Is it an employee or an independent contractor?

Sometimes as a small business consultant, gray area topics will come up and all I can do is share my experience and refer you to more qualified professionals if it’s out of my comfort zone.  I’d like to share a story about a client who also is an organizer, who really wasn’t sure if she was truly hiring correctly.

Here’s her story:  client currently subcontracts with 2 people. One is a college student that hopes to be a pro organizer after graduation. The reason I felt comfortable saying she is a subcontractor is that she is open to (and has done) work for other organizers. Is this not enough to classify her that way? So far, I have loved having her as an option for some of the work that clients won’t want to pay my rate for (scanning, data entry, electronic file organization).

She has also helped my client out with residential work when she felt we could get more done with an extra set of hands. In addition, she is helping me with some website content b/c it is something I hate to do myself, so have been putting off.

My client feels that she is just not ready to go through everything she would need to have employees, but really does need the help at times.

It’s become a concern as she have a large, prospective job in the works with a large university). This particular group just moved to a new building and needs all of their storage areas organized.  She’s suggesting using The Paper Tiger (smart move – sic)  to create and maintain inventory of the items. 

My client was planning on a student as well as a couple of her friends help with some of the manual labor, data entry, etc. it’ll also look good to the client to see university students helping out. But, now my client is wondering just how legitamate the employment relationship is.   Are they really employees? and should she pay payroll taxes?

So, I’m telling my client, It definitely sounds like an employee. There is an expense to having employees, however, as you leverage your business, this area is an ideal place to let go and let those more qualified manage it for you. I use a payroll service, even if I have one part time person. I use Paychex. I don’t worry about unemployment taxes, deadlines, or w2s’. My only concern is that I have enough money in my checking account to cover payroll. (a good problem!) The payroll service deducts not only the wages, but also the prepaid taxes, so if my payroll is $1000, I can anticipate $1400 to come out of my checking. I assume high and am always relieved.

The payroll service also can help you with paying your own payroll taxes.

Check with your accountant too, mine said it was a “no brainer” to let it go to a service.

 

As I started this blog, I’m not an expert on taxes, payroll or employee issues, but I’ve seen enough to guide you out of trouble when you are walking a thin line.

For more information on my business consulting areas of expertise, please visit, www.StrategizeAndOrganize.com.  My focus is personal productivity at work and at home.