Co-Applicant - Anyone Do This?

[talllisa]

I am in Anoka Co Minnesota. I have the okay from my licenser to add my current substitute to my license. She would operate my daycare two days a week and I would operate it three days a week. We have been friends for many years and she has been my substitute for about a year. This setup will give both of us the money and schedule we want and need. I know there are a lot of logistics that need to be worked out. I'll contact my insurance provider to make sure we're all covered. My daycare families will be fine with it. I will just pay her whatever the the income is for the two days that she is here each week minus some for groceries, etc...

I'd like to here from people who have done this. What are other things that I need to consider?

[nannyde]

I would pay her the normal daily rate and maybe a bit more. You are paying all the expenses for the operation. The cost of child care is primarily housing, equipment, energy, repairs on housing, water, insurance etc. The cost of the actual care of the kids is about a third of the cost of operation in my experience with having a staff assistant.

Giving her all but the food costs means she gets to use your housing et al for free. You are paying for forty percent of these except for food when you aren't making any money.

Pick a fair hourly rate and make sure YOU get paid while she is using your business. You will need that money to cover housing etc.

[daycarediva]

Is it a partnership, or is she an employee? Your tax liability is different in both cases.

It's on the back burner for me to attempt the same with my daughter in fall. We would be doing a partnership and splitting profits 50-50 after expenses. We would both work 1/2 the hours, too. Otherwise, she would be my employee and I would have to pay her an hourly salary, deduct taxes (and file those appropriately), and carry workers comp & unemployment insurance on her.

[flying_babyb]

is she responsible for overhead expenses or is she a coworker? It makes a huge differance. Also what happens if she wants out? What happens if she decides she wants to change something in the classroom? what happens if she has issues with something you do or your rules? I have worked with a best friend once before, ended in a 3 year fight. Just from that I would say get a contract of some sort!

[talllisa]

Thanks for the feedback. I would hire her as an employee. Pay the unemployment and worker's comp and withhold taxes from her check. She will supply her own daycare food for the two days she is here. She'll have her own part of the fridge, freezer and a cabinet.
I'll need to take into account disposable things that I supply like paper towels, tp, garbage bags, paper plates, etc.

How about insurance? Does she need to carry her own insurance or should I have her added to my policy? Or would she just be covered under my policy automatically?

She would pay for her own licensing and continuing ed. If she wants to leave, I just work five days instead of three. No big deal.

[hwichlaz]

If she's an employee the food is your responsibility. If she's providing any materials/food etc, then she's a partner.

[talllisa]

Can you tell me what the difference is between a co-applicant, employee and partner? Maybe it's different by state. In MN I think they're either on your license (co-applicant) or they're a substitute. Tax wise, what are the definitions? I have read Tom Copeland's info. She will be an employee not an independent contractor. I want to make sure that I'm doing it right.

[mommyneedsadayoff]

Can you tell me what the difference is between a co-applicant, employee and partner? Maybe it's different by state. In MN I think they're either on your license (co-applicant) or they're a substitute. Tax wise, what are the definitions? I have read Tom Copeland's info. She will be an employee not an independent contractor. I want to make sure that I'm doing it right.

If you are paying her as an employee (withholding taxes, paying unemployment, ect), then you should provide all food and accommodations. This way you can write off those item at the end of the year for tax purposes. It also gives you control over the program, since you are technically the owner of it.

Personally, I think it would be complicated to be co owners, since it will be in your house. You will have the higher overhead and if she bails, the higher consequence both financially and with keeping your ratios in check.

[Blackcat31]

Can you tell me what the difference is between a co-applicant, employee and partner? Maybe it's different by state. In MN I think they're either on your license (co-applicant) or they're a substitute. Tax wise, what are the definitions? I have read Tom Copeland's info. She will be an employee not an independent contractor. I want to make sure that I'm doing it right.

You can list her on your license and simply use her as a co-CAREGIVER. You provide the environment and the food but she provides the care as your employee.

It's the easiest way to have someone fill in for you in MN (with all the rules/regs changes we've had happening)

She is NOT automatically a co-OWNER just because you list her on your license.

I would continue operating your business the same way you do every day but have her work two days of the week as an employee.

You pay for workman's comp, list her on your insurance as an employee and without all taxes etc associated with having an employee.

I hope that makes sense. If not, let me know....
I am in MN and been in business for a long time.

[Blackcat31]

Also, here are several articles about employees on Tom Copeland's website.

You can ask him the legalities of hiring an employee as he is an excellent resource for this topic plus he is in MN too so he knows MN rules for employees.

His contact info is listed on his site and you can PM him on this board too and he is usually fantastic about answering!

http://tomcopelandblog.com/?s=employees&x=0&y=0