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This month, Judy Suval answers some commonly asked questions from window cleaners, on the subject of employees:

Q: I'm a one-man show, but business is picking up, especially during the summer months. Should I hire employees?

A: The choice is whether to work alone, with a partner (perhaps a spouse), or employ other people to do the actual window cleaning. There are advantages and disadvantages to each. The jobs become easier, faster and more fun when youíre working with someone. One person on each side of the glass can see spots missed on the other side. But business partnerships are generally more difficult unless the partners are very compatible. Working with a partner or a mate, you can choose to work the same jobs together or you can work independently, servicing different accounts. The former is more economical because major equipment and vehicles can be shared

As an employer, you can increase your business but you also double the amount of paper work. You can train people to take over the cleaning, youíre free to solicit more business, and then to train more people. But there is paperwork, government involvement and control, and legalities. You have to provide liability insurance and workerís compensation insurance. You must withhold federal income and Social Security taxes and pay a matching employerís share of unemployment taxes. You would have to have any employee bonded who would be working alone in anyoneís home.

You have to keep separate payroll records for each employee, prepare quarterly and year end payroll tax returns and prepare year-end earnings statements for each employee. In addition, you can count on adding at least another 35% of the base wages youíre paying to cover taxes, insurance and paper work.

Write or call your state Office of Employment and Department of Licensing and the State Department of Labor and Industries for laws and regulations regarding employment. Write the IRS for their Circular E-Employerís Tax Guide, see your accountant for information and regulations that pertain to your particular business

Q: What's the difference between employees and subcontractors?

A: An alternative to hiring people when you need the extra help is to use an outside contractor, someone who has a business of their own and can take on a little of yours. The IRS has very clear guidelines as to who constitutes an employee and who is an outside contractor. Generally, if they have their own business, are supplying their own equipment, are available to the public at large and not just you, and are doing the work on their own schedule, they would be considered an outside contractor or subcontractor. Subcontracting is usually not considered legitimate if it is done within a specific occupation--a janitorial firm can subcontract a window cleaner, but one window cleaner cannot usually subcontract another. See IRS tax form SS-8 "Determination of Employee Work Status for Purposes of Federal employment taxes and Income Withholding." It is important to have this clearly defined, because your liability is tremendous should a person be hurt on the job who is not covered by workerís compensation and who is then determined to be an employee.

My friend Grace hired an outside contractor; they brought their own equipment, drove their own car, did the work according to their schedule and were paid 50% of the income. If by the end of the year they have earned more than a certain dollar sum (around $600--check with the IRS), she files an IRS form 1099 showing the contractorís name, address, social security number and amount paid to them. One copy goes to the contractor and the other to the IRS. That is the only paper work involved for taxes for subcontractors.

Most window cleaners realize that it is not worth the risk to try to pass off employees as subcontractors. Penalties are great, and can be handed down by not just the IRS but several state and local agencies, such a franchise tax boards, at the same time. However, as of August 1996, with the signing of the Small Business Job Protection Act, Congress has made it a little easier to hire and utilize subcontractors. This law shifts the burden of proof to the IRS when they question a subcontracting arrangement. Details of new laws are provided in the IRS publication 15-A, available by calling 1-800-829-3676.



				21 Feature Articles D•I•R•E•C•T•O•R•Y

Q & A: The Problem Solver This month, Judy Suval answers some commonly asked questions from window cleaners, on the subject of employees: Q: I'm a one-man show, but business is picking up, especially during the summer months. Should I hire employees? A: The choice is whether to work alone, with a partner (perhaps a spouse), or employ other people to do the actual window cleaning. There are advantages and disadvantages to each. The jobs become easier, faster and more fun when youíre working with someone. One person on each side of the glass can see spots missed on the other side. But business partnerships are generally more difficult unless the partners are very compatible. Working with a partner or a mate, you can choose to work the same jobs together or you can work independently, servicing different accounts. The former is more economical because major equipment and vehicles can be shared As an employer, you can increase your business but you also double the amount of paper work. You can train people to take over the cleaning, youíre free to solicit more business, and then to train more people. But there is paperwork, government involvement and control, and legalities. You have to provide liability insurance and workerís compensation insurance. You must withhold federal income and Social Security taxes and pay a matching employerís share of unemployment taxes. You would have to have any employee bonded who would be working alone in anyoneís home. You have to keep separate payroll records for each employee, prepare quarterly and year end payroll tax returns and prepare year-end earnings statements for each employee. In addition, you can count on adding at least another 35% of the base wages youíre paying to cover taxes, insurance and paper work. Write or call your state Office of Employment and Department of Licensing and the State Department of Labor and Industries for laws and regulations regarding employment. Write the IRS for their Circular E-Employerís Tax Guide, see your accountant for information and regulations that pertain to your particular business Q: What's the difference between employees and subcontractors? A: An alternative to hiring people when you need the extra help is to use an outside contractor, someone who has a business of their own and can take on a little of yours. The IRS has very clear guidelines as to who constitutes an employee and who is an outside contractor. Generally, if they have their own business, are supplying their own equipment, are available to the public at large and not just you, and are doing the work on their own schedule, they would be considered an outside contractor or subcontractor. Subcontracting is usually not considered legitimate if it is done within a specific occupation--a janitorial firm can subcontract a window cleaner, but one window cleaner cannot usually subcontract another. See IRS tax form SS-8 "Determination of Employee Work Status for Purposes of Federal employment taxes and Income Withholding." It is important to have this clearly defined, because your liability is tremendous should a person be hurt on the job who is not covered by workerís compensation and who is then determined to be an employee. My friend Grace hired an outside contractor; they brought their own equipment, drove their own car, did the work according to their schedule and were paid 50% of the income. If by the end of the year they have earned more than a certain dollar sum (around $600--check with the IRS), she files an IRS form 1099 showing the contractorís name, address, social security number and amount paid to them. One copy goes to the contractor and the other to the IRS. That is the only paper work involved for taxes for subcontractors. Most window cleaners realize that it is not worth the risk to try to pass off employees as subcontractors. Penalties are great, and can be handed down by not just the IRS but several state and local agencies, such a franchise tax boards, at the same time. However, as of August 1996, with the signing of the Small Business Job Protection Act, Congress has made it a little easier to hire and utilize subcontractors. This law shifts the burden of proof to the IRS when they question a subcontracting arrangement. Details of new laws are provided in the IRS publication 15-A, available by calling 1-800-829-3676.

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