Latest / Cleaning Business Life / Stop Hiring 1099s When What You Really Need Is an Employee | Ep. 225

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Stop Hiring 1099s When What You Really Need Is an Employee | Ep. 225 · Cleaning Business Life

• 1:00
  SPEAKER_02: Welcome to the Cleaning Business Life podcast.
• 1:04
  SPEAKER_02: I am Jamie Runko with Above All Cleaning Services in Northern California, Humble County to be exact.
• 1:13
  SPEAKER_02: We are here with Shannon, the actual host of the podcast.
• 1:20
  SPEAKER_02: And today we are going to talk about stop hiring 1099s when what you really need is an employee.
• 1:30
  SPEAKER_00: Yay! We've hit this topic from different angles, but this is more specifically for identifying when you already have a W-2.
• 1:42
  SPEAKER_00: And we're not going to go into all the details of misclassification.
• 1:45
  SPEAKER_00: I just we're seeing it goes in ebbs and flows in all the groups.
• 1:49
  SPEAKER_00: And we both just saw a post with a cleaning business owner.
• 1:53
  SPEAKER_00: We're not going to name names, but she was upset because she had hired a 1099.
• 1:58
  SPEAKER_00: She's a brand new business, so she's still figuring it out.
• 2:00
  SPEAKER_00: No crime in that.
• 2:02
  SPEAKER_00: But she was upset because her 1099 was honest and said she started a business.
• 2:06
  SPEAKER_00: I'm like, she should have a business because she is her own entity.
• 2:10
  SPEAKER_00: So we want to prevent people from treating 1099 like employees.
• 2:14
  SPEAKER_00: And we see a lot of people, I probably say, what did they say one time?
• 2:19
  SPEAKER_00: It was like 80% of the industry is misclassification on their own helpers.
• 2:25
  SPEAKER_02: I'd say almost probably even higher than that.
• 2:27
  SPEAKER_00: Right.
• 2:28
  SPEAKER_00: And that's really scary.
• 2:29
  SPEAKER_00: If you look about, you know, and so you, if you it's okay if you want to run them out.
• 2:33
  SPEAKER_00: I run it up here in northern Arizona, but I make sure all my people have insurance.
• 2:38
  SPEAKER_00: I my my people have some of their own clients that my people can take a job or not take a job.
• 2:44
  SPEAKER_00: There is no required uniform.
• 2:46
  SPEAKER_00: There is a customer preference over chemicals.
• 2:49
  SPEAKER_00: Doesn't mean that you have to use it.
• 2:51
  SPEAKER_00: It's just that's what they would like to have.
• 2:53
  SPEAKER_00: So they want independent contractors because they don't want it's too first of all, the government doesn't make it easy to figure this out, right?
• 3:02
  SPEAKER_00: There's you have to set up with the state, you have to set up with the federal, then you have 941 that has to be paid at the end of the year, and then you have workmen's comp insurance and general liability insurance, plus you have God, Jamie, Jamie has it all.
• 3:15
  SPEAKER_00: So you have to have PTO now.
• 3:16
  SPEAKER_00: There is no sick time.
• 3:18
  SPEAKER_00: And then that accumulates 401k.
• 3:20
  SPEAKER_00: 401k in California is required that she had to pay to set up.
• 3:25
  SPEAKER_02: Oh, and by the way, when you put it like that, it sounds daunting, but I promise it just it's not as bad as you think it is.
• 3:36
  SPEAKER_02: But yeah.
• 3:37
  SPEAKER_00: So when they start describing all of the things and all of the bells and whistles and how they want to control this and how they want this to be that, they what they actually are describing are W-2 attributes.
• 3:49
  SPEAKER_00: And this isn't gonna be a 1099 is bad and a W-2 is good.
• 3:53
  SPEAKER_00: I don't care which way you go.
• 3:54
  SPEAKER_00: I just want you to be legal so that you don't get audited and then and I'm not the I'm not an employee expert.
• 4:03
  SPEAKER_00: I just have enough experience to kind of guide people.
• 4:07
  SPEAKER_00: I'm not an expert at all.
• 4:08
  SPEAKER_00: I don't claim to be one.
• 4:10
  SPEAKER_00: If you have questions, you should obviously contact the state that you operate out of and ask those questions there.
• 4:16
  SPEAKER_00: Because some states you have to pay mileage from the time that they start until the end of the day.
• 4:22
  SPEAKER_00: Other states you don't.
• 4:23
  SPEAKER_00: You only have to pay in between the two houses, depending on if you run solos or teams.
• 4:27
  SPEAKER_00: There's a whole bunch of different things.
• 4:30
  SPEAKER_00: But um, how many times, Jamie, do you think that you have you heard people say, I use 1099s, and two minutes later they're explaining the required contractors on what they need to do.
• 4:41
  SPEAKER_00: How many times do you think that you've seen that?
• 4:44
  SPEAKER_02: Probably about 90% of the time, like a lot.
• 4:49
  SPEAKER_02: A lot.
• 4:50
  SPEAKER_02: And again, that's no shade to you guys that are just now starting out.
• 4:58
  SPEAKER_01: But if you want to truly scale, it's just a different business model.
• 5:08
  SPEAKER_02: It is.
• 5:08
  SPEAKER_02: You really gotta, you really, you really got to make sure that you're what you're doing is legal.
• 5:17
  SPEAKER_02: So a lot I see it a lot.
• 5:19
  SPEAKER_02: I see a lot of people just really misclassifying, you guys, misclassifying, and we've done plenty of podcasts about this, but again, it comes in waves.
• 5:33
  SPEAKER_02: J will right before the show, we were talking about how it ebbs and flows.
• 5:37
  SPEAKER_02: We have new people coming in all the time.
• 5:39
  SPEAKER_02: So they're you if you're catching up, there's plenty of the do's and don'ts that we have in other podcasts.
• 5:48
  SPEAKER_00: And another big topic as well, what I'm seeing, and and Jamie, I'm sure you're seeing this too, is if you want to grow and create a legacy that you want to sell, your business is more valuable if you have W-2s versus 1099s.
• 6:03
  SPEAKER_00: When you have 1099s, you have a made service or a cleaning service, but you're more of a made referral service.
• 6:09
  SPEAKER_00: That's what the government labels it as.
• 6:11
  SPEAKER_00: So make sure that if you're gonna buy an asset that you understand what you're getting.
• 6:15
  SPEAKER_00: Cause I actually spoke to someone who thought they were buying a traditional cleaning company, and in actuality, they were all 1099s, and she was surprised because she had paid a premium for what the, you know, she didn't do the research and didn't do the due diligence.
• 6:28
  SPEAKER_00: Oh no.
• 6:29
  SPEAKER_00: She ended up eating a lot of money.
• 6:32
  SPEAKER_00: So the value system is a lot different as well.
• 6:35
  SPEAKER_02: Right.
• 6:36
  SPEAKER_02: I that's exactly why I did it.
• 6:38
  SPEAKER_02: I just, if ever, not saying she's never gonna sell.
• 6:55
  SPEAKER_02: If if somebody were to come in and I were to sell, this is a turnkey operation.
• 7:02
  SPEAKER_02: And that's the that's ideal, and that's that's what I mean.
• 7:08
  SPEAKER_02: Literally, uh, is a lot of homework that I'm doing.
• 7:14
  SPEAKER_00: Or they're you'll see it in the groups too, where they're like, Well, my contractor quit and didn't give me two weeks' notice.
• 7:20
  SPEAKER_00: They're not required, they're not employee.
• 7:28
  SPEAKER_01: Because I've this is happening to me right now.
• 7:31
  SPEAKER_02: I've actually had two applications turned into me, and you know, we just hired somebody, but not from these two.
• 7:42
  SPEAKER_02: They put in that one the one was they had about 20 of their own clients and wanted to expand their clientele.
• 7:56
  SPEAKER_02: That's not for me.
• 7:57
  SPEAKER_02: That's that's not for a W-2.
• 8:00
  SPEAKER_02: I I just it didn't that didn't sit right with with me.
• 8:05
  SPEAKER_02: And then the other one, I one of the questions on I use JAT form.
• 8:12
  SPEAKER_02: One of the questions was, why do you want to work for above all cleaning service?
• 8:15
  SPEAKER_02: Or where do you see yourself in two years?
• 8:18
  SPEAKER_02: Was the question.
• 8:20
  SPEAKER_02: And this person said, owning my own cleaning business.
• 8:26
  SPEAKER_02: And I was like, well, not I I'm thinking to myself, not on my coattails.
• 8:30
  SPEAKER_02: You're not gonna come in here, learn all my processes, and then go open up your your own cleaning businesses in two years.
• 8:38
  SPEAKER_02: So make sure you make sure you ask the right questions.
• 8:43
  SPEAKER_00: Right.
• 8:44
  SPEAKER_00: I I think I appreciate the honesty because we are a very transparent industry, but for the W-2 model to have a 1099 come in, there's um there's you put a lot of effort into making all the processes and systems run smoothly.
• 8:59
  SPEAKER_00: It would not be cohesive for the business because you this is your nest egg.
• 9:02
  SPEAKER_00: But if you had a 1099 model and you had someone come in and they wanted to work under you, then that would be more feasible.
• 9:09
  SPEAKER_00: It would be more acceptable because that's what you're looking for to help people fill in those schedules.
• 9:14
  SPEAKER_00: And then there'll be, as Jamie grows, there'll be instances where she will need a good 1099 for a special project.
• 9:20
  SPEAKER_00: And then that's a different story entirely.
• 9:23
  SPEAKER_00: So here's the practical side of the differences of what's going on.
• 9:28
  SPEAKER_00: So you're small, you need an extra set of hands.
• 9:31
  SPEAKER_00: This is what I this is how I see it.
• 9:34
  SPEAKER_00: If you have the WT model, you're trying to keep your overhead under control and pay payroll can sound intimidating, especially when you've got all of these accounts that you're trying to pay into so that you can make your monthly payments to the state, depending on what cycle you're on.
• 9:50
  SPEAKER_00: Or, you know, then there's the federal government.
• 9:52
  SPEAKER_00: Some people do weekly, some people do bi-weekly, some people do monthly, some people do annually.
• 9:56
  SPEAKER_00: It's whenever you're small.
• 9:58
  SPEAKER_02: Well, when you're small, that's when you do it.
• 10:02
  SPEAKER_02: Do it now because it's like, oh, I can't, you you get to.
• 10:06
  SPEAKER_02: I don't want to say I I know a lot of you take taking on a new hire as a W-2.
• 10:13
  SPEAKER_02: You don't want to play with somebody's livelihood.
• 10:18
  SPEAKER_02: However, that's where you catch all your mistakes at.
• 10:21
  SPEAKER_02: Like, that's where it's like, okay.
• 10:25
  SPEAKER_02: Once when you have just one person as a new hire, all this is so much easier because once you get to 10, 15, 20, those, those payroll, the payroll taxes, the work comp the unemployment insurance, the payroll processing.
• 10:50
  SPEAKER_02: It sounds daunting whenever you put it like that, I feel.
• 10:54
  SPEAKER_02: Right.
• 10:54
  SPEAKER_00: It's more more paperwork, more responsibility.
• 10:57
  SPEAKER_00: Yeah.
• 10:58
  SPEAKER_01: It sound it it it is.
• 11:03
  SPEAKER_02: But 1099 always sounds attractive because it's like here, take care of your own, take care of your own pay your taxes.
• 11:13
  SPEAKER_00: And it's frustrating for the contractor because at the end of the year they don't know enough about writing off deductions.
• 11:19
  SPEAKER_00: So they go to HR block, and I'm not trying to bash HR block, that just is the first thing that came to mind.
• 11:27
  SPEAKER_00: And they're like, well, you don't have all these expenses, so you get to pay, you made blah, blah, blah, you get to pay all of the all of the taxes.
• 11:35
  SPEAKER_00: Because when you're in when you're self-employed, you're paying both sides of the spectrum.
• 11:38
  SPEAKER_00: Because typically, when you're a W-2, the employer pays part of your responsibility and you pay the other part, it's splits.
• 11:45
  SPEAKER_00: But when you're a 1099, you pay the full amount unless you have all of these deductions.
• 11:50
  SPEAKER_00: So, and and it does sound pretty attractive, and and contractors can feel easier because they're a little more seasoned typically because they're already out cleaning.
• 12:01
  SPEAKER_00: And it administratively, it doesn't automatically mean that the right structure of what you're trying to build is wrong.
• 12:06
  SPEAKER_00: It just means that you're gonna have to tweak as you go.
• 12:09
  SPEAKER_00: And then I've had other cleaning business owners who only run 1099s have asked their 1099s whether they wanted to become W2, and they flat out said no.
• 12:18
  SPEAKER_00: So it works really great in the short-term rental market for sure.
• 12:23
  SPEAKER_00: I would never have an employee unless I had to, maybe administratively, as my my processes got bigger.
• 12:30
  SPEAKER_00: But having cleaners be on payroll and a in a short-term rental environment is probably not ideal.
• 12:39
  SPEAKER_00: Unless you're working a resort and you're working a bunch of condos, and that would be a different thing.
• 12:44
  SPEAKER_00: Right, right.
• 12:47
  SPEAKER_02: Sometimes also I see a lot of people, a lot of owners, they're trying it's like they're not trying to get out of paying payroll taxes and I see we see that a lot.
• 13:03
  SPEAKER_00: Yeah.
• 13:04
  SPEAKER_00: Yeah, we see it a lot.
• 13:06
  SPEAKER_00: They don't even want to pay the merchant fees on credit cards.
• 13:10
  SPEAKER_00: I'm like, you might as well just be cash-based.
• 13:13
  SPEAKER_02: You know, I that's that's another topic for something else.
• 13:16
  SPEAKER_02: But I found out about merchant fees and and using a debit card and something that I didn't know that was a law.
• 13:24
  SPEAKER_02: We talk about that later, but it was, I guess you can't charge on if you use a debit card because it's like using cash.
• 13:34
  SPEAKER_02: Anyways.
• 13:35
  SPEAKER_00: It depends on who you ask.
• 13:37
  SPEAKER_00: That's such that sways back one way and that sways back the other.
• 13:39
  SPEAKER_00: I've heard so much about that one particular statement.
• 13:42
  SPEAKER_00: So it just depends on who you ask and what they believe, because I have seen it all over the place.
• 13:47
  SPEAKER_00: And then, you know, people will talk about debt and how you can't actually write off the debt in that year unless you've paid off the debt.
• 13:54
  SPEAKER_00: And I'm like, it depends on who you ask.
• 13:57
  SPEAKER_00: So, but when you say contractor, you and but when you listen to what you're asking for about a contractor, you want them there at eight o'clock, right?
• 14:32
  SPEAKER_00: Got to flip my page here.
• 14:34
  SPEAKER_00: You want them wearing your shirt with your logo on it.
• 14:39
  SPEAKER_00: You want them using your products, you want them following your exact checklist.
• 14:44
  SPEAKER_00: That's a great area, too.
• 14:45
  SPEAKER_00: You train them, which is no, no, you're not supposed to train at a 1099.
• 14:51
  SPEAKER_00: Exactly how you want the house clean.
• 14:53
  SPEAKER_00: You assign the customer, you determine the schedule, you want to control the customer communication.
• 14:58
  SPEAKER_00: You don't want them sending any someone else.
• 15:01
  SPEAKER_00: You don't want them working for your competitor, you want to dictate how the work gets done and think they're frustrated because you're they're not doing exactly what you told them to do.
• 15:10
  SPEAKER_00: That is an employee, ladies and gentlemen.
• 15:15
  SPEAKER_02: Yeah.
• 15:16
  SPEAKER_02: What point does the business owner have to admit, I actually want control?
• 15:21
  SPEAKER_02: And why do you think owners are uncomfortably admitting that?
• 15:28
  SPEAKER_00: I I think that's the hardest part when you're a solopreneur and then you're the golden unicorn, and then we hear it all the time.
• 15:36
  SPEAKER_00: Jamie has more, probably more because you guys hit her up more than me.
• 15:40
  SPEAKER_00: I don't I can never find anyone who'll clean as better as good as me.
• 15:43
  SPEAKER_00: And it's true.
• 15:44
  SPEAKER_00: You're never gonna find anybody who's gonna clean as good as you.
• 15:46
  SPEAKER_00: Ever.
• 15:48
  SPEAKER_00: Once in a while.
• 15:49
  SPEAKER_00: I think I'm like, I think I finally did, and I'm like, you know, not a thousand percent.
• 15:55
  SPEAKER_02: Yeah, yeah, no, I'm just like, dang, yeah.
• 15:57
  SPEAKER_02: No, but because this is your business.
• 16:00
  SPEAKER_02: This is your baby, you know what I'm saying?
• 16:04
  SPEAKER_02: You're st anyways, you're still gonna find those people that they're here for the job.
• 16:09
  SPEAKER_02: That's it.
• 16:09
  SPEAKER_02: They're here for the paycheck.
• 16:13
  SPEAKER_02: So, where have you seen this become a problem operationally?
• 16:21
  SPEAKER_00: You become your own bottleneck, right?
• 16:23
  SPEAKER_00: It's it's we're Jamie and I, uh in case you guys don't know, Jamie and I are working behind the scenes on removing a lot of the bottlenecks.
• 16:31
  SPEAKER_00: We're slowly admitting to each other what those bottlenecks are, and then we laugh and hee hee hee.
• 16:37
  SPEAKER_00: But operationally, it quite feel my face turning red right now because we can really yeah, and and it's true.
• 16:44
  SPEAKER_00: Like she and I talk a lot behind the scenes, and there's a lot of bottlenecks that we have that you very well don't even realize that you have, because we all have them psychologically, monetarily, you know, all of those things come along.
• 16:58
  SPEAKER_00: So that that's when I I see it being an operational issue.
• 17:02
  SPEAKER_00: Um, and then you have to decide where you want to go.
• 17:05
  SPEAKER_00: You can only I I've only heard of one or two companies that have made it to over seven figures with a 1099 model.
• 17:14
  SPEAKER_00: And and even then the government comes in and says, Guess what?
• 17:18
  SPEAKER_00: You're gonna be old in it.
• 17:20
  SPEAKER_02: Yeah, we're gonna audit you and all these years that you three years.
• 17:26
  SPEAKER_02: Yeah, we are you're gonna pay this much for employee taxes, you're gonna pay this much in penalty fees, back pay, and yep, and all the back pay and whatever's owed on all that.
• 17:44
  SPEAKER_02: So I I I think I've said it once uh before in a previous podcast.
• 17:50
  SPEAKER_02: They have commercials here, you guys, like on the skillboards radio where they they have uh like a 1-800 snitch line for work comp like or not work comp for 1099, basically.
• 18:11
  SPEAKER_02: What is it?
• 18:13
  SPEAKER_02: Do you know somebody that's running operations illegally?
• 18:17
  SPEAKER_02: Call 1-800, snitch her out.
• 18:21
  SPEAKER_00: Basically, is what they say.
• 18:23
  SPEAKER_00: You'll hear fantastic stories every once in a while.
• 18:25
  SPEAKER_00: The Department of Labor will come in and seize a pl a business and it it'll shut it down, and then you learn all of the crazy things.
• 18:32
  SPEAKER_00: We had it happen here in my town with a restaurant, and how they got caught is they started a cleaning company.
• 18:38
  SPEAKER_00: So they withheld these people's passports, they came across the border, did whatever.
• 18:43
  SPEAKER_00: They weren't they lived in communal housing, they were never allowed to go on vacation, and they were working for pennies on a dollar.
• 18:50
  SPEAKER_00: I went to this lady's house twice and gave her a bit twice for her house.
• 18:55
  SPEAKER_00: And I was like, wow, this lady must be really making a lot of money off this restaurant because she had four of them, right?
• 19:02
  SPEAKER_00: So you and and how that's how she got busted.
• 19:04
  SPEAKER_00: She started a cleaning company and she didn't pay any taxes.
• 19:08
  SPEAKER_00: That's that was ultimately ships to the hotline, but that's ultimately how it took the whole thing down.
• 19:15
  SPEAKER_00: They waited, they came in and seized everything.
• 19:18
  SPEAKER_00: Everything.
• 19:18
  SPEAKER_02: I remember that story.
• 19:20
  SPEAKER_02: That was last year.
• 19:21
  SPEAKER_02: That was a while ago, but yeah, that was a while ago.
• 19:24
  SPEAKER_02: But yes, I remember yeah, I remember the your mouth dropped to the floor.
• 19:33
  SPEAKER_02: So, yeah, control isn't a dirty word.
• 19:37
  SPEAKER_00: No.
• 19:38
  SPEAKER_00: And you and it's ebbs and flows.
• 19:40
  SPEAKER_00: You know, you have to be comfortable with what kind of control you need control of.
• 19:44
  SPEAKER_00: There are a lot of things you need to control.
• 19:46
  SPEAKER_00: You you should be focused on controlling your bank accounts, controlling your numbers, and making sure that those numbers are meeting your expectation to see where where those numbers are bleeding out.
• 19:56
  SPEAKER_00: If you have like too many subscriptions, I listened to a mini commercial the other day, and it was this guy, he's like, Hi, I'm from so-and-so, and I bet you're wasting all this money.
• 20:06
  SPEAKER_00: Let's sign you up for this app.
• 20:07
  SPEAKER_00: And then they show the app and it's like, I have 36 subscriptions.
• 20:10
  SPEAKER_00: That would be, you know, control that you would want over your finances.
• 20:14
  SPEAKER_00: So you're you're wanting control over your customer experience, but it's not necessarily wrong to want to make it perfect, but there's gonna be give and take.
• 20:24
  SPEAKER_00: Some customers who have dogs, they're not gonna worry if there's a couple dog hairs floating around in the atmosphere after you're done cleaning.
• 20:32
  SPEAKER_00: They're just happy to have it removed.
• 20:34
  SPEAKER_01: Yes.
• 20:36
  SPEAKER_02: Not completely, but yes, removed.
• 20:41
  SPEAKER_02: So, yeah, consistent training, consistent uniforms, consistent products, consistent procedures, consistent commun customer communication, consistent arrival windows.
• 20:57
  SPEAKER_01: Thank you, Jobber, for having that arrival window.
• 21:03
  SPEAKER_01: Consistent quality.
• 21:05
  SPEAKER_02: Thank you, Jobber, again for having those checklists that we get to the my cleaning text can go and check.
• 21:15
  SPEAKER_02: Which also is consistent quality and cool consistent accountability.
• 21:21
  SPEAKER_02: Those checklists work so great because it's like your your signature solo cleaner, your signature is here, but I have a client calling me saying, But over here you have it check mark that you did it.
• 21:39
  SPEAKER_02: That's the control that you get to, you you get to control all of that.
• 21:44
  SPEAKER_02: And those are the reasonable things to want when you're building a company.
• 21:48
  SPEAKER_02: The problem is trying to create that level of control inside of a labor model that isn't designed to give you that control.
• 22:00
  SPEAKER_00: Maybe you haven't outgrown the person, maybe you've outgrown the labor model, and that could be a problem too.
• 22:07
  SPEAKER_02: So, what happens when the owner promises consistency to customer, but doesn't actually have enough control over the people delivering the service to guarantee it.
• 22:20
  SPEAKER_00: We see this a lot.
• 22:22
  SPEAKER_00: So there's a lot of things that you can do to ensure quality control.
• 22:27
  SPEAKER_00: I know several people have supervisors that walk it, even in the short-term rental market versus residential cleaning.
• 22:34
  SPEAKER_00: I'm of the belief that experience matters and it takes a lot of time and a lot of repetition to be able to nail it.
• 22:44
  SPEAKER_00: If you are not holding people accountable, then you might need a quality control.
• 22:49
  SPEAKER_00: The quality control, too, especially for one-time cleanings, move out cleanings, top to bottom deluxe cleanings, you're gonna want quality control.
• 22:57
  SPEAKER_00: It's either gonna be a lead person who's already on site or someone who drives over there, or maybe you walk with the client and they initial on your driver or whatever platform you're using.
• 23:07
  SPEAKER_00: There are things that you can do to ensure quality control, but if you're doing regular maintenance and you're still not getting the quality control, then there's other things that you can do to ensure quality control.
• 23:17
  SPEAKER_00: And that's different for a W2 model versus 1099.
• 23:22
  SPEAKER_01: Yeah.
• 23:24
  SPEAKER_01: Yeah.
• 23:24
  SPEAKER_02: We're yeah, who like I always for 1099 is like who goes back and fixes the problem?
• 23:32
  SPEAKER_02: You know, like I never I I just I never ran a two uh 1099.
• 23:39
  SPEAKER_02: I I I may have ran illegally like for the first week.
• 23:45
  SPEAKER_00: Right.
• 23:46
  SPEAKER_02: Not knowing.
• 23:47
  SPEAKER_00: I I think with us it happens in a blue moon.
• 23:51
  SPEAKER_00: It's very rare.
• 23:52
  SPEAKER_00: So we'll typically we'll call up someone and say, hey, just let you know property one, two, three, four Main Street is complaining that this bathroom didn't get done.
• 24:03
  SPEAKER_00: I'm gonna need you to go back and look it over.
• 24:06
  SPEAKER_00: And usually they'll say, but I already did it.
• 24:08
  SPEAKER_00: And they they'll show you the photos.
• 24:10
  SPEAKER_00: And that kind of is one step of part of your quality control.
• 24:13
  SPEAKER_00: And every once in a while you'll have someone who's just is insistent that someone goes back because they're it's price reflective.
• 24:20
  SPEAKER_00: It's not has nothing to do with the quality.
• 24:22
  SPEAKER_00: It's all about I want to make sure I'm taking your attention because I paid all this money, or what I interpret is a paying a lot of money.
• 24:29
  SPEAKER_00: And this is my way of controlling you.
• 24:32
  SPEAKER_00: So in and that's the way to guarantee quality with a 1099 is that you need to go back if there's a pro a dis if there's a discrepancy over quality, you get to go back on your own time.
• 24:43
  SPEAKER_00: And and then that might not even, and sometimes you can't make them go back right away.
• 24:47
  SPEAKER_00: They might not have room on their schedule till the following day, and then the customer might get upset about that.
• 24:51
  SPEAKER_00: So there's a lot of variations of how you can work that scenario out.
• 24:55
  SPEAKER_00: Where with a W-2, you're like, dude, you missed the bathroom.
• 24:59
  SPEAKER_00: I need to see the photos of the bathroom.
• 25:01
  SPEAKER_00: And they're like, oh yeah, I forgot that bathroom.
• 25:03
  SPEAKER_00: That's a number five, right?
• 25:05
  SPEAKER_00: I need you to swing back by after four because Mrs.
• 25:08
  SPEAKER_00: Smith is waiting for you.
• 25:10
  SPEAKER_00: And then it becomes a whole dynamic of, you know, okay, of course you're gonna get paid, but I'm gonna be writing you up or not writing you up, and there's accountability there.
• 25:18
  SPEAKER_02: Yeah, well, it's gonna sting.
• 25:20
  SPEAKER_02: It's gonna sting if I have to sting send you back, you're gonna drop down to minimum wage.
• 25:26
  SPEAKER_02: That's how we hold accountable as a W-2.
• 25:30
  SPEAKER_00: Right.
• 25:30
  SPEAKER_00: Not forever, but as a and not as a form of punishment.
• 25:34
  SPEAKER_00: It's just that that's you required extra labor.
• 25:37
  SPEAKER_00: You should not get f full weight.
• 25:38
  SPEAKER_00: And by all means, please check your state before you take literally.
• 25:43
  SPEAKER_00: I don't want anyone from Massachusetts calling me up going, Shannon said so.
• 25:47
  SPEAKER_02: Yeah, yeah.
• 25:47
  SPEAKER_02: Oh, me neither.
• 25:49
  SPEAKER_00: Please.
• 25:49
  SPEAKER_00: But yeah, that's that's usually how that part of it works.
• 25:55
  SPEAKER_00: And we're not we're not 1099, trust me.
• 25:57
  SPEAKER_00: I run a 1099 model up on in this part of the state.
• 26:01
  SPEAKER_00: And and I've done so for a while, I think 2018, 2017, 18, I believe.
• 26:08
  SPEAKER_00: I have to actually look.
• 26:10
  SPEAKER_00: I mean, I've I've operated with contractors for years, and there's a protocol that has to be followed.
• 26:15
  SPEAKER_00: And sometimes the contractors are great.
• 26:17
  SPEAKER_00: I have a couple contractors I've had with me for nine years.
• 26:21
  SPEAKER_00: Transitioned when I sold, didn't want to go with the other buyer, and here we are all this time.
• 26:27
  SPEAKER_00: They're still with me.
• 26:30
  SPEAKER_00: And it and it absolutely can work.
• 26:32
  SPEAKER_00: And I've seen other coaches who teach only the 1099 model.
• 26:36
  SPEAKER_00: I like to give you a choice because I Jamie and I always talk about this extensively.
• 26:40
  SPEAKER_00: Everybody has a different goal for the cleaning industry and what they want to do.
• 26:43
  SPEAKER_00: Sometimes that goal is just to pay off student loans, other times it's to buy a truck, other times it's to buy a home, other times it's a short-term rental, other times it's creating a fund for whatever, right?
• 26:54
  SPEAKER_00: It's whatever you want to do with it.
• 26:56
  SPEAKER_00: It's totally okay to me.
• 26:58
  SPEAKER_00: It doesn't bother me which way you choose.
• 26:59
  SPEAKER_00: I'm just here to guide you in the direction you need to go.
• 27:03
  SPEAKER_00: Yeah.
• 27:04
  SPEAKER_00: So there's a protocol, and you if you don't follow the protocol with 1099s, then all kinds of variations happen and things fall between the cracks.
• 27:13
  SPEAKER_00: You know, it's like I want the flexibility of using contractors, but I also want to control every single element.
• 27:22
  SPEAKER_00: You can't have both.
• 27:23
  SPEAKER_00: You have to be able to, when someone says I'm not making it into my house because my kid vomited all night, you're not going to be upset because their kid vomited, A.
• 27:32
  SPEAKER_00: And B, they're an independent contractor.
• 27:34
  SPEAKER_00: They're not obligated to even tell you it that.
• 27:37
  SPEAKER_01: So there's that whole element as well.
• 27:45
  SPEAKER_01: I don't know much about 1099s.
• 27:49
  SPEAKER_02: That's I feel like more Shannon's area of expertise.
• 27:56
  SPEAKER_02: I can tell you about the W2 model, and I have done a lot of research on 1099s because I I want to make sure that I'm doing everything by the book, by law, you know.
• 28:14
  SPEAKER_01: I think that's the same thing.
• 28:15
  SPEAKER_02: So if you're choosing the co ahead.
• 28:18
  SPEAKER_02: Yeah, but if they're choosing the contractor model, they you they have to understand what comes with in that choice.
• 28:27
  SPEAKER_00: Right.
• 28:28
  SPEAKER_00: There there's a lot of variations.
• 28:30
  SPEAKER_00: And the biggest thing I see, and and this is just recent.
• 28:33
  SPEAKER_00: So if you have Jobber, I don't know about if it happens in Zenmate or not, there is an arrival window now.
• 28:38
  SPEAKER_00: A lot of people are using, especially in the larger cities because of traffic, they're using a one to two hour arrival window, which gives the contractor more freedom to arrive when it works for their schedule.
• 28:50
  SPEAKER_00: And it used to be, it's this is a funny thing.
• 28:52
  SPEAKER_00: When I had W-2s here where I am now, it used to be eight minutes to go from town to town.
• 28:58
  SPEAKER_00: It now takes 45 minutes to an hour to go the same eight miles.
• 29:01
  SPEAKER_00: So that's how much my town has grown.
• 29:03
  SPEAKER_00: And so we give a window now.
• 29:05
  SPEAKER_00: I try to narrow it down, but it's I starting in 2027, it's going to be a one to two hour window automatically.
• 29:12
  SPEAKER_00: And then depending on this other project that I'm working on, it it might be a two-hour window off the top.
• 29:18
  SPEAKER_00: Just because of how much traffic is and variances happen, right?
• 29:22
  SPEAKER_00: You know, kids need to be able to do that.
• 29:23
  SPEAKER_02: Well, what's also great about that is your employee can literally you you give them the one hour buffer here at least.
• 29:33
  SPEAKER_02: We give them a one-hour buffer because sometimes things happen, but even then they can time it and use their best logical, like up to another hour five minutes, 10 minutes, 15 minutes, they can send an on my way text.
• 29:54
  SPEAKER_02: So that is very nice.
• 29:58
  SPEAKER_00: It is, and then you we hear a lot, but employees are expensive, but the return on your investment is gonna be a lot more.
• 30:06
  SPEAKER_00: And we see, you know, trust me, Jamie and I see it.
• 30:09
  SPEAKER_00: I we've snuck around in and live calls with some of these other coaches, and I'm like, oh, so what do they say there?
• 30:16
  SPEAKER_00: They never answer our questions, by the way.
• 30:20
  SPEAKER_00: But we can ignore a couple of them, yeah.
• 30:21
  SPEAKER_00: And I'm like, oh, well, what about, you know, what about this?
• 30:24
  SPEAKER_00: And but if you break down the math backwards, what they're saying is true, but it's not the volume that you're gonna create when you have a different model than the 1099 model.
• 30:34
  SPEAKER_00: And they do.
• 30:36
  SPEAKER_00: People will think that employees cost more, and they they can't.
• 30:39
  SPEAKER_00: They absolutely can't, especially if it's a bad hire and you go through the training process and the acquisition price, and then they don't work out, and you're like, oh my God, I just blew all this money on this person.
• 30:48
  SPEAKER_02: They didn't work out for the training and the the this and then the management and then the compliance and uh workmen's comp and then the payroll tax.
• 30:58
  SPEAKER_02: It's a lot to onboard, but it if they're a good hire, woo-hoo hoo, we're they we're you're in the money because now you can start charging those premium prices.
• 31:10
  SPEAKER_02: Right.
• 31:11
  SPEAKER_02: The lifestyle Yep.
• 31:15
  SPEAKER_02: But chaos all chaos costs money too.
• 31:20
  SPEAKER_01: And it's not just money, but it it costs mental capacity, stress, turnover cost, recleans, bad reviews.
• 31:34
  SPEAKER_02: Seen a lot of those.
• 31:36
  SPEAKER_02: Lost customers, constant retraining, costs money, inconsistent service costs money, the owner jumping back in, the field costs money.
• 31:49
  SPEAKER_02: A lot.
• 31:51
  SPEAKER_02: More than you realize.
• 31:53
  SPEAKER_02: It took me a long time to jump in, jump out, jump in.
• 31:56
  SPEAKER_02: I'm finally completely out.
• 31:58
  SPEAKER_02: Woohoo! But that's not my job anymore.
• 32:02
  SPEAKER_02: My job is not no longer to do that.
• 32:04
  SPEAKER_02: So jumping, it does, if I have to go in and jump to help clean, that costs a lot of money because I am not able to pick up the phone and answer calls and do my job as a CEO.
• 32:19
  SPEAKER_02: So I'm literally losing money if I have to jump back in.
• 32:24
  SPEAKER_02: Spending your entire day putting out fires, being unable to grow, because everything depends on your on the costs.
• 32:36
  SPEAKER_02: Cheap labor that prevents you from building the company you actually want isn't necessarily cheap.
• 32:42
  SPEAKER_00: Oh, it's it's more money.
• 32:44
  SPEAKER_02: Yeah.
• 32:46
  SPEAKER_02: It is.
• 32:47
  SPEAKER_02: What costs do owners completely overlook when they're comparing 1099s with employees?
• 32:55
  SPEAKER_00: I think there's a subconscious thing with the IRS.
• 32:59
  SPEAKER_00: It's, you know, the the connotation with the IRS is it's bad.
• 33:02
  SPEAKER_00: Every time you look at the you have to engage with the IRS, it's bad.
• 33:05
  SPEAKER_00: It's bad, it's bad, it's bad, it's bad, it's bad, it's bad.
• 33:09
  SPEAKER_00: There, there, you have a lot more control over inputs and outputs with W2 versus 1099s.
• 33:16
  SPEAKER_00: 1099s, even though I've have some really experienced cleaners that work with me for me, there's a lot more freedom that they have.
• 33:27
  SPEAKER_00: And a lot of people enjoy that.
• 33:29
  SPEAKER_00: But if you're looking for consistent input output, then the W-2 model is definitely the way to go because then you can really hold them accountable.
• 33:38
  SPEAKER_00: You can hold a 1099 accountable.
• 33:40
  SPEAKER_00: You just, there's just a different way of doing it.
• 33:41
  SPEAKER_00: And the first thing I talk about when I'm on the phone with somebody is oh, I have these contractors and they never show up on time.
• 33:50
  SPEAKER_00: And then they use the word employee in the same sentence.
• 33:52
  SPEAKER_00: And I'm like, so is it an employee?
• 33:54
  SPEAKER_00: Is it a contractor?
• 33:55
  SPEAKER_00: What is it?
• 33:55
  SPEAKER_00: Because you shouldn't, you shouldn't say that you have employees ever if you're working the 1099 model.
• 34:00
  SPEAKER_00: That should be the forbidden word.
• 34:02
  SPEAKER_02: Yeah, it really is it shouldn't be used in the same sentence unless we're talking about the differences, right?
• 34:12
  SPEAKER_02: It should not be used in the same sentence, I don't think.
• 34:15
  SPEAKER_00: And a good contractor won't cost you as much as a bad contractor, but as we all know, not everyone knows how to clean, right?
• 34:21
  SPEAKER_00: So there's a variable, or I trained my contractor and we did this, and I trained this other contractor and I gave them a kit and we did this.
• 34:29
  SPEAKER_00: I'm like, you're not supposed to give them anything.
• 34:31
  SPEAKER_00: They're they're here to show up to do the job.
• 34:34
  SPEAKER_00: You're not here to supply the job.
• 34:35
  SPEAKER_00: And then occasionally, you know, I will do a large job, but things are rented out.
• 34:42
  SPEAKER_00: If they're if you know, if you need a job for 15 people and you don't have 15 people and you have people coming in being at 1099 for the day, they can rent a kit from you.
• 34:52
  SPEAKER_00: There is that variable as well.
• 34:54
  SPEAKER_00: Does it work out all the time?
• 34:56
  SPEAKER_00: Most of the time, everybody follows the protocol and the rules, but it can't, it can't be a glitch.
• 35:02
  SPEAKER_00: You know, someone walks off with one of your vacuums.
• 35:04
  SPEAKER_00: Oh, you mean I don't get to keep this?
• 35:07
  SPEAKER_00: Look, you may need to vacuum back?
• 35:11
  SPEAKER_00: Yeah, I do.
• 35:14
  SPEAKER_00: And then that's the business you have versus the business you want, and it takes focus and consistency, as Jamie will tell you, because she's done a lot of work this last summer.
• 35:23
  SPEAKER_00: It's like getting a college degree and in new business that you have versus the business that you want.
• 35:28
  SPEAKER_00: Sit down, and we're getting ready to hit fourth quarter.
• 35:31
  SPEAKER_00: I can't believe it.
• 35:33
  SPEAKER_00: We're like in third quarter right here, and it's kind of we're almost at fourth quarter.
• 35:38
  SPEAKER_00: 2026 just went boom.
• 35:40
  SPEAKER_00: So gosh, think about the business that you want for next year, where you want to go, what you want to grow, what location you want to be in, how you want to do this.
• 35:49
  SPEAKER_00: Do you want company cars versus not company cars?
• 35:52
  SPEAKER_00: What kind of systems do you want?
• 35:53
  SPEAKER_00: Do you want 1099s?
• 35:54
  SPEAKER_00: Are you going to do W-2s this year?
• 35:56
  SPEAKER_00: Decide, make a decision and take the ball and run with it.
• 36:00
  SPEAKER_00: Do you want to determine when they work?
• 36:03
  SPEAKER_00: Do you or how they're trained or how service is performed?
• 36:06
  SPEAKER_00: What the customer experience looks like.
• 36:08
  SPEAKER_00: It can be similar, but it's not going to be perfect.
• 36:12
  SPEAKER_00: Do they how do they represent your brand?
• 36:14
  SPEAKER_00: Is how is quality going to be managed?
• 36:16
  SPEAKER_00: How much control do you actually want?
• 36:18
  SPEAKER_00: Those are all attributes for a W-2, right?
• 36:23
  SPEAKER_01: Yeah.
• 36:24
  SPEAKER_01: Right.
• 36:28
  SPEAKER_01: And then ask yourself, what are you actually trying to build?
• 36:33
  SPEAKER_02: A job for yourself, a small con contractor network.
• 36:39
  SPEAKER_02: I think that is important to have, even if you do run W-2s, we do need to have that even in my area, even if they are competitors, there is a tight-knit group of us that understand that.
• 36:56
  SPEAKER_02: Like there is some times that I can't take on a job, and it's like, hey, this is how much I got a deposit for this job, and I'm just, there's no way I can go all the way down to Southern Humboldt and fill it.
• 37:12
  SPEAKER_02: Can you do it?
• 37:13
  SPEAKER_02: There's times whenever this is needed.
• 37:17
  SPEAKER_01: That network of your competitors, really.
• 37:22
  SPEAKER_01: But you need that they're contractors.
• 37:27
  SPEAKER_00: Collaboration over competition.
• 37:30
  SPEAKER_02: Sure thing.
• 37:31
  SPEAKER_02: Are you trying to build a team, multiple teams, multiple locations, a a company that operates without you?
• 37:40
  SPEAKER_02: And this is where I'm at right now, you guys, in my business, is I am that's where where I'm at.
• 37:48
  SPEAKER_02: I'm trying to create a company that runs without me.
• 37:51
  SPEAKER_02: And also sellable.
• 37:54
  SPEAKER_02: I definitely am not saying that I'm going to ever sell.
• 37:59
  SPEAKER_02: However, if some if I were, I want this to be a turnkey business.
• 38:05
  SPEAKER_02: Somebody can walk in and they're gonna want to look and see your profit law.
• 38:10
  SPEAKER_02: They're they're gonna want to see all of this.
• 38:12
  SPEAKER_02: And do does the employees go with it?
• 38:17
  SPEAKER_02: Like everything needs to be perfect, in my opinion, for somebody to come over and and take it, or maybe even a franchise.
• 38:27
  SPEAKER_02: I who knows?
• 38:28
  SPEAKER_02: Who knows where this is going?
• 38:30
  SPEAKER_02: Right now I'm enjoying the ride.
• 38:34
  SPEAKER_02: Do you think owners choose their labor model based on where their business is today instead of where they're trying to take it?
• 38:42
  SPEAKER_00: I I think that you should build it to suit what your needs are then and navigate for a future later on.
• 38:50
  SPEAKER_00: Does it mean that you have trend more transmission, transmission, transition?
• 38:54
  SPEAKER_00: There's some fluid.
• 38:57
  SPEAKER_00: I did not get a lot of sleep last night.
• 39:00
  SPEAKER_00: There's a transition, or you can start right off the bat because you know what you want and that's what you're gonna do.
• 39:04
  SPEAKER_00: But if I wouldn't the businesses should suit your needs for where you are, it needs to meet you in that place.
• 39:12
  SPEAKER_00: It doesn't mean that it will be that way forever.
• 39:14
  SPEAKER_00: No.
• 39:14
  SPEAKER_00: Businesses transition just like humans.
• 39:17
  SPEAKER_00: And what you what you started out, I mean, when I look back to Castle Keeper Cleaning, God, 16 years ago, it was a side hustle for me.
• 39:25
  SPEAKER_00: I was just like, I'm making this great money, wreck on, right?
• 39:29
  SPEAKER_00: Yeah, yeah.
• 39:30
  SPEAKER_00: I I have this freedom.
• 39:32
  SPEAKER_00: I'm I'm I'm self-employed, I'm pulling in my own money.
• 39:34
  SPEAKER_00: Woo-hoo! But it wasn't something then partway through about three months in, I'm like, I need to make more money.
• 39:40
  SPEAKER_00: This is not, I'm not, I'm not making enough.
• 39:43
  SPEAKER_00: That's when I figured out flat rate versus hourly, because I was charging by the hour.
• 39:47
  SPEAKER_00: And it's crazy to think that I was doing move out cleanings for 200 bucks because I didn't know any better.
• 39:55
  SPEAKER_01: 25 bucks an hour, okay, eight hours.
• 39:57
  SPEAKER_01: All right, right?
• 39:58
  SPEAKER_01: Yeah, that's all.
• 40:03
  SPEAKER_01: Right.
• 40:04
  SPEAKER_00: So there's responsibilities of the people who work for you that you're gonna have to manage them or not manage them.
• 40:11
  SPEAKER_00: Some of us are good leaders and some of us are not good leaders, but you find that in every business, right?
• 40:16
  SPEAKER_01: Yeah, I also think that that that can be learned.
• 40:23
  SPEAKER_01: I've never led people ever.
• 40:27
  SPEAKER_02: Like I I never I've never managed a place.
• 40:31
  SPEAKER_02: I was never a manager in a restaurant, I was never I never did scheduling.
• 40:36
  SPEAKER_02: I never did payroll.
• 40:38
  SPEAKER_02: I never did any of this.
• 40:40
  SPEAKER_01: Jamie chose the trial by fire.
• 40:43
  SPEAKER_01: It's very definitely a a learned skill.
• 40:48
  SPEAKER_01: Definitely.
• 40:49
  SPEAKER_01: So yeah, leadership.
• 40:54
  SPEAKER_02: Being an employer isn't a just about paying payroll taxes, you guys.
• 40:59
  SPEAKER_02: It requires leadership training, communication, clear expectations.
• 41:05
  SPEAKER_02: Performance management.
• 41:07
  SPEAKER_02: That is That's the hardest piece, I think.
• 41:10
  SPEAKER_02: That is I will tell you systems.
• 41:16
  SPEAKER_02: Systems that that kind of goes hand in hand with performance management because you have have to build those systems before you can do performance management, and then it starts coming together.
• 41:30
  SPEAKER_02: Accountability, we were just talking about that.
• 41:33
  SPEAKER_02: Company culture is huge to me.
• 41:36
  SPEAKER_02: I did not realize how big company culture and what I wanted to create.
• 41:41
  SPEAKER_02: I want people walking in here feeling like, yeah, the responsibilities to the people who work for you.
• 41:51
  SPEAKER_01: You have to actually manage.
• 41:53
  SPEAKER_02: That was I I don't know if that was scary to me because I eased into it.
• 41:59
  SPEAKER_02: I was working right alongside of them.
• 42:02
  SPEAKER_02: And then I, you know, I hired a coach, and that I learned real quick that is not my job anymore.
• 42:12
  SPEAKER_02: My that's not my job anymore.
• 42:14
  SPEAKER_02: So and it felt so guilty.
• 42:16
  SPEAKER_02: Like, oh my gosh, I'm sending you out there to work, and I am in.
• 42:20
  SPEAKER_02: I promise I'm not just sitting here twiddling my thumbs.
• 42:24
  SPEAKER_02: I am creating work for you guys.
• 42:29
  SPEAKER_02: You have to deal with uncomfortable conversations, and that is really hard too.
• 42:38
  SPEAKER_02: We have chat GPT, and I'm not saying I don't like whenever I see people using text all the time, but if that's something that's comfortable for you in the beginning, by all means, until you can actually have those conversations.
• 42:54
  SPEAKER_02: I had one the other day with a client in my office, very uncomfortable, but I I stood my ground and I I just I see the evolution of my CEO beginning to show up in places that I didn't realize before.
• 43:17
  SPEAKER_02: And and in order to do that, I had to create systems that allow people to exceed, even if it's myself.
• 43:24
  SPEAKER_02: I am trying to make it easier for the next person that comes in, that walks in, whatever position I'm trying to make or create, that's easy and able, they're able to follow along with it.
• 43:40
  SPEAKER_02: Maybe some of the resistance isn't entirely about money.
• 43:44
  SPEAKER_02: Maybe becoming an employer requires the owner to level up too.
• 43:48
  SPEAKER_00: A lot of times.
• 43:50
  SPEAKER_02: Yeah, I think I I just answered all those questions because that's exactly what I'm doing right now is leveling up.
• 43:59
  SPEAKER_02: So is the owner avoiding W-2 employees because employees are the wrong model?
• 44:08
  SPEAKER_01: Again, it comes on to personal preference.
• 44:11
  SPEAKER_02: Personal preference.
• 44:13
  SPEAKER_02: Or because they don't want to become the kind of leader an employee-based company requires.
• 44:19
  SPEAKER_02: I think that comes back to again, you guys, this can be learned and taught.
• 44:26
  SPEAKER_02: Learn and taught.
• 44:28
  SPEAKER_01: So don't be afraid to step outside of your comfort zone and become the person I'm that you can be.
• 44:45
  SPEAKER_02: Leadership, it can be taught.
• 44:48
  SPEAKER_00: Leadership can be taught.
• 44:49
  SPEAKER_00: It's learned for sure.
• 44:51
  SPEAKER_00: And the the there is a legal and classification reality.
• 44:55
  SPEAKER_00: And if you're brand new, if you've never worked in HR before and you're trying to pick up like, what do I do about this?
• 45:01
  SPEAKER_00: What do I do about that?
• 45:02
  SPEAKER_00: Small business administration really has up their game.
• 45:05
  SPEAKER_00: It used to be that you had to show up in person to to go to the the whatever seminar things.
• 45:11
  SPEAKER_00: They do almost everything online.
• 45:12
  SPEAKER_00: You can sign up, it will send you an email.
• 45:15
  SPEAKER_00: Today's the day, and you can learn skills.
• 45:17
  SPEAKER_00: But I definitely recommend that you do that for the state that you're in because the employee employer loss.
• 45:23
  SPEAKER_00: Change and you don't want to get in trouble for misclassification.
• 45:28
  SPEAKER_00: Um, workers' classification isn't simply just a business owner gets to choose, it's what really is needed for the business.
• 45:35
  SPEAKER_00: Calling someone a 1099 doesn't automatically make them an independent contractor.
• 45:40
  SPEAKER_00: There's things that I do, like all of my 1099s have to carry general liability insurance.
• 45:46
  SPEAKER_00: I will not work with anyone who doesn't.
• 45:48
  SPEAKER_00: If they say, well, I'm not doing that because it's$400, they don't want to invest in themselves.
• 45:52
  SPEAKER_00: They're looking for an employee job.
• 45:54
  SPEAKER_00: They're not looking to be an independent contractor, they're not looking to be their own boss.
• 45:58
  SPEAKER_02: Yeah.
• 45:59
  SPEAKER_00: They're putting an independent contractor in an agreement, doesn't automatically settle the issue.
• 46:04
  SPEAKER_00: No.
• 46:05
  SPEAKER_00: You should tell them that they are.
• 46:08
  SPEAKER_00: They need to sign a vendor agreement.
• 46:10
  SPEAKER_00: It says you are not an employee.
• 46:13
  SPEAKER_00: Because what will happen is there'll be a disagreement and then they'll go to the unemployment board, and the unemployment board's like, wait a minute, we've had 17 of these things come through.
• 46:22
  SPEAKER_00: I guess what?
• 46:23
  SPEAKER_00: I guess we get to audit, blah, blah, blah.
• 46:26
  SPEAKER_00: Yeah.
• 46:26
  SPEAKER_00: And if they and then they get to the end of the year, as Jamie and I were just discussing earlier, and then they have all this tax due because they didn't pay their share because they're 1099.
• 46:35
  SPEAKER_00: So make sure you're trying to be as transparent as you possibly can that this is a 1099 position.
• 46:41
  SPEAKER_00: There are, you know, this is blah blah blah.
• 46:44
  SPEAKER_00: This is what is required to be a 1099 with this company.
• 46:47
  SPEAKER_00: If this is our vendor agreement, you like no smoking on site or that you can actually request that in a vendor agreement.
• 46:55
  SPEAKER_00: Is it ideal for everyone?
• 46:56
  SPEAKER_00: No, some people smoke, some people vape, but whatever you do, it's okay.
• 47:00
  SPEAKER_00: Just don't do it in front of the client's house.
• 47:06
  SPEAKER_00: Federal requirements matter.
• 47:07
  SPEAKER_00: And just because the government hires a 1099 doesn't mean that you can get away with hiring 1099, especially if you tend if you misclassify them.
• 47:16
  SPEAKER_00: And different states also have different standards of what a 1099 is.
• 47:22
  SPEAKER_00: So Jamie just said earlier that her state has an active campaign to report people who are in violation of labor laws.
• 47:30
  SPEAKER_00: So make sure that you're following the protocol for where you're located.
• 47:34
  SPEAKER_00: And owners need professional guidance for their individual circumstances.
• 47:38
  SPEAKER_00: So you can come to us and ask us questions, but again, we're not experts in the field of employee law.
• 47:45
  SPEAKER_00: We just note based on our experiences.
• 47:47
  SPEAKER_00: And there are 50, what it 52 states now, 55.
• 47:50
  SPEAKER_00: I heard it the other day.
• 47:51
  SPEAKER_00: I was like 52.
• 47:53
  SPEAKER_00: We're back to 52 for a while.
• 47:54
  SPEAKER_00: We're at 50.
• 47:56
  SPEAKER_00: I uh I thought we I don't know.
• 47:58
  SPEAKER_00: So make sure that you check so that you're legal, that you're keeping and do SBA once a year.
• 48:04
  SPEAKER_00: Do one boring, yawning employee, whatever, so that you are abreast of what's going on in your state.
• 48:12
  SPEAKER_00: Because we all know minimum wage goes up, which means that the cost of living goes up, which means that if you're not doing pay for performance, your pay needs to go up too because you have to pay more.
• 48:23
  SPEAKER_02: Absolutely.
• 48:24
  SPEAKER_02: For sure.
• 48:25
  SPEAKER_02: So simple disclaimer.
• 48:27
  SPEAKER_02: Let's go ahead and do a simple disclaimer.
• 48:30
  SPEAKER_02: You guys, we're not attorneys.
• 48:34
  SPEAKER_02: We're not a CPA, we're not the IRS, we're not your labor, your state labor department.
• 48:40
  SPEAKER_02: We're not determining anybody's worker classification from a podcast.
• 48:46
  SPEAKER_02: Right.
• 48:47
  SPEAKER_02: We're talking about the operational and business model side of the conversation.
• 48:54
  SPEAKER_02: Know the federal requirements, know your state's requirements, get professional advice if needed.
• 49:03
  SPEAKER_02: Let me tell you the best.
• 49:05
  SPEAKER_02: I want to circle back around to the SBA.
• 49:09
  SPEAKER_02: That is a federally funded, they want you.
• 49:13
  SPEAKER_02: It's free for the most part.
• 49:15
  SPEAKER_02: There's some classes that once you get going, there's some things like quick.
• 49:20
  SPEAKER_02: Yeah, yeah.
• 49:21
  SPEAKER_02: It's that is a federally funded thing that they want small businesses to use.
• 49:31
  SPEAKER_02: Are you a woman, Ram?
• 49:32
  SPEAKER_02: They want you to utilize that.
• 49:34
  SPEAKER_01: Every county has one.
• 49:41
  SPEAKER_01: So make sure that you're looking into that small business association.
• 49:47
  SPEAKER_00: Yeah, the SBA.
• 49:49
  SPEAKER_00: We can I'll I'll write a link for it.
• 49:52
  SPEAKER_00: Link SBA.
• 49:53
  SPEAKER_00: So take taxes out of it, take payroll out of it, take workmen's comp out of it, take paperwork out of it, then ask yourself how do I actually want this person to work inside my company?
• 50:05
  SPEAKER_00: How much control do I want?
• 50:07
  SPEAKER_00: How much experience am I promising my customers?
• 50:10
  SPEAKER_00: What kind of company am I trying to build?
• 50:13
  SPEAKER_00: We've revisited that like four times.
• 50:15
  SPEAKER_00: That should be if we were giving a test, that would be the teacher mine, hey, I'm gonna test you on this later.
• 50:21
  SPEAKER_00: You've been trying to hire 1099, but what you really need is an employee, so make sure that you're paying attention to all the bells and whistles so they don't get yourself in trouble for misclassification.
• 50:33
  SPEAKER_01: So, yeah, so final takeaway.
• 50:37
  SPEAKER_01: This is my mom's my final take.
• 50:46
  SPEAKER_02: Just this question she just uh Shannon just asked, how do I actually want this person to work inside my company?
• 50:56
  SPEAKER_02: How do you want your company to run?
• 50:59
  SPEAKER_02: So what's the what's the things that you guys could be looking at inside your own company this week?
• 51:08
  SPEAKER_02: How do you want to run your company?
• 51:10
  SPEAKER_02: If you guys are small now, I say take take it and and run with it.
• 51:19
  SPEAKER_02: Maybe we'll do uh do a podcast.
• 51:22
  SPEAKER_02: I just literally switched over payroll companies again.
• 51:30
  SPEAKER_02: And I can pretty much document because I'm documented documenting everything right now, how step by step of what is required from us.
• 51:42
  SPEAKER_02: It it it's not as whenever you put it all together like we did, it sounds daunting.
• 51:51
  SPEAKER_02: It sounds like oh, it could almost give you a little panic attack, like no way.
• 51:56
  SPEAKER_02: I did I'm telling you, whenever you're small, you got one or two, three employees, that's that's the good time to start looking into the W-2 model.
• 52:08
  SPEAKER_02: And and say it's very easy payroll.
• 52:14
  SPEAKER_02: It's you start flowing, you start figuring it out.
• 52:19
  SPEAKER_00: It's it could be that you ask and they say no, I don't want it, and say, you know, didn't have them sign documentation, was offered a W-2, refused, blah, blah, blah.
• 52:29
  SPEAKER_00: And then that way you have a document.
• 52:30
  SPEAKER_00: So if you're ever audited, you can say, well, Susan said on December 10th that she was not interested in a W-2 employment model.
• 52:39
  SPEAKER_00: She wanted to keep 1099 because that works best with her kids and her schedule.
• 52:42
  SPEAKER_00: And that way you're covered.
• 52:44
  SPEAKER_00: Cover yourself, cover your butt.
• 52:47
  SPEAKER_00: So if you're listening to this and realizing some of your relationships inside your business aren't nearly as clear as you thought they were, this is exactly why I created the client and clarity bundle, the contract bundle.
• 53:00
  SPEAKER_00: Unclear expectations can get expensive, audits, crazy stuff like that.
• 53:05
  SPEAKER_00: Whether it's working people inside your business or the clients you are serving, you need to know that what that relationship is and where you stand so you don't get scope creep.
• 53:14
  SPEAKER_00: Don't wait until there's a problem to figure out what should have been in writing from the beginning.
• 53:18
  SPEAKER_00: Don't be Shannon.
• 53:21
  SPEAKER_00: Each line item in there is something that I blendered with on all of those contracts.
• 53:26
  SPEAKER_00: You can find the client, the contracts, and you can find the enunciation, is what my 11-year-old likes to do now.
• 53:33
  SPEAKER_00: She's a preteen, so everything is enunciated.
• 53:39
  SPEAKER_00: Oh, yeah.
• 53:41
  SPEAKER_00: Contract and client clarity bundle, baby buggy bumpers.
• 53:45
  SPEAKER_00: So, and before you decide whether you need a 1099 or an employee, ask yourself how do I want this person to really work inside of my company?
• 53:54
  SPEAKER_00: Again, please give us a review.
• 53:56
  SPEAKER_00: It tells the algorithm gods that we are worthy.
• 53:59
  SPEAKER_00: We appreciate and love each and every one of you.
• 54:02
  SPEAKER_00: Thank you so much for tuning in and spending time with us.
• 54:05
  SPEAKER_00: We'll see you on the take care.
• 54:07
  SPEAKER_00: Bye you guys.