EMPLOYEE OR INDEPENDANT CONTRACTOR?

USING INDEPENDENT CONTRACTORS
The majority of Laundromat owners in Southern California, in the past, hired their cleaning help and repair personnel as independent contractors. The workers were paid in cash or check and given a 1099 form at the end of the year. Some of these workers didn't even want a 1099. Under recent court rulings, it is difficult to have a worker classified as an independent contractor. If you can classify your workers as independent contractors, it is recommended that an agreement formalizing the relationship as an independent contractor be signed by both parties and you issue a 1099. Here is a sample Agreement which should be reviewed by your own attorney before using:

The practice of claiming cleaning and repair workers as independent contractors is a result of a
couple of reasons but one certainly is that new owners of Laundromats want to avoid the maize
of forms and formulas associated with payroll. In the event of an injury to a worker or an audit
of your business, it is likely that your workers will be held to be your employees (whether they
are part time or full time, and regardless of whether you consider them independent con-
tractors.) The government tends to want all workers to be "employees" so they can receive their
share of the payroll taxes.

USING A PAYROLL SERVICE
The cautious prefer to call their workers employees and include the expense in their cost of
operations. You can use a payroll service to ensure compliance with all the various govern-
ment regulations. In today's challenging business environment, it is essential to streamline
financial and business operations wherever and whenever possible. You should decide if you
want to expose yourself to penalties, learn the complicated and changing regulations or use a
professional organization to assist in payroll preparation. If you have employees you should
also have workers compensation insurance and one of the benefits of using a payroll service
is that they can also include your workers compensation insurance in their calculations. This
avoids having to go through a year end insurance audit, the nature of which scares many
owners. The cost of a payroll service should be in the range of $20.00 to $80.00 per month
for employees plus your share of contributions to payroll taxes and workers compensation
insurance.

Using a payroll service will allow you to spend your time promoting your Laundromat and not dealing with regulations and compliance with the IRS and the State. There are several large companies and many smaller payroll companies that can assist in helping make payroll easy for a Laundromat owner at reasonable rates and that provide various programs. You want payroll to be easy and intuitive, so choosing the right payroll service for your company is important.

RECOMMENDATION
Some specialists in payroll matters in California are CompuPay, EZ Pay and Bank of America. They will all provide you a free evaluation of your payroll needs. The conversation will could be the best experience you will have in understanding the need and benefits of a proper payroll program, including proper deductions for your employees.

A payroll service can help you consider independent contractors, payroll software, phone-in or online payroll. An evaluation of your employee needs and obligations is worth a few telephone calls. With the new SoCal definiation of an employee, and other government laws, your need for professional help with employees is a good choice.