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How do I pay myself, the owner and crew foreman?

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  • How do I pay myself, the owner and crew foreman?

    I've been in the lawn care world for 8 years and this spring I decided to take the leap and start my own business. I'm happy to say that everything is going really well so far. With the actual work part I know what I'm doing, but when it comes to the legal/office stuff, I started out pretty clueless and have lots of learning to do.
    This may seem like a silly question because it's probably something I should have figured out by now, but how do I pay myself?? I have one person who works with me and I was advised by my accountant to be a sole proprietor and pay them as a subcontractor. Anyway, so I'm the owner/foreman. Do I pay myself hourly? By a profit percentage?
    I would appreciate any advice, thanks in advance!

  • #2
    I've been in the lawn care world for 8 years and this spring I decided to take the leap and start my own business. I'm happy to say that everything is going really well so far. With the actual work part I know what I'm doing, but when it comes to the legal/office stuff, I started out pretty clueless and have lots of learning to do.
    This may seem like a silly question because it's probably something I should have figured out by now, but how do I pay myself?? I have one person who works with me and I was advised by my accountant to be a sole proprietor and pay them as a subcontractor. Anyway, so I'm the owner/foreman. Do I pay myself hourly? By a profit percentage?
    I would appreciate any advice, thanks in advance!
    I do it per job an pay myself the same as my employees.

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    • #3
      This may seem like a silly question because it's probably something I should have figured out by now, but how do I pay myself?? I have one person who works with me and I was advised by my accountant to be a sole proprietor and pay them as a subcontractor. Anyway, so I'm the owner/foreman. Do I pay myself hourly? By a profit percentage?
      I would appreciate any advice, thanks in advance!
      Welcome to our forum!

      I disagree with your accountant as far as paying your employee as a sub-contractor. You should find another accountant. We have seen that the irs defines who is and who isnt a sub-contractor pretty well. If you are already saying this person 'works with me' I would bet the IRS would see that person as an employee.

      Read up on this more on the IRS site http://www.irs.gov/Businesses/Small-...or-Employee%3F

      We have also seen people who were employees on here that were paid as sub-contractors, only later to turn their employer in to the IRS and have them be fined. So why bother messing with doing things this way?

      As far as paying yourself. You own the business, as a dba, (doing business as) or sole proprietor, you and the business are one. What ever profits the business makes, that's your profits.

      You can pay yourself a check by the hour or what ever you want. You still pay the same amount of tax because any profit the business makes is your profit. Paying yourself an hourly salary is like taking $5 out of your left pocket and putting that $5 in your right pocket. It's your money to do what you want with.

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      • #4

        As far as paying yourself. You own the business, as a dba, (doing business as) or sole proprietor, you and the business are one. What ever profits the business makes, that's your profits.

        You can pay yourself a check by the hour or what ever you want. You still pay the same amount of tax because any profit the business makes is your profit. Paying yourself an hourly salary is like taking $5 out of your left pocket and putting that $5 in your right pocket. It's your money to do what you want with.

        Does this help?
        That's how I see it but he needs to set his pay a business that saves no money is in deep trouble.

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        • #5
          "subcontractor"

          Uses their own equipment, etc... Very bad idea to list an employee as a subcontractor. Find a new accountant, I know a few that operate like this but Uncle Sam will catch up with them sooner or later and the later the more costly to the owner it will be.
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          • #6
            Yikes, I definitely don't wanna get into a sticky situation with the IRS, thanks for the tips, I'll look into that!
            And thanks also for the pay advice I think I'll give myself foreman pay, that way I know the business has money in it.

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            • #7
              I think I'll give myself foreman pay, that way I know the business has money in it.
              Saving as much money as you can now is very important. It will help you get through the rough start up stages.
              - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
              Download your Free trial of Gopher Lawn Care Software.

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              • #8
                You could do the 80/20 deal. 20% put in a bank account (if your thinking expenses,saving up for new equipment,ins. etc) and take the remaining 80 and split with your friend/co-worker. Gotta save some money for uncle sam that's for sure.

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