Hiring employees

[LavJordan]

So my business has gone well these start up months. I have learned a lot as I have progressed and gained clients. Now I am most likely going to be transferring to real estate come the near future, but dont want to leave behind my detailing. So I had figured by handling the business side of things, and hiring 1 or 2 part time employees to actually do the labor, I could turn this into a nice passive income. Now I do expect to train them for about 2 weeks before ever getting their own jobs, and I know, nobody will do the work like me, but I just cant maintain this business as I transfer to real estate as a agent and am still attending school.

So here is the dilemma, I am a mobile detailing business. I make only mobile calls where I go to them with my truck, and detail their vehicles right in their driveway. So that arises multiple questions with having a employee. Starting with:
How do I employ them, and allow them to use a personal vehicle as a work vehicle?

I believe you could fit the majority of materials in a sedan, since its limited to buckets, totes, and a couple tool bags.

Where do I tell them to pick up the materials, a storage unit?
I usually keep things limited to my garage, but cant have people popping up to pick up things everyday. Could I just rent a small public storage unit?

Do I reimburse for vehicle wear/gas usage?
I dont think they do for pizza delivery guys, so do I have to?

Do you guys pay under the table?
I dont want to do this, especially since these will pretty much be reps for my company, but I definitely will need some help understanding all the requirements to hire somebody legally, including taxations, payroll and so forth. There is a good chance this will be a acquaintance though. Just food for thought.

Clocking in?
I looked into mobile clocking in systems for smart phones that enable gps tracking. These will work well in making sure my employees are on location during their shift and actually completing the jobs. I expect to give out high quality cigarette lighter phone chargers + backup batteries so they are not out of power at any point and also loan out GPS systems for ease. But do I pay from the time they pick up the materials? Do I pay for when their on site and only then? What about leaving site and driving back?

Commission vs hourly wage?
I planned on commission pay to eliminate any commute time confusion. But I feel with any trained and efficient worker, it would be cheaper to pay hourly. Opinions? Also, what kind of split would you guys think is fair? I know its harsh to be so favorable for the business, but I have to maximize profits just like any other business. So would a 40/60 split be fair? Most of my jobs are about $30 a hour for myself, this way, they will walk away with about $12 a hour, I can put 35% back into the business account, and put the rest on my payroll. I will most likely no matter what offer bonuses and opportunities though as I want to give my workers extra pay for excelling. So additional ideas on opportunities for the employees would also be much appreciated.

I probably have more questions on the mind that will come to me as I sit here trying to make it through todays wealth of migraines. But thats basically all for now. For a bit of insight on the plans. I am targeting to bring in roughly $200 + taxes worth of appointments at least for 5 days a week.
That equates to $1,000 a week gross
$400 to employee wages w/taxes taken out
$250 for my own payroll w/taxes taken out
$350 for the business account.
Taxes are separate. I am a Sole proprietorship.

I plan on hiring 2 employees with them being aware that hours will be part time. Thanks for all the help and ignore any errors or parts that dont make sense in the post. Heads killing me so proof reading wont be happening today.

[TheAverageMan]

Commission is what Id want as an employee. If its hourly, then maybe theyd stall for time during a detail, or take their time.

[conman1395]

I work full time on a $15 an hour wage. I use an app to clock in and out and screen shot my hours to my boss. We use a storage unit currently for our supplies and also as a garage until our shop gets repaired. I'm only 20, so I can't get on the insurance to use the van, I've been working on one of our customers cars the past week and a half (2 cars corrected and coated with 2 more to go) and been showing up in my car while my boss and the new guy do other mobile jobs.

From my boss, he says you need to make sure the employees you hire are passionate like you, otherwise you'll have people who don't do a good job and you'll be going over things twice. I'd been doing stuff on my own for two years before I applied for the job so I didn't require training. I already knew how to wash cars (traditional, rinseless, and waterless) and do full paint correction, but our new guy didn't. He's very passionate about cars and is really involved in automotive photography so he has the eye for details and really is loving the job.

Last thing you want is someone who doesn't care to much. That just is asking for a towel dropped on the ground to be used on the paint (Waterway!!!!).

Like I said, I get paid $15 an hour wage, but when I do entire jobs I myself I get paid 20% commission or whichever is higher.

[BitterGreg]

You need to check with your state labor laws.

Obviously I would not recommend paying under the table, especially in a business like this where there is so much customer interaction, and potential for issue.

Once again check your state laws, but in most you are not required to pay mileage/ reimburse for gas. It is definitely a good idea, and you do not have to pay the 57.5 cents a mile the IRS allows. You can pay whatever you want. The employee can take the difference as a tax deduction, but what most dont realize it doesnt start counting until their total "Miscellaneous tax deductions" reach 2% of their AGI. So in most cases they do not get to take it.

As for the GPS tracking, you will have a hard time with that unless you provide them a device tracking their time. Putting it on their personal phone can get you in trouble, but there is no "reasonable expectation of privacy" on a company phone.

I would personally not pay commission. Unless they are bringing you the business, why do they deserve a commission? One of the things to keep in mind when making a decision, is this the best business decision, not how likely are my employees to follow it. You can set up rules and regulations for that.

I would run the numbers much deeper. How much money right now do you have to make a week in hard expenses? You are going to have additional expenses with employees, first is payroll taxes. You will have to pay in 7.6% of all they money you pay to your employees. There will most likely be a rise in Insurance. You may be required to have workers comp, unemployment and a few others as well.

Not sure what you mean by "$250 for my own payroll w/ taxes taken out". Like you mentioned you arent on payroll, and dont take taxes out. You will be paying taxes on any of the profits when you graduate + 15.3% for SE Tax.

As for hiring the employees. Like mentioned it is very important to find people that are passionate about the work, but keep in mind they are not the owners of the business and dont expect them to have the same buy in as you do.

[tw33k2514]

1099 contractors. Best option for this type of business. No need to pay them for there gas. Just give them a good commission.

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[BitterGreg]

1099 contractors. Best option for this type of business. No need to pay them for there gas. Just give them a good commission.

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Would not be legal. This is a huge area right now with the IRS and the government. Below is the think to the IRS, but if you control when they work, what they work on, what they use to work, which are all items described above, it is not legal to classify them as an Independent Contractor.

Tax Topics - Topic 762 Independent Contractor vs. Employee

[LavJordan]

Thanks for all the help everybody. I'm still completely lost on the whole hiring process legally and what taxes I must pay alongside how much more they will charge. Also I have no idea how much workers comp is gonna be , so insight there would be awesome. I just want a rough idea, maybe even the high end so I can work that in to my hard cost and get a better idea on how much I will need each week.

Now reading Conman's information on his pay doesn't seem like a bad method. Pay 15 dollars a hour or 20% commision if that becomes less. Do not include driving time or gas/wear reimbursement. Have them work from their vehicle. No GPS tracking as this method prevents stalling since there is a pay cap. I think i am going to pay more than 20℅ though. 30% maybe? Opinons?

And I have read all about hiring as contractors and with all the fines that come with that if we were 'caught', I would much rather do it right.

EDIT: Also, how do you guys give invoices like this? I have been giving ranges over the phone, then after the job I charge more or less according to time, and I accept cash, check or credit & debit on a square. No due payments that way, always paid in full onsite.
I can't have my employees stalling so they can charge more on every car? But I also can't go give estimates every time? I plan to have my employees handle the square card reader and accept payments like I have been, but what about accurate estimates? I know one local detail shop that does luxury cars primarily and they just give specific cost for each size vehicle. No range. So you could walk in with a #### hole mini van and a brand new mini van. And they charge the same for both. Should I do something like this? Or should I have a average base line for a vehicle and ask questions like stains, miles, pets, kids, cars purpose? to just kind of give a estimate over the phone? Its kind of like shooting a arrow at somebody with a apple on their head, blindfolded, with a guide... but that guide doesent like the guy holding the apple. I know, metaphors aren't my thing. Anyways what do you guys do who have employees and don't want to pay just to go give a estimate?

[BitterGreg]

If you set up a place where the people go and pick up equipment then then drive to a job, you will have to pay them from the pick up location to the job site.