I just started a surveying & engineering business and have set it up as a sole proprietor. I have a full time career and am 5 to 8 years from retirement. I plan to do this as side work until I retire and then decide to expand if the market allows. In the meantime I would like to operate within the tax laws and don't want to hire employees. From time to time my college age sons will help me (sweat equity for a free college education), but on occasion I would like to be able to hire some help. I assume I would need to treat them as independent contractors to avoid all of the "employee" complications. Does anyone have an agreement that they use for similar situations that they would be willing to share?
You need to very, very carefully check the definition of independant contractor in your state labor laws to see if a part time person will qualify. Generally speaking, if you say show up at 8:00 AM (or any other specific time) they may not qualify. Also, there is the matter of unemployment taxes (state & federal), workmans comp, etc. etc. Try ignoring any of those and your are asking for big trouble.
You need to get good advice from a labor lawyer that is in your state and knows your state & federal employmeny laws. Ignore all other advice - especially from someone outside your state.
David is spot on. The gov really makes it complicated. They do everything possible to make you treat the help as employees who must be paid wages and have taxes withheld. Also a biggie is worker's Comp.
At issue is the definition of an independent contractor. In your situation it is pretty hard to meet. To be honest you are way better off sticking with family members who are treated differently than non-family members.
Drafting services, landscaping, and specialties are more easily accommodated as independent contractors especially if they also do work for other. Good luck.
I have been told, and I don't know if it's true, that if you have someone in mind they can register with a temporary employment service. Then when you need them you call the temp. company and ask for them specifically.
Pretty tough to pass off surveying/engineering helpers as private contractors. Drafting services from a remote location being one of the few possible exceptions.
Sole Proprietor - As needed help - Dennis
Cash makes no enemies, make some friends
Sole Proprietor - As needed help - Dennis
Let's put it this way....If you don't have an expense to report, then you must not have had an employee. Think about it.
Sole Proprietor - As needed help - Dennis
Until someone gets hurt. Don't get me wrong about the concept of over regulation, but at Dennis' age does he need the worry? The more i think about it just hire the occasional help as occasional employees. If the paper work is too much just hire a part-time bookkeeper or use Quickbooks payroll services for a couple hundred dollars per year-they will make all the tax payments for you. Here in Maine you can get Worker's Comp coverage for occasional workers who will be paid less than 3000 dollars for 300 dollars per year.
Sole Proprietor - As needed help - Dennis
I agree with those who are saying, in effect, "either follow the rules or skirt them altogether." Cash for casual labor is probably the easiest route -- talk to the guys in your local firehouse to see if one of them wants to earn some extra money on his days off. You'll be at risk for the fallout from any on-the-job injuries, and you'll be in trouble with the IRS and EDD if you get caught, but the odds are in your favor. Claiming "independent contractor" when the regs clearly render your situation ineligible only raises a red flag without buying you any protection from employer liability.
If you don't want to run those risks -- in the 17 years I've been in business I've chosen not to -- do the right thing. Either go with a temp service, sub out to a bookkeeper, or do the paperwork yourself. It's not that hard, just tedious. I probably spend about four hours a year on it for my one employee, a part-timer.
Sole Proprietor - As needed help - Dennis
Don't forget to check with your state board. You may be forbidden to subcontract with non-licensed personnel or entities.
You should also talk to an accountant about some form of incorporation. Saves a lot in taxes and will protect your assets. If you plan to retire soon you need to protect what assets you have and a lawsuit or tax problem from "skirting" could put a serious dent in the nest egg.
In order for your help to qualify as a subcontractor they must:
1) Have their own equipment and make their own hours. It also helps if they sub for other people (other than you). They should also have their own worker's comp.
Probably your very best solution is to go through a temp agency (as a few other posts mentioned), I have done this before and it works very well, may not be as inexpensive as doing all the paperwork yourself, BUT they cover all the bases and all you do is write a single check for their services plus the wages, very good way to go with temporary help.
SHG
If I use someone I run it through our payroll service... I would rather not create problems that I don't need...