Hiring help And liability

[Nathaniel Lee Winkler]

Hello all, 

I'm at the point where I want to hire a set of extra hands, but I'm worried about liability. I am a full time blacksmith, but I work out of my garage, have not registered as a business, and primarily sell on Etsy and word of mouth. 

I have a friend who I want to pay cash under the table, but I want to protect myself if he were to get injured. 

Thoughts?

Thanks in advance,

Nathaniel

[BIGGUNDOCTOR]

Well just running a business as you are you are taking a risk. 

Maybe you  need to figure out a way to make them more efficiently so you do not need an employee. 

Can't help if we don't know where in the world you are living

 

[ThomasPowers]

Look into how various companies have established how their employees are not employees but "independent contractors".

However having documented the possibility of  making "under the table payments" on a public forum; you have massively increased your possible Tax issues if you  are in the USA.

(Remember it was Tax Evasion that folks like Al Capone finally got nailed with!)

If you are outside the USA look into whether you can get an "apprenticeship" program set up.

[Jackdawg]

Find your local small business association (or equivalent) they will be able to give you some advice on what you need to do, but the easiest way to get a person in to help here in Oz without having to handle all the drudge yourself is through a labour hire company. You can send the person you want to use along to the labour hire company and tell them this is the bloke you want.

Alas they wont help you break the law in regard to tax free income, they will inspect your workplace (or should) to ensure their employee's safety, and will take a couple of bucks an hour off the top for their trouble. But it certainly beats trying to work it all out for yourself.

[beaudry]

By working out of your home, not being legally set up as a business, and more than likely not being properly insured , and  wanting  to pay  a helper under the table,  it sounds like you are setting yourself up for a whole array of real trouble if anything goes wrong. 

Only you can decide if the risk is worth the perceived increase in production.

In some locations , you can legally hire  and pay someone as  temporary'' casual labor'' without having them be an employee, but it's limited to a maximum amount of $600 per year .

That said , you should realize that by  cutting all the corners listed , you  are ,in effect undercutting those of us that are doing this as a legitimate business and bearing all the costs of doing so.

[Steve Sells]

would be a shame to lose your house over  discount labor too

[Marc1]

A question for a discrete visit to a solicitor and not for an open forum.

I like the expression "paying under the table" ... isn't that the way politician get paid? In a brown envelop ...

[Irondragon Forge ClayWorks]

Welcome to IFI...

Reading this thread will help with using the forum. We really can't answer your question until we know where in the world you are located.

https://www.iforgeiron.com/topic/53873-read-this-first/

 

[JustAnotherViking]

1 hour ago, Nathaniel Lee Winkler said:

I want to protect myself if he were to get injured.

How considerate of you. 

Let me guess, you have no public or product liability insurance either? If you're so interested in protecting yourself, I would consider registering your business properly and taking out a suitable level of insurance to protect yourself again a law suit from a defective product in the event something goes wrong before you consider hiring help. 

[Kozzy]

Wrong path to take.  Your potential liability would be extreme on many fronts---from injury lawsuits to back taxes to back unemployment and disability.  

What you need to do FIRST is get totally legal while still remaining profitable---and if you can't do both, it's a hobby and not a business.  As a hobby you should NEVER have someone working for you except maybe the rare "help me move this box" kind of stuff from a friend.  Getting legal and doing that while still making a profit is a job unto itself.

If you can eventually turn this into a legal and profitable business, be aware that adding an employee is still nightmarish to your wallet and administrative time.  It's not something to do on a whim but when you have no other option and that employee can generate at least 3 times their pay rate in actual PROFIT (not simply gross sales).

And there is NO SUCH THING as "paying under the table".  All it takes is one irritated worker or that annoying neighbor to complain and it'll all come crashing down -- HARD and COSTLY.  I've seen too many times where someone thought this was low risk only to have it blow up in their face.

[Gerald Boggs]

Wow, you're in LA and running a unlicensed business.  Good luck, but don't cry when you go down.   

Not what you thought you would get with your question, but you are so far out on a limb with what you're doing.

You need a license, tax number, site approval (which you won't get for a blacksmith shop) and that's if you just stay solo.

[arkie]

I can't imagine that a person would even pose such questions like those here on a public forum......

[SLAG]

The "independent contractor" manoeuvre still seems mostly to work  in the U.S.A.. But it will be legislated soon.(my opinion).

But your operation is a sole proprietorship, and your "helper" sure looks like an employee. Government agencies and courts will look to the circumstances when assessing whether that set up  is bone fide or a tax/liability wheeze.

Given your public admission, that your whole set-up is a liability dodge, you will not prevail. You may even have alerted the tax department to, shortly, have a closer at your affairs.

Businesses usually set up a corporation in order to protect the personal assets, of the principals. in the business.  In other words, liability is thus limited.

May I suggest that you seek tax and financial advice from people knowledgeable in those areas.

SLAG.

p.s. all the folks above are giving you sound advice. California seems to be a very tough place to do business.

Now, even, coffee has health warnings! 

 

[ThomasPowers]

I shudder to think of the health warnings on a butt of Malmsey!

[BIGGUNDOCTOR]

Regarding independent contractors status. The bakery where I work has several drivers who own their own trucks, do their own taxes, etc, etc..... and the bakery pays them to deliver the goods. The labor board recently came in and told the company that they are not independent contractors, but employees under a law passed in 2015. The company does not want them as employees, and the drivers do not want to be employees, yet the labor board is telling them that is how it is going to be. It is all lawyers and judges now..... $$$$$$$. As Ronald Reagan once said.

The most terrifying words in the English language are: I'm from the government and I'm here to help.

 

 

 

[JNewman]

As far as the independent contractor loophole goes.  What I have heard  a lot of jurisdictions are defining anyone who works only or primarily for one customer as an employee.  If their business has multiple customers you can hire them as a contractor.  However if they are using your equipment in your place of work they may be considered an employee anyways. 

Construction seems to be a different set of rules, but here in Ontario they have made it mandatory for sole proprietors in construction to have workmans compensation insurance. 

Of course rules are different for every province and state.

[Steve Sells]

well the logs show the OP has returned, just refuses to comment ? oh well  its a good topic to cover

[Gerald Boggs]

46 minutes ago, JNewman said:

here in Ontario they have made it mandatory for sole proprietors in construction to have workmans compensation insurance. 

But can you collect workmans comp?, here in the states (at least Virginia) one can't as a sole proprietor.

[JNewman]

Only in construction. As a manufacturer if I were a sole proprietor or as I am a corporate officer/owner I can't collect workers compensation.  Construction premium rates are way higher than most other industries.  One of my employees this change was one of the things that pushed him out of working as a sole proprietor contractor.  His rates would have been 3 or 4 times what my shop is.