Mark,
From the perspective of the IRS and SSA, as soon as you pay and
individual $150 in any given year, you need to match FICA, Medicaire,
with hold taxes, and file a 943 + W2's each year. If you consider them
contractors, you will have to 1099 each one, or you can have a
potentially large cash labor expense on your Schedule F. This can be a
trigger for an audit, although many people get away with it.
The problem is, if you give a high school kid cash payment, a 1099 at
the end of the year, are they going to have the cash put away to pay
their taxes at the first of next year? If they have a W2, they can do
their taxes in 10 minutes online, and possibly get a refund. Not
necessarily so with a 1099 and a self employed status. In my opinion,
it's best to go ahead and set up EFTPS and be legal. A bonus to this is
that the IRS will see your business as legitimate, even if you are
showing some losses in the early years. Especially if you are a hard
working fruit grower....
State laws vary widely. In Georgia, agricultural employers are not
required to with hold state taxes or have workman's comp. There are
other employee injury/liability riders that can be added to ag insurance
policies to cover your "assets" at a lower cost. Companies such as
Westfield in Ohio offer such policies, along with product liability,
farmer's market policies, etc. The rider is basically enough to cover
emergency room visits and make you held harmless in case of accident. Of
course it is best to give comprehensive training to avoid worker injury,
which also tends to negate the independent contractor status. Ladder
falls are always a possibility.
Of course, I'm not an attorney, and I definitely don't want to be one......
Brian Heatherington
Beech Creek Farms and Orchards
2011 Georgia Highway 120
Tallapoosa, GA 30176
On 4/9/2015 11:01 AM, Mark & Helen Angermayer wrote:
I plan to hire some high school kids to help me thin fruit this year.
They will only be working for about a month it takes to thin the
fruit.
I'm uncertain if this temporary employment would fall under employees
or contract labor. I've looked at the definitions, but still unclear.
Some of the requirements of contract labor vs. employees are who
provides tools, and who defines work schedule. Obviously there are no
tools required for fruit thinning, other than one's hands. I intend
be flexible on when the kids can work, so am not setting work times.
The kids would be hired individually, not as a "thinning crew".
The dollar cost is the same to me either way (because I plan on paying
more for contract labor and less for employees) but the paperwork is
less for contract labor. I'm a very small commercial grower, so FUTA
is not a consideration.
Any help would be appreciated.
Mark Angermayer
Tubby Fruits Peach Orchard
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