Employee - Contractors

Just wanted to set up a general discussion regarding the topic. What's the difference? Why is it important to classify correctly? Benefits of each?

The irs has a section about this but some examples of some differences.

A contractor is often assigned a job at a price and he will do it as he sees fit. He will usually provide his own equipment and work on his schedule. You do not have to pay taxes and oftentimes do not insure them.

An employees usually works for you. Working on your time, doing thebjob how you demand, dressing like you want, follow i ng your procedures.

Its about control. Contractors are financially better, but I always feel like I need more control

Also, a contractor may not be obligated to you. Like, you remove wildlife from an attic, but hire out to have the attic done, paying that person or his company, but the job is being run through you. He doesn't work just for you And tomorrow he can contract with someone else, where you would necessarily allow an employee to

I feel pretty strongly about this one. Contractor status is usually for employers trying to shift liability or responsibility that they shouldn't be allowed to shift. You don't need to withhold taxes and carry workman's comp on a contractor. Usually that is the motivation. Contractor status can be challenged(its usually not, unless something bad happens and there needs to be a discussion about who pays) I think a lot of people live with a false sense of security that "they're contractors, I'm safe" but they are just one accident away from finding out they really had employees instead of contractors.

Running a business is a trust and a responsibility- to your customers, and employees. I don't think contractor status cuts it.

Bob....I agree. It's a competitive advantage....until you get burned.
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Years ago, I worked for The Nation's Largest Wildlife Control Company. The boss wanted to turn most of his employees into sub's. Really pushed it. I don't think anybody actually took the chance. Knowing the situation, his already-poor quality control would've taken a nose dive, and he'd have been run out of town.

Dave, if your boss was the one I've met, I kind of liked him. He had one of the largest wildlife businesses in the country in the St.

Louis area. Back then there was just my wife and I so we were in awe of everyone. That was a fantastic wildlife cruise that we really

enjoyed. Our family wants to cruise the mediterranean next. That will cost an arm and two legs. But, if we made it a wildlife cruise,

we could write most of it off.

What is the cost of an employee over a sub-contractor?

I know the employer must pay approximately 7.65% on payroll taxes along with workman's comp and liability insurance. What's the average cost of the insurance?

Assuming the number of employees is below the threshold for the ACA to kick in, what other costs does the employer incur?

Steve Idk what the averages are, but for insurance, work comp, license, and the bookkeeper to do payroll for my employee is about $2200 a year BEFORE I pay him a nickel, not to mention tax contributions.

Other cost? Uniform, equipment, safety gear, paying him while training, fixing his mistakes.

What's the cost of headaches and ulcers?

Arizona is mostly 1099 and you cover the gas...........

So if you're looking at a 40hr./50wk. employee, your talking about $1.10/hour plus payroll tax?

If I hired subcontractors who paid their own Health Insurance, Liability, Vehicle, and Workman's Comp, I would only save $64,501.00 a

year on insurance alone, so it's hardly worthwhile.

Health is optional til you hit Obama threadhold. Anyone read it, yet? Lol

Unemployment is what $5k year depending on the state?

Thanks Dave.

After looking it up, it looks like it's a 2.2% tax here in NH with a wage base of $14,000. I think that ends up being $308.

One of the big things...it seems would be if you provide the equipment. If you provide ladders...trucks.....

Steve...yeah...I was way off. There's federal unemployment too...but it's less. So you might be looking at a total of $450 or so.

It's not that much, Dave. Our last two vehicles with caps, ladder racks, and new ladders, only set us back about $40,000 apiece. But

they're pick-ups, so they also get crappy gas mileage and there is never enough room. And what you already have loaded is never easy

to get at. If some company were smart enough to put a cab in a van, the pick-up would be a thing of the past.

True...its only $40k

I think your $64k answer has to be close.

My Brother briefly worked as an installation contractor for one of the Cheapo Depot's, and when ever a customer would complain (we all know what complainers some people can be), they would just refund 1/2 the installation price to placate them, and the Sub-contractor wouldn't get paid all he was due. They wouldn't argue, or even check it out.