Benifits For Your Drivers?

XiZBiT · Dec 14, 2007

Ok O/O, the grand question for you. Do you offer your drivers benifits? I was looking into this and the best way I found was to use a PEO company (leased employee) for the payroll services that can get good rates on insurance plans for employees. The downside to a PEO is that with all the taxes, unemployment, workers comp etc works out to be about 31.28% of a drivers gross pay that I would need to kick in. So for every 1000.00 a driver makes, as the owner it would cost me an additional 310.28. Not worth it, my profits would be sucjked down the drain.

I decided to go with 1099's a drivers hired as contractors, so now because the driver is not an employee I can not look to a group policy, and was told to look into the HSA plans (Health Saving Plan) Sounds like a solid idea if you know about how an HSA works and I would contribute 300.00 the first year and increase it 100.00 each year there after.

I was just wondering if you guys offer insurance plans. I know that a driver will not stick around long without some kind of benifit package and as stated in a different post, I want long term relationships.

Pur48Ted · Dec 15, 2007

XiZBiT said: ↑

Ok O/O, the grand question for you. Do you offer your drivers benifits? I was looking into this and the best way I found was to use a PEO company (leased employee) for the payroll services that can get good rates on insurance plans for employees. The downside to a PEO is that with all the taxes, unemployment, workers comp etc works out to be about 31.28% of a drivers gross pay that I would need to kick in. So for every 1000.00 a driver makes, as the owner it would cost me an additional 310.28. Not worth it, my profits would be sucjked down the drain.

I decided to go with 1099's a drivers hired as contractors, so now because the driver is not an employee I can not look to a group policy, and was told to look into the HSA plans (Health Saving Plan) Sounds like a solid idea if you know about how an HSA works and I would contribute 300.00 the first year and increase it 100.00 each year there after.

I was just wondering if you guys offer insurance plans. I know that a driver will not stick around long without some kind of benifit package and as stated in a different post, I want long term relationships.
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You should know that IF you:
Provide the driver with equipment and or tools to do his job,
Control WHERE and WHEN the driver does his job,
Instruct the driver HOW to do his job;
HE IS AN EMPLOYEE and you might find yourself in trouble with the State you operate out of, as well as the IRS.

NOTE: I have successfully sued TWO "employers" who had paid me "cash" and "10-99'd" me. The first one bounced a check, then canceled it as well as the previous check.
The second one fired me after I discovered he was required by HIS FEMA contract to pay me $3.88 per hour MORE than he was paying me as well as over-time after 40hrs. I was working in excess of 80 hours per week.

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

Independent Contractors vs. Employees

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -

An independent contractor

A common-law employee

A statutory employee

A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.
It is critical that you, the employer, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.
Caution: If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.
Who is an Independent Contractor?
A general rule is that you, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.
Example: Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements. Vera is an independent contractor.

How should I report payments made to independent contractors?
You may be required to file information returns to report certain types of payments made to independent contractors during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (e.g. independent contractors) for services performed for your trade or business. For details about filing Form 1099 and for information about required electronic or magnetic media filing, refer to information returns.
Who is a Common-Law Employee (Employee)?
Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
To determine whether an individual is an employee or independent contractor under the common law, the relationship of the worker and the business must be examined. All evidence of control and independence must be considered. In an employee-independent contractor determination, all information that provides evidence of the degree of control and degree of independence must be considered.
Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties. Refer to Publication 15-A, Employer's Supplemental Tax Guide for additional information.
Who is an Employee?
A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done.
Example: Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week, and is on duty in Bob's showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.

Statutory Employees
If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute ( statutory employees ) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes , below.

A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.

A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.

An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.

A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer s business operation. The work performed for you must be the salesperson s principal business activity. Refer to the Salesperson section located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.

Statutory Nonemployees
There are two categories of statutory nonemployees: direct sellers and licensed real estate agents. They are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:

Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked and

Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.

Refer to information on Direct Sellers located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.
Misclassification of Employees
Consequences of treating an employee as an independent contractor. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. See Internal Revenue Code section 3509 for additional information.
References/Related Topics

Worker Classification Webcast
A critical issue for all businesses is properly classifying workers as employees or independent contractors. The IRS's archived Tax Talk Today Webcast, "What's Hot in Employment Taxes: Independent Contractor or Employee?", focuses exclusively on worker classification issues.

Tax Topic 762 Basic Information
To determine whether a worker is an independent contractor or an employee, you must examine the relationship between the worker and the business. All evidence of control and independence in this relationship should be considered. The facts that provide this evidence fall into three categories Behavioral Control, Financial Control, and the Type of Relationship itself.

Publication 1976, Section 530 Employment Tax Relief Requirements (PDF)
Section 530 provides businesses with relief from Federal employment tax obligations if certain requirements are met.

IRS Internal Training: Employee/Independent Contractor (PDF)
This manual provides you with the tools to make correct determinations of worker classifications. It discusses facts that may indicate the existence of an independent contractor or an employer-employee relationship. This training manual is a guide and is not legally binding. If you would like the IRS to make the determination of worker status, please file IRS Form SS-8.

Form SS-8 (PDF)
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding

Publication 15-A
The Employer's Supplemental Tax Guide has detailed guidance including information for specific industries.

Publication 15-B
The Employer's Tax Guide to Fringe Benefits supplements Circular E (Pub. 15), Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide. It contains specialized and detailed information on the employment tax treatment of fringe benefits.

Businesses with Employees

Hiring Employees

Online Classroom, Lesson 6 - What you need to know about federal taxes when hiring employees/contractors

Distinguishing Between Self-Employed Individuals and Independent Contractors

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mc8541ss · Dec 15, 2007

I'm not into trucking yet, My brother is, and I will be driving for him in a few months.
This is what he told me and I have also read the same thing on here, If that driver is operating your truck and hauling what you tell him to haul, you cannot 1099 him. You can do it and may not get caught; But if you get caught or he protest and says somthing to the effect that he thought you were holding out taxes, the IRS is coming after you.
Many of the security companies here in Iraq were doing the same thing and have been for years. Now they are paying those taxes back with penalties.

mc8541ss · Dec 15, 2007

RK and I must have hit send at the same time, anyway his is alot more detailed.

Pur48Ted · Dec 15, 2007

mc8541ss said: ↑

RK and I must have hit send at the same time, anyway his is alot more detailed.
Click to expand...

Hey.....
It's one of my pet-peeves.
Employers pay cash and they try to screw their employees.
Not saying XiZBit would, but I have seen it happen time after time.

Matthews · Dec 15, 2007

XiZBiT said: ↑

Ok O/O, the grand question for you. Do you offer your drivers benifits? I was looking into this and the best way I found was to use a PEO company (leased employee) for the payroll services that can get good rates on insurance plans for employees. The downside to a PEO is that with all the taxes, unemployment, workers comp etc works out to be about 31.28% of a drivers gross pay that I would need to kick in. So for every 1000.00 a driver makes, as the owner it would cost me an additional 310.28. Not worth it, my profits would be sucjked down the drain.

I decided to go with 1099's a drivers hired as contractors, so now because the driver is not an employee I can not look to a group policy, and was told to look into the HSA plans (Health Saving Plan) Sounds like a solid idea if you know about how an HSA works and I would contribute 300.00 the first year and increase it 100.00 each year there after.

I was just wondering if you guys offer insurance plans. I know that a driver will not stick around long without some kind of benifit package and as stated in a different post, I want long term relationships.
Click to expand...

In all honesty, I would be speaking to my lawyer about such things and also my CPA. If you own your trucks out right like I think I read in another one of your posts, doing so shouldn't be that big of a deal. 2 trucks, payed for should provide enough to do something with.

You also told me that you are into the IT field and use the trucks as a P/T or just anther business gig. So again, I say IM ON THE DRIVERS SIDE! I WANT, BENI's!!!!!!!!!!!!!!!! lol

No, I dunno what to tell you here either. I would consult with my CPA to see where I stand.

All the best,
Matt

Pur48Ted · Dec 15, 2007

Matthews said: ↑

In all honesty, I would be speaking to my lawyer about such things and also my CPA. If you own your trucks out right like I think I read in another one of your posts, doing so shouldn't be that big of a deal. 2 trucks, payed for should provide enough to do something with.

You also told me that you are into the IT field and use the trucks as a P/T or just anther business gig. So again, I say IM ON THE DRIVERS SIDE! I WANT, BENI's!!!!!!!!!!!!!!!! lol

No, I dunno what to tell you here either. I would consult with my CPA to see where I stand.

All the best,
Matt
Click to expand...

Truth is, Matthews....in most cases, 1099ing an employee is illegal, and if he spoke to his lawyer and/or CPA, he would know that.

MedicineMan · Dec 15, 2007

roadkill439342 said: ↑

Truth is, Matthews....in most cases, 1099ing an employee is illegal, and if he spoke to his lawyer and/or CPA, he would know that.
Click to expand...

Road kill is right. Unless you let him book his own loads and go where he wants when he wants, go home when he want you are illegal and just Bideing your time untill you get a lawsuit. Companies do it but it's illegal. And there is still the workmans comp ins to be considered. You don't even want to have one of those drivers fall off the back of the truck when you don't have workmans comp. I guarantee(from personal experience) the first thing they will do is talk to a lawer who in turn will tell them you are illegally 1099ing them so that means you should be providing workmans comp...and you know what comes next, the lawsuit
It's expensive to have employees, welcome to business. Do the right thing and pay there taxes. You own your trucks, there is no reason you can't afford to pay the witholding taxes except you'r being greedy and want more for you. There is a reason we have all said you need to drive your truck. People think I'm crazy when I say I made more money with one truck driving it myself than with 6 trucks and drivers.

MedicineMan · Dec 15, 2007

oh and you are not an owner operator, you are a company owner.

Bigray · Dec 15, 2007

this is true in all reality he would be a co. driver.

the only way i can think of to get around this is to form a llc/corp. where all parties involed are owners

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