I’m in need some advice. My issue is. I’m in California. I’ve 5 guys working for me. I turn one of the guy to become company so that I can do corp to corp from my company to his company. His company in turn pay other 4 guys 1099 by check as independent contractor bi weekly. I give this 4 guys the apartment for each one to live on for free. I’ve neither contact on paper between my company to his company, nor my company to this 4 guys. His company also doesn’t have contact on paper to this 4 guys. All we do just pay by check the structure is kind of loose but everybody know they are being 1099 from the first guy company. My issue is I need to let one of the guy out from 4 guys go. If he doesn’t move out what is my option ? He live at my place for long while 6 months but i’ve been moving him from one apartment to the other without paper contact that which apartment that he is belong to. Do I’ve to go thru the whole eviction process in order to get him out ? I just want to make sure that I’ve no hole on my back before I execute any shot. Please advice. Thx a lot
You need to double check local law, but probably if the apartment is part of his pay package (he gets to live there because he is an employee), and he is terminated from his job, then his employer can order him to move out.
Not you, because you are not his employer. As the landlord, you can give him a 30 day notice to vacate and then evict him if he doesn’t go— unless it is in Los Angeles proper, where there is rent control and it is very difficult to get a tenant out.
I’m thinking of offering him cash per key as well. I just want to make sure that he can’t come back and hit me with this total cash deal. Should I just have him sign some paper of no contest upon taking this cash or check ? Will check be better than cash so that I’ve evidence ?
Each apartment is what I give away for free to each of this 4 guys. It is not on any contract at all. He got pay base on 1099 so he is independent contractor not an employee at all. He doesn’t have rental contact for the room that he is living in right now ? He doesn’t even have contact with the guy that I setup as company the structure is kind of loose. If it come to worst you think I’ve to evict him right ? I was thinking since he is not on any rental contract I may just call the cop to kick him out. What do you think about my idea ? Please advice
From what you have said, these 5 guys are your employees legally and your set up sounds as just a means to bypass employment taxes and other requirements for an employer. Luckily, that doesn’t affect the rental situation. You should clean up the situation before you get into real trouble.
Your contract with these guys is the CA rental statutes and case law that apply when there is no written agreement. You will have to evict the fired employee using the standard procedure for CA or just pay him to leave.
I agree with BLL. If you are trying to bypass taxes it WILL bite you in the rear eventually.
Maybe 2, 3, or 4 years from now one of those 1099 non-employee contract laborers WILL get audited for why THEY haven’t paid gross receipts taxes on their earnings. Trust me, they are going to screw up on their tax filings. They always do.
States are very hungry right now and they are pursuing independent contractor filers and non-filers.
The state will question that contract laborer and probably determine that he WAS an employee, based on the rules governing what employees DON’T DO: work independently, bid jobs, have their own tools, determine how and when to do the job, file their own withholding taxes, etc. If you are telling the contract labor how, when, and where to do the job, they are probably employees.
Then the state may come after you. I can’t emphasize strongly enough the adage: YOU THINK YOU DON’T HAVE THE TIME OR MONEY TO DO IT RIGHT, BUT YOU ARE GOING TO HAVE THE TIME AND MONEY TO DO IT OVER.
The “employee vs private contractor” labor problem is the one that brings many beginning business owners to their knees. When they or their previous contract laborers get audited.
You can avoid future problems by doing it correctly now. Smoke and mirrors will not sway the tax people. Your future profits will then go to your lawyer. Isn’t it worth it to sleep well at night?
I’m also considering to convert them to an employee but still on the process of doing it. What do you think about pay cash on some worker, convert some to employee. Is there any point that I’ve to watch out for the cash worker ? Thx all for your advice.