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Ive run a business doing about 90% rough framing for the last ten years.I pay all of my workers as subs to control cost but I am seriously considering changing over to an employee system to avoid the risks. I know the costs will increase but I think I can get by for a year of two while the Company adjusts.
I would appreciate any advice and ideas as to what to expect and how to make the adjustment smoothly. Thanks
 

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Custom Builder
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You know your costs will increase? ......I don't, and I've paid out both ways for years. If your organizational skills are any good, employees can produce useing that, as well as your judge of charactor.

Bad Signs

If I fella says "I'll work the first day for free." to get the job, thats a bad sign.

If you just so happen to see a pillow in his truck, thats a bad sign.

If he picks a hair, out of the plumbers sag butt crack of another employee while they climb a ladder, thats a bad sign.

More to come, I'm sure.
Bob
 

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Alot of subs out there should really be employees according to the IRS. Do you determine how and when they do the work? Does the sub work almost exclusively for you? The IRS has a checklist and these issues are among the things they look at. If you've got the deal flow to keep them busy, it's basically administrative overhead vs control. Or, control vs stress of payroll in good and bad times...

Also, you may want to look at a payroll service or even a company that will serve as employer of record..
 

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Good point trekr, many don't realise the difference. This could get you into deep doodoo especially if the sub claims it against you.
I was first exposed to this as an employee. The IRS came in on a Friday afternoon, sealed the office building, took all of the records and left. Fortunately for me, the company was owned by a large bank and a week later I recieved my pay and a generous severence. The company went out of business.
The second time was pretty much the same as the first except I was freelancing. The guy eventually paid me and he is still in business but is struggling 12 yrs. later (the event cost him his most valuable accounts and tarnished his rep.).
 

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Custom Builder
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Something along similar lines, had a broad working for me painting and finnishing. My ex-wife and I along with the paint chic, had a little fun at the lake on an island.

I was looking at the moon fallas, looking at the moon.:Thumbs:

Anyhow 2 weeks later the broad quits, then trys to claim unenployment on me.

I guess she figured it was her turn.:cheesygri

Bob
 

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We sub-out the vast majority of our work, but we also know the subs and what they can do.

Before we hire a sub - and those whom we have used for many years - we require certificates of insurance from them. If there is any indication that they are not a valid company - we don't use them. All subs, even those under the monetary limit are sent 1099's at the end of the year.

You are not allowed to dictate to a sub what his/her hours are - only what time frame the job needs to for completion.

We used to run a bigger crew - but it is not cost effective.
 

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You can't dictate what hours a subcontractor can work but you can dictate what hours the job will be open for them to perform their work. We run into this all the time on large commercial jobs. Some of the out of town and/or smaller subcontractors will want to work nights and weekends - which creates a ton of issues with Q&A, supervision, theft, etc.
 

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Yes, that is true, hatchet. A job site can be closed during certain hours. We don't have much of a problem here - but one time we needed to finish a job at a local bank and my husband and two workers decided to go in on a Sunday evening. He had the keys. The cabinets they were installing had to be attached to a wall and on the other side (different room) was the vault. The vibrations from the drill set off the silent alarm in Wichita and the authorities descended in droves. The workers had to go and let the police into the bank since they had re-locked the doors after they started working. The bank president had to come in and punch in a special code to disarm the alarm. Then they all had a coffee break together and then they got back to work.

Life in small towns. It's wonderful.
 
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