This is a pretty tall order, but if anyone is willing to respond, you will have my undieing gratitude!
I’m looking for a MA located owner of a building/remodeling or framing company to exchange emails with me. I am currently working for a guy (have been for 3 years) who has decided that WC insurance is killing him, which I can understand. His solution is that all of us will get our own insurance (around $500 year) and he will pay us as Independant sub contractors and 1099 us at the end of the year. I have been thinking of going out on my own for about a year now and more and more it seems like now is the time. I have a few questions regarding the legality of what he is doing, and what the tax repercussions for the rest of us will be. I haven’t made a real decision yet as to whether I will stay or go because I just don’t know the whole picture yet. I also would like to know what I should expect to pay for insurance if I start my own deal. I have contacted a tax lawyer, to see if he could answer questions for me, but haven’t heard back yet. I also am not sure that he can answer my questions as the whole insurance problem is also a big part of the problem. What is the best way for everyone (owner/employees alike) to set up a business in MA? Is it to pay exorbitant insurance fees (I think the company I currently work for paid around $40,000 for the year last year) or is it to hire everyone as subs? If confidentiality is an issue, please use my email at [email protected].
I realize I am asking for alot of hard earned experience for free, but I’m pretty confused and don’t know where else to look for answers. If you think I’d be better of talking to someone else and know of a good source, please let me know as I would gladly pay a consulting fee for this sort of guidance into the unknown.
I have plenty of work, a great skills foundation, and a modest amount of natural talent (ie luck) but very limited experience in the business end of things. I find it quite intimidating.
Replies
I am originaly from MA but in SC now. I'll give you my quick opinion on two things.
1. It is illegal to treat employees as subcontractors. If he trys it, it will come back to haunt him. He may end up paying taxes, insurance, and social security for these people retroactivly. The IRS has several tests to determine if an individual is realy an emploee or a subcontractor.
2. Massachusetts building trade laws are amoung the toughest and trade licenes are hard to get. The trade unions have had strict laws passed for licencing. Forget getting into the union unless your father or uncle is in it.
Good luck.
John,
Thanks for replying, I suspected as much regarding the legality of the options he has presented to me. Second, the unions aren't nearly a tough to get into anymore. I've turned down 2 union jobs in as many years. Steel studs, drywall, and forms aren't my idea of a good day's work. Cutting roofs is more my speed!
I know nother about MA laws....but will take the time to say about 90% of the replies you'll get will say this is "illegal"....even if it isn't!
The irs has a web page on what differs an employee from a sub.
I'll try to find it.....but you'll probably be able to find it quicker yourself. Someone around here have me the link over a year or so ago....
It's not that hard at all to determine. And has nothing to do with the amount of time U work for one particular individual. Take one other job on the books a year and your off the "employee" hook along those line without worry. And..ya don't even need to work for anyone else for it to be on the up and up. You'd just be a "captive sub"....which can be done legally.
The whoel thing depends on who they intend to tell ya to work.
If they direct the times ya start and stop....breaks.....what days....etc...you are an employee.
A big thing is also if they tell ya how to do something.
An employer can say...nail this at 8" on center. A sub will be told....lay the ply.
An employer can give a sub specs to follow.....but can't direct you how to build something step by step.
Basically..a sub is given the prints.....given any special specs to follow....then turned loose. All the GC can do is be unhappy and not hire ya again...they can't tell you to change the method you are using.
Here in PA..there is no licensing..so I'm of no help there.
And..I'm sure like all things insurance......it varies greatly state to state...and probably city to city.
I pay around $400/yr for $300K..with ryders for tool theft..materials handeling..etc.
I was self employeed when I started....then after 5 yrs decided to see how the other half lives...and went FT employee for a hig end Design/Build firm....
After I was there a year..they wanted to try the all sub thing....a bunch of us were laid off......at my lay off meeting I was handed a set of bath prints and asked to stick around as a sub.
They knew I worked self employ before..and they found out I never cancelled my insurance....just in case!
Now...2 yrs after I called their ad.....I'm still doing the high end work I went to them for....they're about 1/2 my business...and one of the owners decided to split(Go 100% sub)...and I'm now subbing for him too! Just spoke with him today.....he just closed 2 huge remodels that he said will keep all his current subs very, very busy.
So give it some good hard thought..could be the easy way to have a semi-steady flow of work to fill in the time between growing your own customer base. Some good points..some bad....just like any other decisions.
But from where I'm sitting right now.....it was a good thing. Working for the solo owner at the moment...have a signed contract for a big kitchen install with the old company immediately after this job..and have 2 of my own customers waiting for me after these are done.
Email me if ya want more info on how I'm working it. All about positioning yourself.
Jeff
Buck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff,
Last year the insurance regulations changed. As a sole proprietor you must carry Workers comp and be covered by it. ( very difficult to explain to an agent but have them call the parent company). P.A. hasn't started to enforce this yet but several other states have. I know of one company in P.A. and several in N.J. who paid up big last year because a lot of thier subs were one man shows and didn't cover themselves. ( it worked out great for me. I bit the bullet early and covered myself, doubled my work load). Just check it out if you get a chance. It sucks to make a huge payment at the end of the year instead of buying a new snowmobile, motorcycle, boat......................
uhhh..no we don't.
and last time I checked....I couldn't get it for myself.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff,
Check it out carefully. Last year three companies that I do a lot of work for got hit hard at audit time on the insurance end. ( one payed almost $10,000) Some states no longer seperate a craftsman from an employer. While I won't post them here, i can give you the names of at least 5 companies in P.A. and N.J. who had to pay up for just that reason( i can e-mail the names to you if you want to check out). As far as not being able to cover yourself, I was told that by my agent. when i pushed the issue she called the parent company. They told her not only could I, but as a sub who worked for other builders or contractors, as of 2002 one of us was going to pay workmans comp on me. In P.A. it works out to about $10 on the hundred unless most of your work is framing. Then it's a little more. Like i said, even my agent didn't know. I only found out after one of my best customers got audited. even then I dismissed it until it happened to another customer.
Ironically, a few weeks later my agent called me to tell me she had to go to a seminar about that exact thing.
As far as making money as a sub, I've made a ton. But it sounds like this guy just wants to pawn his cost off on someone else.
Jeff,
This guy may be right. Most of my work( about 80%) was sub work. Before i got Deployed all of my customers in N.J. and a few of my P.A. customers called to see if i was covered on my own WC. In P.A. you couldn't get WC if you didn't have employees and couldn't cover yourself.
Most of my work was in N.J. and there you must have a Wc policy, employee's or not. To do this my agent claimed i had one employee at the minimum yearly payroll( about $10,000). I paid the min amount for a Wc policy and everone was happy.
Until of course i got these phone calls. It seemed that all of these companies had been audited ( all have different insurance companies) and had to pay for WC on every sole proprietor who was not covered by his own policy. When i checked into this with my agent he had never heard of such a thing. After some research he called me back to tell me that i could in fact cover myself in P.A. He said that insurance companies were changing this because as a subcontractor who worked for other companies with liability and WC i was required to. He also said that it was a 50 state thing, not just N.J. or P.A. He said not every state or company was enforcing it yet but would be soon.
I can't tell yo9u a whole lot more than that because thats when i got called up. But, i do know that if you have gotten an insurance certificate lately it should have a box that is checked if the owner of the company is coverd by the WC policy.
i would check it out. If no one pushes the issue with you why add the expense. On the other hand if you hire any subs at all you need to know. A friend of mine works for a company that paid over $12,000 last year for WC on it's subcontractors who weren't covered. That was on 4 subs over the course of the year.
Robert
Although I am not local i think that generally the laws of liability are about the same, from what i've heard this is a grey area at best, I've seen builders treat their employees as subs but require them to supply some materials say once or twice a year and bill them for it.
I'd say go for it, be on your own, but also know that as such you get to bill more, theres more risk, also charge a profit on top of your wage , not only do you make a good wage but you charge a profit on top to allow the "company" to grow and weather the slow times, carry your own insurance, do your own books, truck, tool expenses ect ect.
If your planning on going your own way in due time this might be a good way to start, just make sure your billing enough to warrant the risk. And always know that to the builder you are disposable to an extent, more so than an employee.
"I have a few questions regarding the legality of what he is doing"
Who cares how he wants to run his company? Who cares if he wants to treat employees as subs? He wants to make money running a business, but does not want the expense of having employees. If he hires you as a sub and nothing else changes between him and you, he is asking for trouble.
What you need to dwell on is YOU! No one else. You mentioned you may want to go out on your own, well start planning just that. If you do, and the company you are currently working for hires you for your services just take heed to what was stated about. You will be running your own business, with your own business expenses and will not just be charging this guy for wages. If you do decide to go it alone, start looking into other builders/contractors that could give you work. Good luck, but more important, do your homework. "One measurement is worth a thousand expert opinions"
I started out in similar fashion. I was told to get my own insurance and that I'd be hired as a sub. The thing is, I started looking for work on my own and pretty soon, I couldn't sub for him anymore at the prices he wanted to pay (a little more than what he was giving me a week).
What you need to decide is if this is the life for you. Going on your own isn't easy and I don't think is the way to vast riches (although, I'm still hoping! LOL!), but it has been very satisfying in other ways.
As far as the legalities, I'd say that you should only concern yourself with what is good for you.
Your employer is taking a lot of risk if he wants things to stay the same and just save money. He is trusting that you will pay your taxes. He is trusting that nobody gets seriously hurt. If his "subs" do not pay their taxes, he may be liable for them. I know a contractor who was financially ruined by this. Ditto for a serious injury. Try going head to head with a personal injury lawyer.
While your employer is taking a lot of risk, you are now in business for yourself. This can be a good thing and you can make more money, but you had better understand the business part of it. Know what your costs are and make sure that you are getting compensated for them. Keep accurate records of everything. Slowly diversify your market. If you don't want to tackle the business end, stay an employee.
http://www.mass.gov/portal/index.jsp?pageID=va&c=doingbusiness&v=gettingstartedinma
DP,
this question has been asked before.
I don't own a business.
but,
as a business you are responsible for, amongest others, SS, WC, your other overhead expenses, and profit for your company (which is different than your wage)
SS is like 15% on the owner, employee payes ~7.5% and so does the owner.
you might try a search for other threads on the topic of overhead for more info.
your employer may skip a heart beat when you tell him as a sub he'll have to pay 2 to 3 times an hour what he is paying now because he wants to not pay WC, he'll still pay WC because you'll have to include it in your overhead. where he might gain is not paying for time between jobs, but you have to figure out how to cover that, including preparing bids.
edit: example http://forums.taunton.com/tp-breaktime/messages?msg=26179.1
you might also check jlconline.com forums
bobl Volo Non Voleo Joe's BT Forum cheat sheet
Edited 3/25/2003 9:19:39 AM ET by bobl
Well I appreciate everyone's advise. Some of you guys suggested that I shouldn't worry about his position, but that I should just "do my homework". That's what I'm trying to do here. I also am trying to understand what he is gaining because there's a pretty good chance that whatever he is saving, I will be losing. I know of several other companies our size in MA who run their crews this way due to exorbitant insurance rates. I'm trying to get a good picture of the entire situation to better understand my part in it. Also, I have been seriously entertaining going into business for myself for sometime...this would make his position, my future position.
Leet me try to answer it this way - If I am running guys at 18/hr as employees and turned them into subs, I could afford to pay them 22-24/hr..
Excellence is its own reward!
I think that you hit it on the head when you stated that what he is saving you may be losing. I would ask him if he thinks that you can purchase insurance cheaper than him, and if so, why? Or does he expect you to go without it? As far as I can tell, the cost to him should not change very much, he simlply pays you to do all the stuff that he has been doing. I am going to go way out on a limb, as I don't know you or him, and guess that he is expecting you to work for the same rates as before, and take care of the details for free, and go without the insurance that he can't afford. Time for him to wake up and smell the roses. It is getting real expensive to run construction related businesses and he is trying to drop it on you and the others as Subs. Beware, danger ahead.
Dan
Found it..the IRS 20 Q's to determine employee status.
http://www.taxprophet.com/apps/active2/indep-mm.html
Just figure how much ya need to make to afford your insurance...don't forget to guesstimate the taxes..and give him your number.
I was getting $15/hr as an employee......thought I'd be asking for a raise to $18 right before I was laid off!
Now I'm get $35 to $40/hr when subbing for the companies that keep me busy and work around my schedule.....and $45 to $50 when working for homeowners.
Also it get's mentioned ever coupla months that the original owner was thinking about asking me to hire back with them...so I guess he's paying now to have me there than as an employee.
Don't go by all the nay-sayers here.....get your ducks in line.....add it up and divide it out..and if the numbers look good.....might be the best time to give it a try. A good worker can always go back to being an employee....if not for the old boss then someone new...but ya never know till ya try.
I heard the same bs about how "illegal" it would be and how anyone that tries it is trying to rip off employees.....wasn't the case at all for me. In the end..I couldn't have asked for a better starting position.
Somedays..when the sub jobs keep rolling thru and GC's are lined up waiting for me...I wonder why I'm still focused on doing my own jobs and dealing with homeowners and all the added problems.
Maybe talk to a lawyer..I get plenty of free legal advice...but with out that..I'd try to start a relationship with some young lawyer...and get an even better accountant!
That's much more important than the lawyer at this point. Ask around..ask everyone....pick a good one......and double the money that stays in your pocket!
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff makes a good point about a lawyer and an accountant. I'll just add one other research venue.
The Small Business Administration runs a program where retired folks from a given field are available to give FREE advice. I went to them, signed myself up for some advice in my field (wanted to start a property management company at the time...still do, long story).
Within a few days I was emailing back and forth with one of these volunteers who had 30+ yrs experience in my field and getting great advice. He brought up things I hadn't even thought about re. starting my own gig.
In a way, it was very much like the generous people here...willing to take their time to share hard earned knowledge.
http://www.sba.gov/
You can do it online via email; or I think there's local counseling face-to-face as well.
I think this is one of the best things our tax dollars go toward. Best of luck!
I read your post with some interest. In the New York, New Jersey area even owners are required to be covered by a companies workmans comp policy. The reason for this is the situation you are facing now.
The boss is getting killed and wants to cut costs. Making everyone a sub sounds like a great idea. He gets away from paying what is probably an insane amount to cover his employees. You Don't have to pay the per hundred rate because you can exclude yourself from coverage, and he doesn't have the payroll hassel anymore. Sounds great, doesn't it. Oh and i forgot, you get to write more stuff off.
Here is the truth. Most if not all states now require that a sole proprietor be coverd by his own workers comp policy ( many will so no it isn't so, but more than a few people in this area got burned bad last year), so you don't get out of paying the per hundred rate. I also doubt he is going to give you a large enough raise to cover it. You will have to pay the selfemployment tax( the other half of social security, as well as someother matchings). Plus, you'll need a book keeper(more extra costs). And, you must be available to work for others. What he is asking you to do doesn't fit the IRS's description of an independant subcontractor and may well get a few of you in trouble.
Think of it this way. You are being asked to share in the hassel and expense of running a company. Is he willing to share the profits with you. I doubt it. The per employee cost is the same no matter who pays it. I would look for a new job.
ya don't need a bookkeeper...
all ya need is an accountant...
and a good accountant will save ya more money that he charges.
Mine cost $250 start up costs. $250/yearly returns. $100/per quarter.
Save every reciept.....report everything......deduct everything....
money well spent....as ya get back more than U spend.
Diesel....
Told ya a bunch of naysayers would chime in. Sounds like no ones ever made money as a sub, huh?
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff,
My take on the situation is the boss wants the same level of production but without the associated costs of running a business. I don't know for sure, but my guess is if DP meets with the boss and says "okay, I'm ready to be a sub contractor, I just need a raise for WC, and liability ins., and acct. fees, etc., he will be out on his butt.
Some employers cannot comprehend what a true business needs to operate, and they will most likely pay for their ignorance.
That's what I think is going on.
Jon Blakemore
Diesel,
I have worked both in large operations, now for myself. I doubt (I am in Ohio) that your insurance cost would be the same per person as it is for him. Typically a larger company the higher the rate per man.
That being said I am with Jeff on this. Do the research. Do the math first. Talk to an accountant. You are currently employed and have income while researching. The best of both worlds. Being on your own isn't a perfect life but has a lot of benefits. Flexability, you can control your own income to a degree, and above all I like the fact that I am constantly learning something new. Everyday.
The first thing I did was sit down and say if I were going into business how much would I need to make per hour to earn what I do today and survive. All you do is make a list of expenses, add them up and divided by the number of hours you want to work. Or typically do work. Make sure its all the expenses. Cell phone, truck, tool allowance, taxes, insurance, lunch for a client, fuel, accountants fees, legal fees, office equipment, office supplies, sweety on the side etc. (sorry, was thinking back to my youth) It sounds daunting but it really isn't all that bad. And you have a number of guys at your disposal. Jeff, myself have both been through this in the last few years so ask away public or private.
And ditto on what Jeff said about the accountant. Will save you his fees easy. Mine even hires me occasionally so its kind of offsetting. Good luck. Need info, ask away. DanT
I encountered precisely the same situation with my former employer. His Remodeling company was falling apart due to his utter ineptness at running his business (he went from being a solo handiman/repair outfit to having anywhere btn 3-7 employees practically overnight)..He learned the hard way that he was better off alone. He fired most of his employees then decided to make the last of us "subs".
It bombed. Before he could make the transition, he couldn't make payroll. Myself and the last employee saw the handwriting on the wall, partnered up and bought an insurance policy, a license and got bonded. Total cost to start up was less than $3,000. We already possesed enough tools between us to get started and I had a truck.
Here's how it can work for you: Form an LLC (most states now will permit a single owner to become a Limited Liability Company). Unless you're in CA, your cost to incorporate (actually "organize") will be $200-500. Well worth it. Better yet, make your wife an inactive member of your company...a partner...She pays no SE tax on herself (assuming she does no work at all for the company). You are the sole managing member... The net result is your Self Employment tax (normally double what you were paying as an employee) is now halved (bringing you back to your prior employee taxation rate). Use your own private vehicle for the company. Do not rent office space or a "shop"--use your basement or garage instead. Write it all off. Advertise in the paper and with flyers and business cards at first and get your butt in the phone book as soon as possible.
Lose the boss and the old job. He's angling to fire you. You may yet be able to get work from him though once you've become independent, so don't burn the bridge if you can help it. While you are doing all of this, have your business cards prepared and give them to his clients you are working with...tell them you are preparing to be independent and humbly offer your services... Hey, shut up, y'all it's not immoral to compete...Besides, if they liked the work, odds are it's becasue they liked who was actually doing the work, not the bossman who hired you.
BTW, undercut him by a few dollars an hour in your rates.
Anyway, the keys are low overhead, limited liability, and a better product for less cost to the client. And guarantee your work. Always. Your best advertising is the word from your previous clients. Never take advantage of them and don't ever let them take advantage of you..(this does not mean you oughtn't eat a few episodes of rudeness for the sake of getting along once and a while)..But always, always contract with HO's or with GC's. Put it on paper and get it signed before you even set foot in the house.
Finally, become an expert on the IRS..know thine enemy...Read the reams of crap they publish on their website. Learn to beat them at their game. You'll find they are generally idiots who make a habit of shooting themselves in the foot..Take advantage of any and all tax 'loopholes'. Find a tax accountant who specializes in LLC's and pay the initial $250 or so for the start-up advice. Ask every question you can think of. Read every book you can get your hands on regarding your business, taxes, and the law. It ain't heavy, it's just a headache...OK, maybe it's heavy, but even a retard can learn it if he's willing to suffer the initial headache...no pain no gain.
This could quickly become a book-legnth post, so I'll stop here. But suffice it to say, you can do it and it can work...You will be wealthier and happier than you are in your current situation. And it's fun to make your own money...and keep it too.
suntoad,
If you don't mind----please back up a minute and explain how forming a LLC will cut your SE tax in half. I have operated as a LLC for a number of years and have not found that to be the case. thanks in advance.
If you don't mind----please back up a minute and explain how forming a LLC will cut your SE tax in half. I have operated as a LLC for a number of years and have not found that to be the case. thanks in advance.
No, I did not say forming an LLC will cut your SE in half...I said how you organize your LLC can cut your SE in half. Again, here's how: If you are married, make your wife (or your son), say, a 50% partner...but as a non-managing, inactive member. This is key. She can not do any work for the company...officially...As an inactive member of an LLC, this person is only liable for federal income taxes on his/her share. Not Self Employment taxes, as she/he is not employed by the company. Net is, SE tax is halved. Talk to your LLC knowledgeable acountant if you're game. I could cite some info for you if you like (and as soon as I have some time)...be happy to, in fact.
Edited 4/1/2003 1:50:05 AM ET by SUNTOAD
Shazlett, In a former life, I was an employment discrimination lawyer who took a lot of tax classes in law school. Technically, the distinction being made is between income that are wages and non-wage income. One must pay employment taxes on wages but not on non-wage income (rental income, stock dividends and appreciation, interest, etc.).
Thus, theoretically, your "company" earns $100,000, and you pay yourself $50,000 in wages and your wife $50,000 in "profits" (precisely how her money will be classified depends upon whether your using a Sub-chapter C corporation, Sub-chapter S corp, or partnership). You would pay employment taxes on your wages but not on her "profits."
The IRS thought of this problem years ago. In law school, we read case after case where athletes would incorporate themselves and give shares to their family. There are several legal doctrines the IRS can use to reverse this transaction. One, for example, is declaring that paying yourself $50,000 was a deliberate under-reporting of wages (e.g., a big name, pro quarterback ought to earn more than $50k in wages). The Service has the power to recharacterize the entire transaction.
In construction, I see all sorts of things done that violate tax and labor laws. Of course, almost no one ever gets caught. So, talk to a good CPA.
And Chris,.. What I am speaking of is niether illegal nor immoral. My wife deserves half of my proceeds. Indeed, however, you must pay yourself a reasonable 'salary'. Which is why I limited my cut to 50%, not 10% as some have done (50% of my comany's total profit IS a reasonable wage for me, whereas 10% would not be).
It's way under the radar...It violates no tax or labor laws...And it's good business.
The SE tax is a fraud and a crime...Just like Federal Income tax "witholdings". Finding ways to NOT pay them are a moral duty, IMHO.
we're talking taxes here...
illegal and immoral aren't invloved.......just playing their too difficult rules against them!
LIke my accountant says....it's not what ya make...it's what ya keep.
Perfectly legal to follow the tax codes and get back as much as possible.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
"- While you are doing all of this, have your business cards prepared and give them to his clients you are working with...tell them you are preparing to be independent and humbly offer your services... Hey, shut up, y'all it's not immoral to compete...Besides, if they liked the work, odds are it's becasue they liked who was actually doing the work, not the bossman who hired you.
BTW, undercut him by a few dollars an hour in your rates.-"
Keep telling yourself that.
Did ya keep cashin his checks?
View Image
Barry E
Keep telling yourself that.
Did ya keep cashin his checks?
Actually, no. Like I said, the dude was going under. His paychecks kept bouncing. Hence, the impetus to launch out on our own. But one check I did cash...his settlement check after I sued him for unpaid wages and overtime.. ;-)
Department of Labor, baby...Wage and Hour Admin. Learn it, love it, live it.
I agree if that's the case...
But ya don't sit down with the "boss" and say....I need a rasie to cover x, y and z...
Ya sit down with the GC(no longer your boss, just another business contact) and say.......this is my hourly sub rate....I'd love to work with ya.
Plain and simple.
Guess what I'm trying to say is......doesn't matter what the hell the "boss" is looking for......if anyone wants to try self employment......ya better change the attitude yourself.
People treat ya the way U let them. Present yourself as someone that commands respect and you'll get it. You aren't an employee anymore......so U don't let them treat U as such.
Jeff
Buck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff,
That is absolutely correct. Attitude change is a must. You must look out for number one from the point you decide to go on you own. Anything less and you will starve or be left hanging. Also don't forget that everyone jumps on board with a winner. We never say we are not busy, and never bring a problem to a customer that we don't have a suggested solution for. People want to work with people that are decision makers and handle their own issue. Thats what they pay for. DanT
Jeff, thanks a lot for the advise and encouragement. I have to sit down this weekend and make some phone calls and put together a definate list of questions I need answered. If not from some of you guys, a lawyer. Unfortunatly I did what was easiest this week....I put my head in the sand, ignored the situation, and worked a billion hours. I gotta get on the stick though as I already bid three side jobs this week to line up my ducks. The work is there...it's all over the place and alot of guys I've done work for in the past are psyched that I'm taking on side jobs, problem is two of the jobs I bid on are too big to just be side jobs. I love to work, but man the business end of things is confusing! Thanks again for the help...that goes to everyone, and I surely be getting back to you guys with more questions
Dp,
When a homeowner posts on these forums about an unusual problem....everyone here wisely tells him (or her) to find a professional contractor, plumber electrician etc. This is the best advice that I can give you. Although I am not in the home building business, I have owned my own business (Automotive Machine Shop) for 15 years. The best advice somebody gave me when I was starting was that my two most important employees would be my attorney, and my accountant. That was the best advice I ever received.
One problem you are going to have at this moment, is that most CPA's are completely "booked" until after April 15th. Wait it out and get some recommendations from others as to a good CPA who is familiar with the tax laws as they concern small businesses. Make an appointment to talk to him after tax season is over. Also find an attorney familiar with small businesses to help you figure out the best legal form for your business in your state.
Everyone on this site can give you advice based on thier own experiences, but it may all be worthless depending on the laws in the Commonwealth.
Hope this helps,
Bill K
Edited 3/29/2003 8:19:08 AM ET by Mr Bill
Dieselpig,
When I started out all of my work was as a sub. It gets a cash flow going and limits your initial risk. It also gives you a chance to get your feet wet. I highly recommend it as a way to get started.
The two most important things you can do are: find a good lawyer, and find a good accountant. It's your job to build things. It's there job to know the laws and tax regulations. One post here talks about L.L.C.'s. they are not a bad idea but not all states treat them the same. Ask around. The same thing with insurance and licenses, ask around in your area.
As far as what your boss wants to do, I wouldn't. Twenty years ago my father had a big framing company. Some of the guys wanted to be subs and payed on a 1099. Sounded good, even to his accountant. Not to the IRS. We ended up paying a huge amount of money in the end. long story short, if you tell a guy what time to show up, take lunch, and go home he's an employee. Don't let anyone else tell you otherwise. Besides why should you share in the hassel of running his company if he's not going to share the profits.
it sound to me like you are looking towards going it on your own. It can be hard and it's not the path to riches some people think it is, but it can be very satisfying. you never know until you try. Stick to what you do best and for everything else find someone who really know's, not just thinks they do. You'll be better off in the long run. Find good solid advice and get off on the right foot from the very start.
robert