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advice needed about one of my sub situations

Discussion in 'Commercial Snow Removal' started by ACA Landscaping, Jan 21, 2008.

  1. ACA Landscaping

    ACA Landscaping Member
    Messages: 53

    hello all, long story short , one of my subs operates two pieces of equipment for me at two of my meijer parking lots. one piece is a large wheel loader and the other is a 4x4 backhoe, now for the problem i have, the equipment is his and i understand the cost that is associated with these pieces on purchase and maint but he doesn't have any pushers of his own. last yr i borrowed one from a company i do work for so last yr wasn't an issue now this yr they told me if i wanted one or two i'd have to lease them which i totally understand and they said the price would be min or they'd come up with a purchase price either way i really didn't worry about it. i figured i'd go for the lease price since i didn't want to have to store all summer long and just take the deduction but they came back with 550 together a mth for a 14 fter and a 12 fter so leasing them would be stupid i can buy them for 4500 but my problem lies in that my sub doesn't have the money and even if he did he feels that he's not responsible the provide them and i should provide him with them. i tried to work something out where i'd buy them and deduct x amount of $ from his bill until they are paid in full then there his but he still thinks it should be my cost not his. i also said fine i'll buy them but i'll have to charge you a small fee hourly the recoup my cost.he also declined that offer. i pay him 150 an hr for the loader and 100 and hr for the backhoe so when he's plowing i basically don't make any money on him which is fine it allows me the have more accounts where i can make money on the salting aspect. is my pay to him on par with others in area. i feel like to be a sub you have to have right equipment to do the job not unlike hiring a sub with plow truck only to have him so up with a truck and ask me to buy him a plow? if we were not talking about almost 5 k i'd just eat it but this guy seems to allways to come up with some sort of equipment mobilization fee , fuel surcharges, ect so its not like i haven't let some things slide in his favor. what do you guys think i'm struggling with it personally and thought someone can shed a little unbiased opinion on this issue.
     
  2. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,574

    The problem is he is an employee and not a sub-contractor.
     
  3. mulcahy mowing

    mulcahy mowing Senior Member
    Messages: 718

    Find a sub with the right equipment
     
  4. Niteman9

    Niteman9 Senior Member
    Messages: 165

    Why do you say he is an employee? I don't get it. He is sub contracting the use of his Loader and Backhoe. I sub with a plow truck and get paid by the hour and I am not an employee of the company I sub for.
     
  5. cet

    cet PlowSite Fanatic
    Messages: 7,202

    He seems to have the equipment you hired. If you wanted someone with a pusher then that is what you should have hired. If he is willing to use your pusher for the same hourly pay then you are getting paid for the pusher because he won't take as long. I supply a 10' pusher for the backhoe sub that works for me. If he decides to quit I will still have the pusher and maybe find another backhoe.
     
  6. iceyman

    iceyman 2000 Club Member
    Messages: 2,546

    does the guy give you a plow to put on ur truck to service his accounts or do u have ur own...:cool:
     
  7. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,574

    A sub-contractor is an independent contractor.
    Who is an Independent Contractor?
    A general rule is that you, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result

    Who is a Common-Law Employee (Employee)?
    Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

    Who is an Employee?
    A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done.

    http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
     
  8. Mike S

    Mike S PlowSite.com Addict
    Messages: 1,588

    We do some thing like that. Sub has a backhoe but no pusher and doesnt want to buy one but can not do the job without one so he get $90 a hour. We bill $140 so we make $50 an hour for owning the pusher. More profit to be made with for me and gives him a reason to buy one next year so he can make moreand we can grow. That example is with a backhoe. A lot of companies in Columbus own lots of pushers but don't own any equipment.
     
  9. ACA Landscaping

    ACA Landscaping Member
    Messages: 53

    first he isn't an employee i stated he's a sub contractor using his own equipment for an agreed houring wage. he uses his equipment for his exavating biz and this is extra machines that are just sitting around and in with it being winter and contruction biz being slow right now he likes the work to keep his guys busy . i really thought 250 hr for 2 pieces of equipment plus mobilization fees and such was decent pay especially when he's sending his guys out for 17 bucks and hr. that was one of our first disagreements since i felt i hired him not his low wage employees who i seem to have to watch alot i figured he would operate one piece and keep an eye on his second machine. that happened for the first event but never again. he originally said he was going to make his own pushers in his shop but never happened then i fell into the deal of borrowing one last season. what do you guys think of the 250 per hr for the two pieces of machinery? i'm sure he carries insurance on his exavating end of biz but i actually carry all insurance to cover any slip and fall , ect at all my properties so thats another expense he doesn't have to worry about.
     
  10. Runner

    Runner Senior Member
    Messages: 957

    Actually, it will be great to hear from some of these guys (especially in your area) who run a front end loader equivalent to his size and a backhoe. I'm thinking that 150 and 100 per hour PROBably isn't that bad. I know I have read n here before that some guys get between 200 and 250 per hour for a loader...let alone with a box. So, you might be coming out alright and it balancing out. Another way to do it is check and see what these pieces of equipment would cost to lease for the season and divide into it the number of hours it is used. Don't forget to ad fuel and the cost of qualified driver(s) for these pieces of equipment.
     
  11. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,046

    The 4 subs that I have working for me, I supply the blades. I like it this way because if they decide not to work for me I can put my blades on another peice of equipment. I think your pay rate is more then fair,. JMO
     
  12. ACA Landscaping

    ACA Landscaping Member
    Messages: 53

    hey runner my guess would be that 200 to 250 an hr wouldn't be a sub price but more of a contracted price but i could be wrong it will be interested in seeing what prices come back in my area. i can only say that as for plowing goes if we get a little 2 inch snow i only get a around 800 or so to plow a meijer so if hes getting 150 plus and hr i can only have him there 5 hrs to break even , now i must say i do alot better if theres more snow but here in cincy we're lucky to get to the 2 3 inch mark on a reg basis. now i only shoot for breaking even on him because i get more to salt it than i do to plow in which lies all the profit. also i've salted only each meijers prob 10 or more times each this season and have yet to plow once. so i don't have a billable hourly rate mine are set prices for set depths in contract. and i feel with a 14 ft pusher you should easily be able to finish a meijer in 3 or so hrs at the most. but if i was making 17 bucks an hr i'd wouldn't really be worried about busting my ass either when the guy making 250 is at home in bed or at bar drinking. so they seem to string hrs out longer than i think it should take .
     
  13. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,574

    Again your ins not his a sub-contractor carries his own ins.
     
  14. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,574

    http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
    Example: Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements. Vera is an independent contractor.

    Otherwise you could be an employee...
     
  15. ACA Landscaping

    ACA Landscaping Member
    Messages: 53

    i think someone needs a little more sleep or something because the irs and the 1099 i submit says he's a subcontractor. i have no more say in how he does his job than a bird sitting in a tree watching him. so acording to you when a builder hires a sub contractor to pour his concrete work and he tells him he needs it done on a thurs and gives him plans and tells him how he wants it done i guess he's an employee not a sub???
     
  16. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    Several things;
    First do a search in the archieves there are probably tons of posts on this.
    Second this (you own the pusher sub the equip) was & still is VERY common place as pushers were catching on the large regional/national companies bought tons of pushers, subbed the loaders & bid stuff all over more effeciently (less expensivly) than the current contractor was doing it, thats a big part of how they got so big.
    Third, If it were me I would bite the bullet, buy the pushers, there your weather you use him, another sub, or buy/lease your own equipment for next season. Letter the pusher up & leave them on site. Make sure you get a independent contractor agreement with the guy stating above, etc. SIMA has a decent one for members.
    BTW that is cheap for pushers, what brand are they? Be carefull I looked at some that were made in a small shop, they used the wrong type welder, etc, they wouldv'e fallen apart.
     
  17. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,574

    But that's not what you are doing.
    You are controlling the how not the what when.

    You do not control the how, how he puts up the forms for the slab or the equipment he uses or how much he pays his employees to pour the slab do you?
    .
    You are trying to control how much he pays his employees.
    You are trying to control the equipment he uses.
    you are paying by the hr not the job.
    It's your Ins.

    When I hire a subcontractor I pay by the job.
    I don't care if he has a crew of Mexicans with shovels doing it.
    At the end all that matters is the job done right and on time.


    Just because you 1099 him does not make him an contractor.

    http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
     
  18. ACA Landscaping

    ACA Landscaping Member
    Messages: 53

    the pushers are rcs's there used but only 1.5 seasons old and look like new the both seem very heavy duty to me i've seen some online that seem more like residental grade if such a thing for pushers but you get my drift. i the 14 i've been the only one to use it and the 12 i just got this yr but someone else used it last season. i didn't think price was to bad. i've been at it for 14 yrs now and have changed my overall plan from the early days till now i've back off of using my own stuff a little and went with more subs for the less maintenance factor and such. i found if driver is using his own truck he tends to take it easier on equipment and i have less breakdowns. i only run two of my own plow trucks and one full time salt truck and one bobcat and rest is covered with subs. thats why i wanted to go with subs on my meijers lots big machines no maintenence on my end and one machine can tackle the lot in no time so i can come in sling the salt and make my $. i might be wrong on price but 2 machines for 250 hr i would think my sub would be ready to plow. i've heard of people making all kinds of crazy jack hourly in other places around the country but here in cincy market seems to pay alot less than other cities , with our weak winters anymore for plowing i wouldn't make 5 k on him in 5 yrs like i stated i only look to break even and i feel like a winner.
     
  19. ACA Landscaping

    ACA Landscaping Member
    Messages: 53

    first of all exactly how am i trying to control what he pays his employees??? i could care less if he gets someone to run machine for 99 cents an hr or if he gives them 160 hr and takes a 10 dollars loss. my only point was when he was hired "HE" was hired not someone else. i'm sure anyone out there who hires subs and talks to a propective sub and say he's 55 married with kids been in the biz for 20 yrs and has a dog in the fight since its his company and you hire him and suddenly a 19 yr old single guy who if its a friday nite you have to worry about if he's out parting and not going to make it you'd have the same issues as me. second how am i exactly trying to control the equipment he uses????? he tells me he has a wheel loader and a backhoe and i say great if he gets the job done right , on time, and everyone is happy i could care less if he goes inside the meijer he's working at and duct tapes 16 inch snow shovels the the bucket and it gets done more power to him . if meijers happy, job gets done, everyones who shops is safe when walking in and out of store i could care less on the how aspect. third i'd love to pay him by the job he doesn't want it that way. less risk on his end if its hourly that way if his drivers milk the clock then i'm the one who gets screwed not him. i'd gladly give him a set price and if his guys want to bust it out the thats just more money for him. so i not sure i completely agree with anything your saying am i all the different in my relationship with my subs than everyone else???????? i don't think so but if you say so then with all the people on here theres gotta be a few that will prove me wrong and agree with you. so lets hear it guys is this guy a sub in your mind or more and employee?????????????????????
     
  20. ahoron

    ahoron Senior Member
    from here
    Messages: 422

    I would have to say he's a sub his equipment and his employees running the equipment not your employees. But, the fact that you pay by the hour might be an issue I'm not sure. I think if you set the hours of work he is an employee and if you just say have it done by a said time he's a sub. Why don't you get rid of him if your that concerned with him not having the equipment you want him to have?