Good day! I have been in the business for 15 years now in the state of Colorado and I am needing to know what sort of business change suggestions when bringing on an employee or stick with sub contracting help.
I have been paying my friend as a sub contractor when I need help on jobs. It has been getting more and more busy and I don’t know what is best to hire him as an employee or pay him as a sub.
Insurance suggestions please.
I feel I would rather pay him as a sub and have him deal with the taxes and cary his own insurance GL.
Colorado could at anytime likely reclassify him as an employee which would cost you alot if you don’t have it set up correctly which most dont.
Most independents are between business to business not business to individual. That is a red flag immediately.
By adding 1 employee you will add about 12.5% in payroll tax, work comp insurance, tools and uniforms.
Your friend who likely isnt setup properly for independent classification must be willing to either take a lower pay as employee or complete the neccessary steps to be legit to receive this type of work for your protection.
This is easily accomplished if your business is profitable. You need to determine what future direction you want your company to grow or not. Will you eventually be adding even more employees or not.
Your the one who has the most to loose if not following state requirements.
Every state varies somewhat on this, check with your state’s Small Business Development Center.
