Many cleaning companies want to grow their cleaning business but don't want the hassle of hiring employees. That's because there's a lot of paperwork, taxes and insurance to pay. Instead, they decide that it's much easier and less expensive to hire subcontractors to do the work and then give them a 1099 so the individual has to pay their own taxes.

The problem is, the IRS has laws regarding the hiring of subcontractors. There are three primary areas of concern:

1. Behavior. Who controls the work performed by the individual? Does the company have the right to control what the worker does and how he or she does it? When a person is truly an independent contractor, he or she is self-employed and is contracting with a company for a specific task.

2. Financial. Who controls the business aspects of the job - how the individual is paid, whether expenses are reimbursed, who provides the tools and equipment to get the job done? If the employer provides cleaning equipment like vacuum cleaners and mops, then they have control over the job, which means the individual is an employee, not an independent contractor.

3. Relationship. Are there written contracts or employee benefits like insurance or vacation pay? Is this to be a continuing relationship? If you hire an individual with the expectation that he or she will continue working for you indefinitely rather than for a specific project or a limited time, then the IRS generally looks at this as intent to create an employer/employee relationship.

The key is to look at the entire relationship and consider the degree to which you have control. If you improperly classify an individual, you could face substantial penalties and tax liabilities, not to mention Worker's Compensation charges that would be back-dated for these employees. These penalties and liabilities could add up to thousands of dollars and could potentially put you right out of business if you can't afford to pay.

To find out more about whether a worker is an employee or an independent contractor read Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Many cleaning companies want to grow their cleaning business but don't want the hassle of hiring employees. That's because there's a lot of paperwork, taxes and insurance to pay. Instead, they decide that it's much easier and less expensive to hire subcontractors to do the work and then give them a 1099 so the individual has to pay their own taxes.

Copyright © The Janitorial Store (TM)

Thoughts or comments? Please consider posting them to the discussion forum

Would you like to reprint this article in your newsletter, on your web site, or on your blog? You sure can! As long as the article is complete and unaltered (including the author information below). Send a copy of the reprint to us by filling out the contact form, including the URL of the published article. (Make sure all links are live if placed in an e-zine, on a web site or blog.)

You must include the following information at the end of each article you reprint:

Copyright © TheJanitorialStore.com. All Rights Reserved.
Steve Hanson helps owners of small cleaning companies build a more profitable and successful cleaning business through his online community at TheJanitorialStore.com. Read inspirational cleaning success stories at http://www.cleaning-success.com, and sign up for weekly cleaning tips at http://www.TheJanitorialStore.com.