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View Diary: So, I'm a job creator now (29 comments)

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  •  Are you taking out FICA, & state & federal (7+ / 0-)

    unemployment taxes properly? If not, you could be in big trouble. Being an employer is not for the faint of heart. You seem to be confusing being a human being with running a business, and despite what Mitt Romney said, the two are not the same thing.

    •  Still learning about that (5+ / 0-)

      Not yet,  I will when they agree to formalize the relationship, there's no contract yet; I keep asking but they're not interested in editing it and signing it.

      This is supposed to be a temporary thing (my priority is allowing them to move out), but it has been 3 weeks which is why I'm going to start looking into the paperwork now.

      At the very least I am absolutely not kicking them out around Christmas, if the law has a problem with that, the law is wrong.

      I am an electrical engineer, run a reasonably high traffic server, and build autopilots and drones for a living. If you have technical questions, ask away and I will try to give a cogent answer.

      by spiritplumber on Mon Dec 10, 2012 at 08:13:35 AM PST

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      •  spirit - you have some employment law issues (9+ / 0-)

        technically these are employees and you have to be withholding FICA and income taxes and reporting all of this to both state and local government agencies. Because the amounts are small you can probably get away with treating them as contractors and giving them a 1099 at the end of the year, although they don't meet the legal requirements of independent contractors. However, unless you do something that documents that you have direct labor expenses you won't be able to deduct what you are paying them from your gross revenues for tax purposes. As you are becoming aware there is a significant additional administrative burden on entrepreneurs and small businesses once you hire your first employee.

        "let's talk about that"

        by VClib on Mon Dec 10, 2012 at 08:29:30 AM PST

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      •  Well, if they are using your tools and working in (3+ / 0-)
        Recommended by:
        cassandracarolina, SilentBrook, kurt

        your facility (i.e. your home) it would be hard to argue that they are independent contractors (in any event, you'll have to file 1099's for them). So if there is any dispute in the future, you could easily be on the hook for ALL payroll taxes, both their portion and your portion.

        •  I'm hoping that (3+ / 0-)
          Recommended by:
          plumbobb, llywrch, cassandracarolina

          I'm hoping that I will not be hounded by the IRS for this if it's only lasted for three weeks - in honesty I'd rather give them more money now.

          I like the work they do, when they get around to doing it, but my priority is getting them to move out. I don't mind roommates but I need to put some distance physically and emotionally.

          Again, my issue is that they have spent all their wages on consumables and can't move out yet. I do not understand their strategy and they're not interested in explaining it to me.

          I am an electrical engineer, run a reasonably high traffic server, and build autopilots and drones for a living. If you have technical questions, ask away and I will try to give a cogent answer.

          by spiritplumber on Mon Dec 10, 2012 at 08:42:00 AM PST

          [ Parent ]

          •  Every employer would like to give his/her (3+ / 0-)
            Recommended by:
            cassandracarolina, VClib, kurt

            employees more money rather than give it to the government. But you have to anyway. Or you can get in serious, serious trouble.

            •  I appreciate paying US taxes (0+ / 0-)

              they actually buy me good services. Part of why I'm asking for advice here is that I'm asking for advice in general, especially to friends who already have a business with employees; I will gladly do extra work to comply with the law if it doesn't break my ethical rules.

              I am an electrical engineer, run a reasonably high traffic server, and build autopilots and drones for a living. If you have technical questions, ask away and I will try to give a cogent answer.

              by spiritplumber on Mon Dec 10, 2012 at 07:43:01 PM PST

              [ Parent ]

      •  Be very careful about doing without a contract (4+ / 0-)

        If you don't have a contract, what happens is that local law and "precedent" determine the actual "contract".

        For example, just from tenant/landlord law, in Callifornia if you ever allow a tenant to claim to represent you, they become a "manager" and have rights to sublet, which can make things extraordinarily complicated to untangle if the tenant OR the subletter suddenly decide to stop paying rent.

        Accepting rent late without issuing a warning every single time can lead to a legal precedent that the "real" date when rent is due is on the 10th, not the first, regardless of what the lease says.

        Stuff like that.  Essentially, at least with tenant/landlord law in California, pretty much any behavior that allows the tenant to live on the property becomes a precedent for the future.   A lease (contract) helps with that a lot, allowing you to spell out ahead of time important things that can be immediate cause to evict (damaging property, breaking the law on the property and disturbing the neighbors are the holy trinity) but the lease has to also be backed by action  (if wild parties are disturbing neighbors, you need to post a legal warning to your tenants and you need to follow through and evict if they repeat after the warning or your ability to evict for cause is weakened and you instead might be held responsible for any "disturbing the peace" or property damage that occurs during future parties).

        I don't know employer law in the bay area, but I'm sure there are pitfalls there too.   The point is, you have a legal relationship with these people with or without a contract.  Think of it like how property works in a common-law marriage state.   The contract allows both parties to free themselves a bit from the local law and clarify what their obligations are to each other.  Contracts should have a severability clause, which just means that if any part is found to be illegal, the rest still stands.  

        Thus if you make a contract, they sign it and it turns out one clause violates labor law, the rest is still binding (although you should cross out the offending clause and re-sign the amended contract, of course, should you find out if not already in a legal dispute).

        If your situation is too complex for self-help legal books to make you sure what to do, it really is worth spending $100 or so to get a consultation with a lawyer who specializes in this kind of law to help you write a proper contract.  (most folks can do ok with the boilerplate stuff, crossing out or amending a few paragraphs).

        •  I keep insisting on a contract (0+ / 0-)

          but they keep not touching the wiki, so I have nothing to print yet.

          I am an electrical engineer, run a reasonably high traffic server, and build autopilots and drones for a living. If you have technical questions, ask away and I will try to give a cogent answer.

          by spiritplumber on Mon Dec 10, 2012 at 07:41:47 PM PST

          [ Parent ]

      •  I echo what VClib said, ... (0+ / 0-)

        but you should be aware that the authorities won't care a bit how kindhearted you want to be.  You have a legal obligation to report their wages, etc.  The fact that they won't "explain their strategy" or are refusing to "touch the wiki" should tell you all you need to know; i.e., they intend to subvert the law ... and will stick you with the consequences if it comes to that.  Save yourself before you find yourself facing false assault charges or worse.  Seriously.

        "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

        by Neuroptimalian on Tue Dec 11, 2012 at 12:03:12 AM PST

        [ Parent ]

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