Ok… I am new in business and have no idea what i’m doing…I need to learn quick! Here is my problem, all of my five employes are mexican. so far (just a couple of houses) I have been paying them cash. My accountant who I have been avoiding says that this CAN NOT BE DONE. I understand that this is going to come back and haunt me. maybe even put me out of buisness so I need help. I have no problem paying on the books I have comp and all but my accountant also tells me that For every employee I have to have this I9 form filled out complete with copies of ssn card etc. now all these guys can come up with a ssn but copies of documents aint gunna happin. everyone around here is paying cash and using mexicans……I want to be like the guys I used to work for and pay alot on the books and some cash like overtime. Now what I want to do is way more leagal than most around here. most people around here dont even want to frame unless its cash and thats the regular citizens….. I would probably loose my guys but I like to work real long days 6 to 7 days a week and they like that. so how are they all doing it? what my accountant says is impossiable…….and why isn’t Imigration coming after them??? What do I need to do? help!
Oh and if your not from a town like this ya have to understand how it is, you drive into a busy development and 95% really! of the people working there are mexican from the slab guys to the roofers….a couple of them might be leagal…..I speak pretty good spanish have worked with hundreds of them…..I met one that was leagal once…..so thats just the way it is…..
Replies
What state are you in ?
The only way you can do it is to convice your employees that it is in their interests. If you can't do that , you can't do anything.
It is in their interests to be legit, but they have to be shown why. Some of that depends on your state laws and enforcement.
Mike Smith Rhode Island : Design / Build / Repair / Restore
Danny-O I know that feeling of being the only legal white guy around, and the only one who has to worry about taxes. One of the problems I already see is that the SSN they are giving you they probably bought at a flea market somewhere. So of course the numbers are not going to come back matching the guy that gave it to you.
Heck I've seen guys come in with sequential numbers on their social security cards. I have seen new guys come in with the same number as somebody already working there.
I really don't know how a lot of the employers get away with paying cash like they do. I know for a lot of employers the Mexicans are the only ones who will show up to work everyday and not complain about the money( i.e. not making enough to do this crap).
I really wish I knew how they get away with it though. Good luck with it.
By the way where are you out of? sounds like some of the same places I have lived.
sounds like texasHalf of good living is staying out of bad situations.
Whatever you choose to do, consider using a payroll service. I used to do my own payroll and forms, and hated every minute of it. Then I hired a payroll service and was amazed how cheap it was. And to have all the paperwork automatically done and accurate......a godsend!
I'm in Idaho and the situation is a lot like what you describe. Theres more Mexicans working than white guys. One framer I know pays his Mexicans by the piece so he can get away from all the gov't b.s. I haven't had any problems with payroll, even though I know that one guy was illegal. I just tell all of them I hire to go to my bookkeeper and fill out the w-2 or w-4 forms, whatever they are, and then they can go to work. I know the ssn numbers they give out are bogus, but what can I do? Those brown-skinned guys will out work most of the Anglos I've hired, not be stoned on the job, or miss days, or steal tools, etc., etc., etc. I have enough problems just making a living and keeping work lined up and properly completed without worrying about all the tax paperwork and everything else that the state and the Feds require me to have. To make a short story long, I don't know how it works, but thats the way I dealt with the problem. I never have had any state or Fed. problems because the Mexicans were illegal.
You guys are part of the problem, not part of the solution. I work in a similar environment so I know. Take the high road. It is the only long term solution.
I'll take all the hardworking, honest guys I can get, mexican or algerian, but you got to play by the rules. Otherwise your killing the rest of us. And, your putting yourself at risk which I'm sure isn't figured into your prices.
Paying cash is a patently bad business decision I don't care how cheap they are.Tom
Tommy,
You're exactly right. It seems that many have the mindset that they will start at the bottom and only go as high as they absolutely have to in order to scrape by.
I don't see why any legitimate business person would even consider paying in cash. If I was their customer I would be very concerned. I don't buy the idea that it's ok to be a good carpenter and a bad business person, because after all, it's what we produce that matters, right? I think it's a package. To be a good contractor, one must understand both sides of the business- production and administration. If you're cutting corners in how you run your business, what other corners are you cutting in what you produce?
Danny says "so thats just the way it is". Well, either you need to change "it" or "you". Jon Blakemore
I second the motion for taking the high road and going legit. Many days I feel like turning in other contractors but I figure their day will come. Earlier this year one of my guys couldn't renew his drivers license and to make a long story short he had given me false ID for his I-9. He was a good worker but I had to let him go because I knew he was illegal. He has been in this country since he was 4 years old and has lived in the shadows all his life. He is paying the mortgage on a home, car payments etc. ... but he's not here legally. He went to work for someone else in town and I wish him the best. Believe me, working within the law can and does work. I make good money as a finish carpentry subcontractor and sleep well at night.
I use a bookkeeping service for my payroll, and some other things. It's the best $65 a week I have ever spent. The service includes weekly payroll for seven, quarterly and annual reports, workers comp and liability reports and audits and tracking of expenses and income. I just report deposits, draws and raw payroll information. I do my own billing and of course bidding.
I agree with sleeping well at night! There are enough worries in any business with out taking on more that you don't need to. I use a payroll service too and think it is money very well spent. There is enough to think about without worrying about quarterly returns and such.
Maybe I'm too paranoid, but I believe that one accident that involves a worker that isn't legit could ruin a business and a life.
Danny, a lot of these guys are correct. Don't believe for a second that if one of these cash workers falls off of one of your roofs and gets crippled or killed (it can happen) that you won't have huge problems.
Another poster was also correct that using such illegal business practices only hurts our industry. It will hurt pricing so that those that are doing everything above board and paying a fair wage to legal workers won't get the work. A lot of that is dependent on your marketplace. If you're building spec homes your end consumers may not know what is hidden under the sheetrock, or care who framed their house. If you're doing any custom work or remodeling though, there are always customers who place a great deal of emphasis on who your employees are, and they should, it can speak volumes about you as a business person.
There is one scarey way around some of this. You can help some of your employees get their contractors licenses and use them as subs. Be careful though, if they only work for you, and you control their activity too much the IRS will consider them to be your empoloyee, no matter what your understanding is, and depending what criteria your states uses, they could to. Then you're back to having huge problems.
If you're using known illegals you probably aren't going to 1099 them either. Have you considered the tax consequences of not being able to utilize their labor cost as an expense?
I'd take a realistic look at how you're doing business, and what the real risks are. Good luck to you.