Regarding Independent Contractors
This is an area where you must be very careful if you pay people directly as independent contractors.
In the mid 80’s, so many cleaning companies were being audited because of abusing the independent contractor status, they actually sent out a notice (in California) that this was an area both the state and federal tax people would be looking at very closely. It can be very serious. If the government feels your people are really employees and you treated them as independents, you may be liable for ALL of their social security, not just the ½ you would normally pay. There will also be penalties and other taxes and it can really add up.
Worse, the government plays no games with employee taxes. They rarely compromise the amounts due and the are very strict on re-payment plans if they will accept one at all.
The government is very strict about this for a couple of reasons (of many):
1. If you hire independent contractors it may allow you to have an unfair advantage over your competitors. You do not have to pay a portion of their social security or any other taxes. The government does not like this.
2. Often the taxes never get paid. Some independent contractors treat it like money “under the table.†You can bet the government definitely does not like this.
Another issue to consider is with an independent contractor, you can only be concerned with the “results†of their work. You can not tell them when to work (other than the days the CUSTOMER has requested service), how to work, what to buy or involve yourself at all in their business operation. With an employee, you have direct control over their work, the quality of their work and providing them with the materials they need to do the job.
Saying all this, it must be admitted that working with sub contractors, hiring independent contractors can be handled legally, is very common in the cleaning industry and can work beautifully as long as you do it right and meet the guidelines.
A just a few of the guidelines to consider:
The Independent Contractor has their own insurance, business cards, and business name, and performs the “same or similar†work for other customers, not just you.
The Independent Contractor provides their own materials, set’s their own time and schedule, may hire others to work with them including other subcontractors. You can tell them what days the customer wants service provided.
Robert Kravitz,www.alturasolutions.com
Altura Solutions Janitorial Resource Center