Hello,
I have been self-employed for about 18 months and am hiring my first employee next week. I am wondering what advice I can get from you guys about this process and what I need to prepare for with paperwork.
The guy I’m hiring has worked w/ my brother so I’m not worried about his ability/work ethic. It is more my responsibilities that concern me. On my first day my boss asked what exemptions (if any) for taxes and my soc. and that was it. I know he used quick books and I’m just wondering what you guys think works best for payroll. Last year I did my own taxes because I wanted to understand them myself but I didn’t know if I should look for an accountant or go through a company like paychex or what.
Of course I’m busy enough to not need any extra hassle w/ paperwork but I also want to streamline my finances as efficiently as possible right now.
Can’t remember if there’s any info in my profile so – I’m in upstate NY and am doing both remodeling and new construction.
Edited 9/15/2008 1:37 pm ET by bcarpentry
Replies
I would get a payroll service. Around here I can either use a local accountant (a few of them do payroll) or use a company like Paychex. You should probably know how to do the whole thing yourself, but unless you have time to really pay attention you will get caught by filing and deadlines, etc. Better to have someone else get you started.
I would second the payroll service suggestion. If you can work with direct deposit, I would recommend an online payroll service like the one that Suntrust bank has. It does everything that Paychex does but at about 1/3 the cost.
Do you have GL & WC insurance? I would consider those (especially WC), even if not required by state law.
I would write a brief employee manual. It doesn't have to be anything big and formal, but I like to have something in writing that states the rate of pay, time off, holiday schedule, time card procedures, etc.
Jon Blakemore
RappahannockINC.com Fredericksburg, VA
I do have GL and WC and I have already contacted them about information on the change of coverage. Instead of 2 grand for a piece of paper that says what I can't do I will actually have the money go towards potentially protecting someone. Of course it will now cost more than 2 grand but it was still ridiculous. Oh well, got me in this position...
It's the legalities of payroll that I realized I am relatively ignorant of and so I appreciate the votes in favor of a payroll service. I have found that the best help usually comes from finding out what others in the trade do before I blaze my own trail.
Ok, so I just checked out Suntrust and then thought that maybe I should check with my own bank and they provide an online payroll service that's free for 3 months if my employee(s) have an account w/ them and get direct deposit. After that its $15 month. That seems like a pretty risk-free option.
Are there any other things I should be prepared for going from operating as a sole prop to being an employer? I really haven't done enough research probably. I have my EIN, and necessary insurances... am I missing anything else? Hey, I welcome any advice as well. thanks
Edited 9/15/2008 3:54 pm ET by bcarpentry
Your payroll service sounds good. Make sure that it's turn-key service. You don't want to have to make quarterly payments, or SUI, or the myriad other items to worry about.You want something where you set up the employees initially, and then every pay period you tell them how many hours and they cut the checks.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
My advice, learned the hard way, is to hire somebody you can quickly train to be a lead guy. That way you don't have to be on the job every second watching him--you can be chasing down sales or design questions instead.
Get ready for the headaches, buy yourself a big bottle of advil. If your new employee is anything like my employees be prepared for your patients to be tested.
I was thinking the same thing. Don't get an employee...get a carpentry sub contractor.
b.... i know lot's of guys who wound up behind the 8-ball by doing their own payroll..... not only does it take time... but your quartery reports and sending in the withholding is what gets them
suppose you need to pay a lumber bill... or you just have enough to give your guys a check.... and your qtly W/H is due ?
that's what got me...
and it got a couple of my friends
we all have 2d mortgages to prove it.... it was the only way to dig ourselves out of the IRS hole
2 things changed my business....
incorporating ( and treating myself as just another employee----the most important one,of course )
and getting a payroll service...payroll now takes 50 seconds a week....just fax the hours in...and...
make sure the money is in the bank account......those two things changed my business and my life
I really appreciate the input I've gotten. A little concerned about the negativity about stepping away from relying on subs. Maybe I'm just naive but I don't see a future in using them every time I need an extra set of hands. Am I blinded by ambition or is it worth the risk of trying to build a business that doesn't rely solely on what I can do and who I can scramble to find to do it w/?
Anyway - thanks for replying so far.
You can't and shouldn't do everything yourself...not if you want to make money and stay sane.
Some things you and your help do and some goes to the subs. Pretty simple.
Depends how much work you have going on at once. I can't even come close to doing what my drywall guys can do for the money. Small amts of drywall I do but anything over 30-40 boards they do. They just did a 50 board finished basement I framed for me for $1950. Was rocked in less then a day and spackled the next two days a few hours each day. No way could I do that for that money. Know what I mean?
http://WWW.CLIFFORDRENOVATIONS.COM
http://www.ramdass.org
"I am Andybuildz and I approve this post"
Yeah. less than $1.25 is real good for hang and finish. I do sub all the drywall except real small stuff - done it and hated it. They are a lot faster that's for sure.
To reiterate my concerns about the skeptic attitude on hiring...
Last year I had a large addition to a church to build. Because I did not have a crew I ran subs and acted as GC, lead, etc. I was hesitant about hiring because the future intimidated me and I didn't want to run out of work. Instead what happened was I was consumed by the one job and had to push everything else out of the way. I tried subbing around my schedule but it got to be too much stress and also not the quality or consistency (reliability) I demand.
This year I have found myself subbing for remodel work as well as running my own remodels. I have passed over several jobs because I did not believe that I could juggle them all succesfully. I also had a proposal accepted for trimwork, doors and kitchen installs in a new apartment development. I have to have at least one guy by my side daily and possibly sub elements out just to keep up with the pace. I hope that I can also sub out some of the remodeling that comes my way.
I watched the last business I worked for swell their labor force when the work was hectic but when it suddenly dried up they nearly bankrupted. They ended up using subcontractors instead of their own labor and that has made a big difference in their profit margin. Sure, all the work I think I'm going to do could get delayed or fall through - part of our trade.
Sorry if this is too much ramble. I guess I'm trying to say that I know how to make a profit for myself and am just worried that I am a bit blind to the realities of actually starting to run a business instead of just representing myself. Last year I promised work to a guy if he would work alongside independently and looking back I could have just hired and I believe it would have been more profitable to my business and future. Does that sound like a misconception? I certainly haven't been this way before and so I don't know.
subs are short term
employees are long termwhere do you want you business to go ?Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
I am in it for the long haul. Just kind of doubtful because of the amount of guys that don't make it...
"subs are short term"So, how you keeping your full time electrician, Hvac and plumber busy these days?
I was understanding it in the context that subs to do the same work I can do but speed up the pace. For instance one guy doesn't frame a house by himself. If I was building one I could either hire a crew, sub a crew, or call everyone I knew and work with them as subs. I did that last year and now it seems like opportunity to build a crew. I took Mike Maines advice to heart as well - not just hiring an extra set of hands.
A lot of the guys around here do that kind of work - hire their buddies and go from job to job - just doesn't seem like a solid way of doing business. Maybe I'm biased.
I understand all the positives and negatives about creating crews and expanding your business. It's a dicey situation depending on your business model. I hope you've read the E-Myth.
I had never heard of it but just googled and went to amazon to order e-myth. Didn't mean to sound like I was correcting you if you took it that way - I've learned a lot from reading posts on this site. I realize that I need to learn new things about the business and I'm trying to catch up as fast as possible before I make avoidable mistakes (no use worrying about the inevitable ones). As a sole prop I've missed the educational experience of learning from those I work with so this forum is a kind of substitute for me. I don't have anyone in the same boat as me that I know right now so I just hope to learn from you guys that have been here before.
There's several e myth books that basically teach you to run a business, not let a business run you. I wish I had read the book in my twenties. I'd be done building the business by now LOL!
I'll send ya my copy and U can give it to someone ...
read it ...
got absolutely nothing from it.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Thanks Jeff but I have a copy of E Myth revisited. It's a great book and I was just trying to get the new guy to read it if he was going to hire his first employee. He might as well start out with a good plan.
fair enough.
I read it ... never saw what everyone else saw.
Hey New Guy ...
email me your mailing addy ...
I'll put my copy in the mail to you!
also have a copy of Selling the Invisable around here somewhere.
that one I did like.
will have to look ... may have actually given that copy to the wife's former boss.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
i liked selling the invisible....
guerilla marketing was high on my list tooMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
keep forgetting to buy that one.
Gotta get that one ... sounds right up my ape-like alley.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
There's several e myth books that basically teach you to run a business, not let a business run you. I wish I had read the book in my twenties. I'd be done building the business by now LOL!
Jim
Out of all the biz books I read I found Jim collin's book From Good To Great to be the best. Great concepts to go by.
First time I saw him was over a year ago on a PBS TV special...then I bought the book.
http://WWW.CLIFFORDRENOVATIONS.COM
http://www.ramdass.org
"I am Andybuildz and I approve this post"
Speaking of books (two, to be specific) you should read...the first is "Smart Business for Contractors: A Guide to Money and the Law" by Jim Kramon, Taunton Press. Not sure what year it was published, but I know for a fact that it's been updated since then, so be sure to get the recent edition. The second is "Running a Successful Construction Company" by David Gerstel, Taunton Press. The last edition came out in '02, if I'm not mistaken. Two EXTREMELY indispensable resources for all contractors. Particularly, ones like you, who are about to make major decisions regarding their businesses, the repercussions of which can have a lasting, if not permanent effect on not only their businesses, but on their very lives and those of their families.
Please take the time to read these books. Seen the businesses and lives of too many of my buddies devastated because their egos and "pigheadedness" (hallmarks, unfortunately, of a lot of us contractors) got in the way of accepting the advice found in these books.
Have a good 'un
J.D.
P.S. you can find both these books on this site or at your local library. Chances are, they're there.
jd..... i'll look those upMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Thanks . I'm gonna be collecting as many of these as possible - better reading than the tax publications on the nights that I just can't shut the brain off and sleep. By the way - is "insomnia" a natural part of this process or am I defective? I don't lie awake and worry - I just can't turn off the troubleshooting part of my brain that moves from one project to another and solves (or at leasts attempts) their complications. My wife calls it stress - I had viewed it as focused....
This focused insomnia is similar to what I'm experiencing. I sat around for the past few weeks estimating, estimating... Thought and rethought "am I too high for this area's economy?" Then within 36 hrs 6 jobs lined up. Now its "How am I going to tiptoe through this?" I don't seem to be in as deeply as you, but being by myself, I find it necessary to rely on the BT'ers who've been there. Thanks to all for the referals on the books.
Don't waste another minute reading tax publications. Your time is much, much better spent on what you do best: your trade and on running and growing your business (you'll read all about this in "Smart Business for Contractors"). Leave all those tax issues to the licensed professionals (CPAs), just as your clients leave the remodeling and construction of their homes to the licensed professionals (you).
Good Luck.
Edited 9/29/2008 5:47 pm ET by joshd
subs like those i keep by building relationships
but those relationships end and i have to go find more "long term subs"
my crew ( cross trained in lot's of remodeling skills ) is long term and they are basically carpenters
just had to go find a new roofer... my old one stopped paying his WC premiums
we had worked together for about 6 years
another thing.... as a small contractor... one will never have a captive sub.... just can't get them enough work... which means i don't control their schedule... and i have to rely on them fitting me into their schedule... usually works fine..... but not always
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore