contractors around here do it: Have your guy sign up with Labor Ready or some other temp labor outfit. He will be paid minimum wage and the cost to the contractor is about $16 per hour.

Then you supplement his minimum wages with cash under the table, an amount previously agreed upon. This way you have the best of both worlds, a legal, proper, workers comp covered employee and you're also paying cash so the worker is happy too.

Also, since the worker is not your employee, you are not subject to lawsuits for hostile work environment, discrimination, sexual harassment, etc.

This is a cool trick for small contractors, but once you are working guys full time, it's cheaper to make them real employees and hire a payroll service.


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