I admit, switching from Independent Contractors (ICs) to Employees can be a daunting task. For some, it is a major earthquake in their business foundation. But let it be known, I have never heard of a business that went out of business because they did this transition.
A lot of what I am about to share with you will be overwhelming. There is a lot to look at. It will seem that I am pitching, selling, or referring you out to other writings I have on this subject, and I am. I have spent years researching, interviewing authorities, gathering actual case studies in our industry, and creating step by step plans (over 7 years) to help numerous pet sitting businesses do this.
You also have to understand that you aren’t the first to do this, and you won’t be the last. It might be a little rocky and the same thing holds true to when you fly as a passenger on an airplane:
“Secure your mask first, before those around you.”
You are the one who needs to remain strong, focused, and confident throughout this process because here is what is going to happen.
Most likely you WILL be making big changes. Your staff might have objections, your clients might have objections, but you have to remember that you are doing this for the long term health of your business. It is like working out. Most of us complain in the beginning, and along the way we have aches and pains, but in the end it is for the good of our health, right?
Ok, so let’s get into it. What do you really have to consider when making the switch from ICs to employees in your pet sitting business?
20 Minute Consultation.
First, I want to offer you something for FREE. Not only do I like getting under the hood, but if we could just chat for 20 minutes, I promise to excite you, and probably overwhelm you, but the excitedness WILL bring you through it. So go ahead and just fill out this contact form. It’s the best way to answer all your questions directly and get you running in the right direction with the right resources.
How Much Does It Cost To Have Employees?
I know this is probably the #1 thing on your mind. How much is this going to cost me? And then the anxiety sets in and before you know it you have already bankrupt your company in your head because “it costs too much”
Am I right?
Well let me offer you a little hope – You are right and wrong.
Depending on where your numbers currently are will determine which side of the coin you fall. Frankly speaking, by doing the math, I have discovered over and over and over again by coaching pet sitting companies ALL OVER that to be sustainable with employees the minimum visit price must be at least $22. To thrive, even more.
But everyone is different, so you do the math. You must pay your staff, yourself, and your business. I break it all down right in the pricing strategy and structure guide.(Paid)
Were you wondering what exactly the breakdown is of the cost in the paychecks? I interviewed Alexia from Payroll Experts (an incredible payroll company that I highly recommend) and here is the breakdown.
Know About This Program:
The day you switch to employees doesn’t give you a guarantee that the IRS will never audit you. In fact, when I did my audit case studies on pet sitting businesses that had been audited, often times the audit came a few years later.
So to avoid this from the IRS (and there are 5 other agencies that can audit you) the best line of defense is to basically tell them you want to switch in 60 days, pay them a small portion and get their agreement that they will not audit you.
Voluntary Classification Settlement Program. (VCSP) From their website: The VCSP is a voluntary program that provides an opportunity for taxpayers to reclassify their workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes. To participate in this voluntary program, the taxpayer must meet certain eligibility requirements and apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.
Pet sitters around the country who currently have independent contractors are going through this program and successfully switching to employees. what the program requests of the business owner:
- Pay 10 percent of the employment tax liability that would have been due on compensation paid to the workers for the most recent tax year, determined under the reduced rates of section 3509(a) of the Internal Revenue Code. See VCSP FAQ 15, for information on how payment under the VCSP is calculated. Also see Instructions to Form 8952;
- Not be liable for any interest and penalties on the amount; and
- Not be subject to an employment tax audit with respect to the worker classification of the workers being reclassified under the VCSP for prior years. (source: IRS)
I have written more about this along with the help of another pet sitter who has gone through this exact program. She provides the breakdown of what she paid when going through it.
Just Do It Already, Will You? You Know You Want To!
The thing that I see happen time and time again as a pet sitting business coach is that people don’t make a decision and do it. They get stuck not making a decision. Even if it is the wrong decision, it isn’t a bad thing! You will learn from it. Hopefully? 🙂
I spent a lot of 2014 investigating our industry. Puling actual laws and compiling them all for you in one easy place. On my website! No where else in the pet sitting industry will you find this topic so comprehensively talked about. So please, have at it!
Here are 18 Real Reasons Why You Should Switch Your ICs To Employees
I would love more than anything to help you through this process. I have done it more times than I can count with many pet sitters. But there are certain people I can’t work with.
And here is a recap with links to all of the Audit Case Studies I have done. From small to large businesses. You will be shocked at what they were “caught” for. Very eye opening.
“There is a lot on this topic and I made it my mission to answer almost every question last year. “
Steps To Make The Switch
From ICs To Employees:
1. Get all the legality in order. Get your CPA and Lawyer ready.
2. Revisit your pricing structure and strategy.
3. Address staffing issues and objections.
4. Make the switch (easiest part. It is just paperwork).
5. Learn how to be an effective manager.
The last one is especially hard for many. Being a manager means that you have to follow and enforce the rules. It means that you have to lay down the law and follow it. You have to define, attract, and hire the right types of people. It is a lot of work and the Employee Quick Start Manual will help you step by step in 60 pages and 2 hours of audio get through it all!
Hope that helps. I know it is overwhelming, and that is why I recommend that you DON’T do it on your own.
MANY MANY MANY people have gone through this program with me. Comment below and let me know how I can help YOU!