If you have independent contractors and if you tell them when to show up, you provide tools for them, and you provide the vast majority of their income over the course of a year, they are not an independent contractor, they’re your employee.
There are a couple of ways to get around that if they’re your employee. Number one, I do not recommend you do your own payroll. This white hair, I’m not that old, this is payroll. There are federal withholdings, state withholdings, and FICA withholding and matches. They’re all due on different days. Moreover, regulations are changing all the time. There are companies, such as my bank, for example, that charge $2.00 a paycheck. They wired the funds directly to your employee’s bank account. I don’t have to write a check.
At one point I had 250 employees. I got writer’s cramp on payday you know signing 250 checks. That was bad. Then all of a sudden, I hired this company, my bank, and they made 250 electronic deposits and I didn’t have to worry about signing all those checks anymore.
Now in the beginning cheapskate Steve I was managing payroll. I said listen I pay employees on a Thursday but I didn’t need to make a withholding deposit until Monday. I’m waiting for this invoice to come in to have the money to pay the withholding portion. I was sitting there saying the invoice payment is going to come in by Monday. I’d say I got your withholding money in the bank but I really didn’t because it’s still sitting over there in this invoice and that payment better come in by Monday so I can make the withholding deposit. I’m sweating it all weekend. That’s the gray hair part. Don’t do that okay. I might have gotten the float that covered me for a weekend but it just wasn’t worth it.
In criminal cases, we know that you’re innocent till proven guilty. However, with the tax code, you’re assumed guilty and you have to prove your innocence.
On two occasions it cost me over $2,000 in forensic accounting and correspondence fee from my accountant to prove that I was right. That’s four thousand dollars that I ended up paying somebody to show that I was the right person in that scenario.
Independent Contractor
So what is Steve believe in? Freelancers [or independent contractors].
I use tools like Upwork, Freelancer, Guru, and TopTal to find and hire contractors. When I hire somebody locally, I have a face-to-face interview with you so I can get a gut feeling that I think you’d be good, and I’ll hire you. I don’t really know what your past performance is.
When I hire freelancer vendors, I have an IT person for example. He happens to be the top-level guy in a call center in the Philippines. When it comes to the support of PCs he’s the highest level technical support guy and he’s a manager for this business. He’s been doing it for seven years but also has a side hustle. He’s an IT guy that charges $6.00 an hour. The fastest guy I’ve ever had. He connects to my PC when I have a system crash or something and he’s in there, downloading tools and changing configurations. I’m watching him during the entire process and a couple of minutes later he’s done. I’m writing him a check for $6.00 and he’s out the door.
I have a social media person who lives in Bogota Columbia. Here’s the best part, she’s writing all kinds of things and responding to tweets and everything that goes on in my social sphere. She’ll elevate things that I have to deal with, but the rest of the stuff, that mundane stuff like following them back, sending a thank-you, and all the kinds of stuff that is routine she just does for me. Again, for just $6.00 an hour.
Here’s the other part of that, when I have a website that needs changes, my web developer, who is in India is following the Sun. Their daytime is my nighttime so when nobody’s banging on my website in the USA they got complete control over the site in the middle of the night. They’re making all the fixes late at night. The site might not be available for an hour while they’re uploading new code which happens at two o’clock in the morning, At that hour I don’t really suffer any traffic hits. But when I do it here locally, I’ll lose that hour of traffic time because those guys are working 9:00 to 5:00 and you know 2 o’clock in the afternoon is not a good time to take my website down. So, I follow the Sun.
Has anybody ever bought anything at eBay? You know how eBay works right, the buyer and seller each other at the end of the transaction. The same thing happens here. I get to see what every other person that has hired that person said about them. Are they punctual, do they meet budgets, do they communicate properly? So, when I hire somebody, I have a better hiring record because I can see what all their previous employees were, how much money they’ve made, all the narratives that anybody has ever said about them before I commit to hiring them. So even when I hire somebody now local, I hired a graphic designer here that was local here in Colorado Springs, I did it the same way.
I don’t care about currency translations or anything like that either. When it comes to hiring, that’s what I would recommend.
If you do your own payroll for your employees, you got payroll withholdings to deal with, you have poster requirements, etc. They do not make it easy for you to employ people.
