How to hire hourly help, be IRS compliant, and protect myself from liability EASILY

1 Reply

This is my first post - hopefully the subject is OK.

So it looks like I won a local (Minnesota) HUBZU.COM house auction and will be re-habbing the place.  Hopefully the closing will occur in the next week or two.  Its a dump.


It is a small 900 sq ft rambler in a suburb but I am toying with the idea of short-term rental (there are no current rental restrictions in the city).


Mostly because the company I work for is going thru an SAP software conversion and that is likely to have consultants working here in and out for years.  It is close to my company and consultants get tired of a hotel room month after month.


(Many of them are from India - far from home - and I am hoping that 3 or 4 of them will want to live together in a house instead of hotel rooms.)


Back to the rehab:


I want to hire people from Craigslist at $15 to $20/hr and need to pay cash at end-of-day to keep them coming back (they dont return if paycheck is 2 weeks away).


I have a worker's comp policy to protect myself from worker injuries. Is there anything else I need? Do I need a gen commercial liability policy? I wouldnt think so if it is my own house. But maybe for neighbor kids getting hurt? Or hopefully my homeowners would cover that. (I will change to a commercial STR type policy when house is ready for use).


How do I comply with IRS payroll withholding requirements?  I am thinking that whatever I enter on my WC forms at EOY must match what I declare to the IRS.


Is it possible to pay $20/hr cash at EOD and then report on a W-2 an amount so that after all taxes are withheld, then my employee is left with EXACTLY $20?  For example I report on a W-2 form the following amounts: $23 compensation, $2 withheld for FICA, $1 withheld for state withholding, etc to end up with an even $20 (that I already paid the worker?).


I dont want to 1099 as these workers are obviously employees to me (and not contractors). They dont have a business or LLC, I am providing tools and supplies, I am directing the work each hour, etc.


Also 1099 workers are not covered on my WC policy are they?  I dont think so.


Is there a web service that can do all the nitty-gritty tax and payroll stuff for me?  Except cut checks to the employee, as I would have already paid them.

Are there any major items that I am missing?

Thanks!


Joel

Most of these questions are better suited for a tax/legal professional.  If you are going the route mentioned, you really should speak with them to get some clearer answers.

What you are mentioning happens regularly, but it doesnt mean that it is a safe plan.

Good luck on your investment property.  

Medium kcinvestment logoWilliam Robison, Kansas City Investment Real Estate | [email protected] | 816‑804‑1226 | http://www.kansascityinvestmentrealestate.com | MO Agent # B1999109148

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you