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Independent Contractor or Employee?

Independent Contractor or employee when hiring for your new startup cleaning business?

We Ask a House Cleaner about building a house cleaning empire and if it makes sense to hire an independent contractor.

Angela Brown, The House Cleaning Guru juxtaposes the setup between a maid and an independent contractor.

She gives tips on matching uniforms, car decals, car magnets and things like FICA tax and Workman’s Comp.

If you want to manage your company image and have matching cars and teams of people – you’re better off hiring employees.

Today’s show sponsors are My Cleaning Connection and Bedicalcare.

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Hey there, I’m Angela Brown, and this is Ask a House Cleaner. This is a show where you get to ask a house cleaning question, and I get to help you find an answer.

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Independent Contractors or Employees?

Independent Contractor or Employee which oneA great question came in from a house cleaning business owner. She wants to know if she should hire employees or independent contractors.

That’s an excellent question. Most house cleaners or house cleaning business owners will need an answer to that at some point. What it comes down to is how is your business structured.

Are you a solo operator and you’re only ever going to be a solo operator and maybe hire one other person? If you’re only going to hire one other person, you can give some of your chores to an independent contractor. If you have long-term goals of growing an empire. Maybe you want a business with matching cars and matching uniforms, those are employees.

The Difference is in the Details

Independent Contractor or Employee cleaning empireAn independent contractor can follow a dress code but they do not wear your uniforms. You cannot tell them what to wear. Also, if you have them scheduled for certain hours during set days of the week, that is an employee.

With an independent contractor, you give them a job and you can say, “This is the range of the job.” They get to schedule themselves and they get to pick their own hours. You have to have these agreements upfront. Dictating that makes them an employee.

There’s a big difference as far as cleaning supplies go. Maybe you provide the cleaning products because you’ve promised your customers certain kinds. So, that’s an employee.

The independent contractor provides all their own cleaning supplies. You can say, “If you work for our company, we provide green, non-toxic solutions or whatever. So, they have to fall within that range.” You cannot specify the products that they use.

Vehicles and Insurance

Independent Contractor or Employee company carIf you provide vehicle expenses, a vehicle, or vehicle insurance, that’s an employee. The independent contractor provides their own transportation. You cannot tell them that their car has to be clean.

They can just show up in whatever their car looks like. The image of your business, regarding the appearance of the cars, that’s an employee.

Another issue is providing insurance for the worker. If you provide insurance for the worker, that’s an employee. Independent contractors provide their own insurance.

Benefits and Taxes

Independent Contractor or Employee worker's compIf you have an employee, you have to provide worker’s comp for them as well. You do not provide that for an independent contractor. For an independent contractor, you do not pay FICA tax. When you handle Social Security and the benefits you take out, you have an employee.

For an independent contractor, you just give them a 1099 miscellaneous form at the end of the year. The form says, “This is how much money you made during the course of the year.”

You do not have to report that to the IRS. You do have to report it to your independent contractor, but you’re not taking out any of the taxes or Social Security. The independent contractor doesn’t get any benefits from you from Social Security. You need to know the legalities of it all.

If you are a House Cleaner

Hire-an-employee-or-independent-contractor-Angela-Brown-Savvy-CleanerDo you want to sign on as an employee or do you want to sign on as an independent contractor? That depends on how you have your future set up.

If you want to be flexible and freelance with many accounts, sign up as an independent contractor.

If you’re looking for structure and you want to wear a uniform to work that’s different. Maybe you want them to provide a company car with car insurance and gas.

You may need health benefits or FICA and Social Security, and your cleaning supplies provided. Then, you would sign up as an employee. They’re different business structures. Your goals will determine if you want to be an employee or an independent contractor.

Hiring an Independent Contractor

Independent Contractor or Employee risk and rewardNow, with an independent contractor, they have other clients. If you hire them to help you, you raise the risk of them taking your clients and customers from you.

They can go out on their own because they’re already out on their own. They have other customers and other cleaning accounts.

If you have them come in and help you, even for a day, you run the risk of losing your accounts. They don’t sign a non-compete. They’re independent contractors. There’s an agreement that they already have other accounts, and that the market is wide open.

They’re free to choose and come and go as they please. It’s a risk, but you have to decide what works best for your business.

Things to Be Aware of If You Hire an Independent Contractor

Independent Contractor or Employee independent contractorSome people come in for a job interview, and you can hear them between the lines. You learn to read the body language and the things they say. You’re like, “Hey, this person is going to be here for two or three months and then they’re out on their own. They’re going to start their own business.”

If that’s the case, and they’re an entrepreneur, hire them as an independent contractor.

You are not allowed to train an independent contractor, but they can watch your work. They can see how your other employees work and they can try to fit in with that of their own accord.

Turning Independent Contractors into Business Associates

Independent Contractor or Employee agreementThen, as they spin out on their own, you can send referrals and overflow and all those things their way. Instead of creating animosity and saying, “Are you going to steal my clients?” it’s like, “Hey, I know you’re going to steal my clients. Let’s work this out right now. Let’s figure something out so you can work for these people and build relationships. I can help you get up and running on your own, so you can run your own business.” Then they became consulting clients and colleagues.

In the event that you need help, you can call one of your former independent contractors. “Hey, I got a house here. Can you cover for me?” There was a risk that they were going to steal that customer. Out of respect oftentimes they would say, “Hey, I know this is your customer. I’m not going to take them. I’ll just help you out for the day.”

Employees and independent contractors each have their pros and cons. Everything depends on how you set up that relationship in the beginning. If you work well with independent contractors, it can help you stay afloat during the ups and downs.

 

Until we meet again, leave the world a cleaner place than when you found it.

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About the Show

Learn how the show came to be, interesting facts about the show host, and other frequently asked questions about the show.

Resources For This Episode

Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Gig Workers of All Types – http://amzn.to/2rxbh23

Independent Contractor, Sole Proprietor, and LLC Taxes Explained in 100 Pages or Less – http://amzn.to/2G1vUGA

Consultant & Independent Contractor Agreements – http://amzn.to/2F0D0tB

Independent Contractor Agreement, Simple – Legally Binding: Employment Legal Forms Book – http://amzn.to/2G1w2WA

Working with Independent Contractors – http://amzn.to/2G1rwat

Annual Tax Mess Organizer for Self-Employed People & Independent Contractors – http://amzn.to/2n15qfV

The Great Debate, Employees vs. Independent Contractors – http://bit.ly/2mXZ68S

How to Hire Employees – Independent Contractors or Employees – http://bit.ly/2F1azM2

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Show Sponsors

SAVVY CLEANER – House Cleaner Training and Certification – https://savvycleaner.com

HOUSECLEANING360 – Referral database of the world’s most prominent home service providers and the homeowners they serve. https://housecleaning360.com

MY CLEANING CONNECTION – Your Hub for All Things Cleaning – https://mycleaningconnection.com

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