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How do you pay your guys?

Discussion in 'Commercial Snow Removal' started by Lawn 'N' Order, Jan 17, 2012.

  1. Lawn 'N' Order

    Lawn 'N' Order Member
    from IL
    Messages: 48

    I was wondering how everyone pays their help Mainly shovelers and drivers? I know a lot of companies pay their help cash. If you do this how do you write it off? I'm not talking about a few hundred dollars last storm generated about $2,500 in payroll. I know of companies around me pay cash to all their help and it has to be in the tens of thousands every storm. How do they do this when it comes time for taxes and not getting audited? Any help is greatly appreciated
  2. TCLA

    TCLA 2000 Club Member
    Messages: 2,696

    It's fine to pay casual labor up to $600.

    Cash deals beyond this is skirting the law.
  3. Eronningen

    Eronningen Senior Member
    Messages: 442

    I think paying employees to shovel with cash is stupid unlesss its a one time thing or once and a great while. I want it on paper as a write off.
  4. Lawn 'N' Order

    Lawn 'N' Order Member
    from IL
    Messages: 48

    I know that, thats why I don't understand how those guys do it. Didn't know if there was a trade secret that I have not found yet.
  5. bhmjwp

    bhmjwp Senior Member
    from kcmo
    Messages: 309

    -Correct me if I am wrong-but nothing wrong in paying cash. They sign the pay voucher, and I issue a 1099 at year end. I have done this for several years for temp snow help. Less hassle, no return trips, ect. Even have a app that can calculate withholding if necessary.

    And be assured I take the deduction!
  6. Eronningen

    Eronningen Senior Member
    Messages: 442

    No secrets I'm aware of. All I know is if I have cash I want to keep it for MYSELF. I will not make a cash withdrawl out of my business accounts as its a huge red flag and you can't write off as and expense. If you paid em cash you would save on the work comp, unemployment ins, ss match, medicare, etc but its just not worth it imo.
  7. Antlerart06

    Antlerart06 PlowSite Veteran
    Messages: 3,437

    On your taxes you file it as contact labor so it up to the workers to pay the taxes on it
  8. Lawn 'N' Order

    Lawn 'N' Order Member
    from IL
    Messages: 48

    I agree, I want to pay them on the books so I can write the expense off as well. The problem is around me everyone is paying cash and the guys here that and thats what they want. They want green bills with no taxes taken out. Some of them are on unemployment as well so a few hundred in cash when ever we get a snow is great for them. Thats the whole problem that I have with it. 1099 is not a bad idea....but in doing that whoever we 1099 now has to have their own insurance. I did this last year and didnt get a cert from some of my sub contractors and my insurance company audited me and it came back as a red flag! So I definatly don't want to be in trouble with the insurance company cause you know as well as I do that they will raise the rates when ever they can!
  9. Lawn 'N' Order

    Lawn 'N' Order Member
    from IL
    Messages: 48

    Do they have to have insurance. Correct me if Im wrong but if you have someone driving one of your vehicles they have to be listed as insured with insurance company as a driver. Contact labor is sort of like a 1099 corect?
  10. DuraBird02

    DuraBird02 Member
    Messages: 76

    Your tax professional can issue a 1099 for any amount to whoever worked for you. I would say that if they are paying their employees with cash, that they are getting paid from their customers in cash and keeping it out of the hands of the IRS. That's what it sounds like, could be wrong.
  11. NickT

    NickT Senior Member
    Messages: 707

    Interesting thread
  12. Eronningen

    Eronningen Senior Member
    Messages: 442

  13. Eronningen

    Eronningen Senior Member
    Messages: 442

    This is the whole deal, some of you aren't seeing it clearly. If you pay a guy green cash he is not insured and will not pay tax on that money and you as a business owner can't claim that cash a deduction.

    The other thing you guys are bringing up is 1099'ing these guys your paying cash and thats not the deal he is asking about. If you are going to 1099 a guy he is your subcontractor and you might just as well write them a check than so you have proof of payment, but be oh so careful, to be a true subcontractor there is a list of stipulations a page or two long.

    Pay them as employees, don't let them screw the system we all pay into, UE insurance
  14. Lawn 'N' Order

    Lawn 'N' Order Member
    from IL
    Messages: 48

    I agree 100% with you. Just two of my main guys are threating to go somewhere else. Thats what frustates me. I try and be legit and you get screwed one way or another
  15. classiclawncare

    classiclawncare Senior Member
    Messages: 277

    If they are a contractor they must have thier own insurance. If your insurance company finds out they will make you pay for all of that back owed time they worked for you without their own insurance.

    If they don't have their own insurance your better off paying them with a check. If you do cash print a receipt and have them sign it and you still have to take out the taxes ect.
  16. bhmjwp

    bhmjwp Senior Member
    from kcmo
    Messages: 309

    Thanks why you issue the 1099. I have had guys on unemployment that I have no clue of. Once the state get the 1099 info they bill it back to the individual. I get a request from the state about the dates paid, ect and they handle it from there.

    Have never thought about requiring my shoveler's to provide insurance. Might be a tough policy to get!
  17. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    What it sounds like is these are bigger companies that are paying cash.So they are getting cash from some of their other accounts or another part of their business.And if one of their shovelers get hurt do you think they will complain to much while collecting unemployment? It's called the underground economy
  18. White Gardens

    White Gardens 2000 Club Member
    Messages: 2,665

    As far as I've always been told by my accountant, is that you can't 1099 an employee. The must be a sub-contractor and carry all the legalities along with it.

  19. JKuch

    JKuch Junior Member
    Messages: 11

    My guys say I mess their unemployment up because I write them a check. I refuse to pay cash.
  20. downtoearthnh

    downtoearthnh Senior Member
    Messages: 121

    What I have discovered through insurance audits is that if a sub does not have insurance, the dollar value of that subs work is added to your income in the workmans comp and liability categories, and you pay the premium on the amount.