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First employee vs subcontractor

Discussion in 'Business Fundamentals' started by KPC, Feb 4, 2014.

  1. KPC

    KPC Junior Member
    Messages: 8

    My snowplowing business is growing and I'm already planning ahead for next season

    I have 2 trucks and looking to add a 3rd next year

    As of right now, I drive a truck, my brother drives the other truck, and for next year with the addition of the 3rd truck, i'll need to hire my first official employee, meaning someone outside my immediate family.

    I know a friend that has a small handyman business but he is mostly a summertime business. He is slow in the winter and he's asked a few times about working as a subcontractor driving one of my trucks.

    Would I add him as a permitted driver to my commercial automobile policy.
    I have a great insurance agent, who I will be talking to in the near future about all of this, but I frequent this site just lurking in the background which has helped me to grow this business so I do want to give a big thanks to this site and its members.

    I am now to the point where I am growing enough to take the business to the 'next level'

    How should I handle adding an employee or subcontractor so I can continue to grow beyond what my brother and I can handle on our own.
     
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    your truck ,an employee.
     
  3. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,501

    His truck, sub-contractor
     
  4. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,445

    He's an employee.
    Even if he uses "his" truck he could be a employee.

    Independent contractors, by definition, are self-employed and because they are not employees, independent contractors are not covered by employment, labor, and related tax laws. Employers may be tempted to reclassify employees as independent contractors in order to avoid taxes, benefits, and other liability. Whether or not a worker is covered by a particular employment, labor, or tax law hinges on the definition of an employee. Yet, statutes usually fail to clearly define the term "employee", and no single standard to distinguish between employee and independent contractor has emerged.

    For example, the IRS uses the so-called “20-factor test,”


    INDEPENDENT CONTRACTOR TEST
    INTERNAL REVENUE SERVICE
    http://http://www.twc.state.tx.us/news/efte/appx_d_irs_ic_test.html