Cleaning person ?

[JOY712]

New owner we have a person that comes in at nights to clean . we have just been giving them $20 each time . we are going to start paying weaky and taking out taxs they are not happy about this They do a really really good job and we would hate to lose this person not sure what to do THANK YOU

[Buddy_Amoroso]

http://www.taxalmanac.org/index.php/Independent_Contractor_vs._Employee


The question is does the person act like an employee or does he act like an independent contractor. Simply put the IRS rules for determining if one is an employee is "If it looks like a duck and acts like a duck, it is a duck!”

For a person to be an independent contractor they should act like a business. They should have a tax id number for their business and they should have their own workers comp insurance. You should have a written contract with this person and they should invoice you. If they cleaned other businesses that would show that they are independent contractors.

The biggest concern for treating a person like an independent contractor is that the IRS will come back on you and rule that the person was an employee and not an independent contractor and that you should of withheld taxes and you would be liable for these taxes and social security. The IRS has sized many of small business assets because those businesses were treating employees as independent contractors.

buddy amoroso

[DuboisLaundry]

I clean my own but I live here.
On those rare occasions when I get to leave town for a few days, I check around the local bars and retails and ask who does their contract cleaning and send it to that person for a few days. I suppose I could send it to that person all the time if I wasn't onsite so much.

as Buddy said, they should run a contract cleaning business
If they are a sole proprietor, their tax ID is their SSN
I think the key factors are that they own thier own supplies and they clean other places too

[Silent Roo]

You are playing with trouble. The odds of getting caugt are slim unless you are using the expense on you Profit and loss statements. Your accountant should have already screamed at you about this....

However you will be liable for SS and tax.

This is a very gray area. Do I track my baby sitter? No should I yes. At what point does it become an issue.....

I have a guy I use for delievery about 3 times a month I could pay him a per mile charge only. He could claim the expense and have no income. We bout would end up with huge tax issues when one of us got caught....

At some point we have to realize that yes it would be nice to not deal with taxes and SS however we must.

[Ken]

I have all my employees on the books that is included my mom.I charge 6.5% sales tax in my video game business if the buyers are in IL.A few buyers were not so happy about the tax,some even own retail business in IL
Nobody like to deal with pay extra money and paper work.If you think the person do great work,I may give he/she a small rise to pay the tax.

[DaveLevenson]

New owner we have a person that comes in at nights to clean . we have just been giving them $20 each time . we are going to start paying weaky and taking out taxs they are not happy about this They do a really really good job and we would hate to lose this person not sure what to do THANK YOU

If this person is truly valuable, your best bet would be to put him/her on the books, deduct taxes as required, and give the person a raise so that the take-home pay stays the same. In effect, you're paying the taxes for the employee. Assuming that the employee is legally allowed to work, this should not give him/her any reason to quit. Remember, your investment in your business is at risk.