Do your contractors collect cash?


#1

Help me here. My husband worked for a window cleaning company before we started our own business, and he was always told to keep the cash he collected. At the end of the month, the cash was deducted from his pay and the rest was paid to him by check.
So, that’s what we’ve been doing with our contractor, but it’s super confusing on the bookkeeping side. Can you tell me how you do things? We’re going to be hiring three more people this summer, and I don’t think I can manually deduct the cash anymore. Should we do a cashless system?


#2

Whatever you do…DO NOT do that ! Was he an actual employee ? If so I would say they were not paying payroll taxes on the cash they were giving him. And probably not claiming the cash as income.
Its very unprofessional. If they were not paying taxes on the cash amount they were cheating him out of his Social Security Contributions. Ask your Accountant.


#3

https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation
and


#4

How I have done it was I send the work order or hand it to them, they went to the houses and they also collected but never were they to keep it. It was always check or credit card. Very rare was it cash. And they kept all tips.

At the end of the day they brought it back to the office with the signed work orders and that was that.


#5

This a great reply.


#6

Automate all payments.

No fault

No confusion

Way less headache day to day and tax time.


#7

He was only a subcontractor, and they did it very legally and professionally. I just think it makes things confusing on the bookkeeping side.


#8

Also, we only have subcontractors now, and I have always accounted for the cash income. But we’re filing for an LLC this month and will be paying them as employees. That’s why I’m asking-I don’t want this hassle once I have the added work of payroll. I think we may go with the cashless system, thanks for the responses!


#9

I use SurePayroll to pay my employees . Quickbooks also has payroll modules.


#10

Just collect the cash and pay your employees at the end of the week like other businesses do.


#11

If they do much work for you, it sounds like there is a really good chance the they are not legally considered “contractors”. They are most likely “employees”. The IRS can make life tough for you if that is the case.


#12

@clean
Thats not a good idea man. You should have a paper trail come tax time. You can’t be paying cash all the time because its invisible, and will one day bite one on the butt cheeks.


#13

Agreed. I meant that theres no problem with accepting cash as payment. You can still deposit cash in your company account and write your employees a check at the end of the week. Im fully aware you should report your income.


#14

my bad