Getting licensed...

[emosks]

So in another post I just said that I was in the process of getting licensed. Do you know that if I'm a group family home and have an assistant how paying her goes? Do I have to take taxes out for her or do I just pay her the split and she has to take out her own taxes? Do I have to set up a business or am I just self employed?

Sorry for all the questions...my husband and I are going over all this tonight and I have no answers!! LOL!!

[mac60]

I think you can hire her as a (I can't think of the right word), where she pays her own taxes. Maybe it is called a private contractor. I worked for a home health agency and they paid me $9 per hour and I had to pay all my own taxes. In the end it wasn't really worth it for me, because there were no deductions I could use, but I gained experience which was worth something.

[gbcc]

I was told that I could not hire my assistant as a independent contractor. Apparently the difference is that an IC does not have a schedule and only comes in as needed to fix something. An assistant is there on a scheduled basis throughout the year. You have to put them on the books, get disability insurance, workmans comp and have the taxes taken out of her pay. I live in NY so it could depend on your state what you are allowed to do. I have a friend who paid her assistant as a IC and she was audited and now has to pay fines and contribute to this persons social security and I think disability based on a percentage of what she paid. Check with an accountant or legal rep in your state to be sure.

[originalkat]

No you cant

Many providers hire an assistant or substitutes to work with the children in their care. In these cases the critical question is, Are these workers your employees or are they independent contractors? The difference has major tax implications.

• If the workers are your employees, you must withhold Social Security and Medicare taxes and pay Federal unemployment tax and the employer portion of their Social Security and Medicare taxes. You may have to withhold State and Federal taxes from their wages. You will deduct the wages you pay on the "Wages" line

• If the workers are independent contractors, you do not need to withhold or pay any taxes, and you will list your payments to them under "other Expenses" on Schedule C.

The IRS examines 3 factors to determine if an assistant is an employee or an independent contractor:

• behavioral control- Are you giving them instruction on what you expect? How to discipline? When to serve food? What to teach?

• financial control- Are you in control of their wage? Do you pay for the supplies they use while they work in your home?

• relationship of the parties- Who is in charge? Do they come to your home to provide a service and leave or are they required to meet you expectations, follow your routines etc...

These all describe and employee/employer relationship. In MOST cases any assistant you hire will be considered an employee for tax purposes.

An Independent contractor usually comes to your home on special occasions for a specific purpose. They are in control of how much they make. They often work for more than one provider or client.

If you are audited and the IRS determines you do have an employee. You will have to pay all past unpaid Social Security/Medicare taxes plus fees and penalties.

What could flag the IRS to look into your records?

• One of your workers files unemployment and lists you as a previous employer

• One of your employees in injured at work and files a workers comp claim and if you dont have workers comp insurance your Sate could turn you in to the IRS

• You list a deduction under "wages". Do NOT list money paid to Independent Contractors under "Wages" section

• You file a 1099 for one of your workers. The IRS often uses the filing form 1099 to investigate whether a person listed as an independent contractor is actually an employee.

All this info was found on Page 150-153 of the Child Care Record Keeping Guide. BUY IT! It is AWESOME!

[mac60]

I was considered an independent contractor for a home medical supply place. I was paid $9 per hour. I had a set schedule, set hours, they told me what to do and how to do it. I was their employee. The only difference was I was paid a flat fee and had to pay my own taxes. So Yes, I would think you could do that with an assistant. You pay a set hourly wage, have a set schedule, etc. I would call your tax accountant and ask. I would say that most people would not want to be considered an independent contractor though, as while that $9 per hour sounds good, take out all the taxes, and there isn't much left.