A few general questions on hiring a part-time employee

September 14, 2007 9:26 AM

I'm a one-person website development company. Things have been getting busy lately so I'm thinking about hiring my first part-time employee. This is new to me, so I'm looking for some advice.

The plan is to target the local university to find someone with about 10 to 15 hours available per week. I have two initial questions...

1. How complicated is the paperwork/accounting? I do my own accounting, so I'd have to figure out tax withholdings and related stuff. Do I have to somehow 'register' with a government agency regarding taxes, employment, etc?

2. Is it out of line to request that the employee have a laptop to use while doing my work? The alternative is to buy a computer for the part-timer, but that is a pretty big expense.

As an aside, I do work with contractors (1099s) for some projects, but I don't think I can call this part-timer a contractor because I am going to request that they work at my office during a set daily schedule. It won't be project-based work. Is this correct thinking?

Thanks.

posted by jpep to work & money (11 comments total)

1. Not sure

2. It is not out of line but you may also have to compromise and get an extra computer just in case a poor college student does not already have something and can not afford to buy a new laptop. Depending on the type of work you are going to have this part timer do, you could find something that is not too powerful but still get the job done. You could even increase your billing rate slightly to account for the extra cost.

3. I am pretty sure that you could consider this part timer a contractor. I see this all the time on employment websites. Contract her/him for 1 year. Since they are in college that may be the length of time that they are willing to work. I think it also simplifies the paperwork.
posted by remthewanderer at 10:10 AM on September 14, 2007

I don't think I would want to make my employee to have his own laptop. Obviously, those who are real contractors work from their own equipment, but it seems a steep requirement for a broke college kid and adding extra complications for someone who's only working 10-15 hours for you. Will you require a specific OS? Who will be responsible for regular backups? Will you provide them with any needed software? What if the laptop dies - who's responsible for fixing/replacing it? Computers are so cheap these days - get a cheapie $500 Celeron desktop or whatever is the minimum required to do your work (ie you'd need something better if the work is to be Photoshop-intensive, for example) and let them use that in your office. If you can't afford a $500-$800 commitment to the hardware, then you're probably not ready for an employee.
posted by cgg at 10:26 AM on September 14, 2007

The information you need is here at the IRS small business center. Well, not the computer bit anyway.

You are correct that if you control where and when they work, you must consider them an employee. If on the other hand you say "X must be done by the end of the week, let me know when you are done," that's a contractor. Providing a computer makes them even more your employee. When an electrician comes to your home, do you let him use your screwdrivers? More here and here. The IRS has clamped down on this a bit too.

Some things you might consider are a payroll service. If you are a Costco member, you can get a special rate with Intuit Payroll Services, who will gladly fill out all your paperwork, send in all your taxes, send you the right forms filled out correctly at the end of the year, and deposit your employee's money directly into their bank account for about $30 per pay period. It costs more than doing it yourself, but it's *right*. You will also need to look into your state's regulations concerning employees. Once you have employees, you need to worry about stuff like Worker's Comp and Unemployment Insurance and required informational posters.

Another option is to consider a temp agency. You pay the agency, the agency pays the worker. Sure you pay a higher hourly rate, but the workers are pre-screened and you don't have to worry about the paperwork.
posted by ilsa at 10:38 AM on September 14, 2007

I was given a long and lengthy lecture about hiring "employees" a while ago, and the lecturer made me aware of the fact (apparently) that when you hire someone as an "employee," you're responsible for their pension and welfare, as well as a few other responsibilities and tax obligations. When I hire overhire labor to work with me, everyone is paid as an independent contractor, and they get a lump sum payment. It was explained to me that it is the easiest way.
posted by jimmyhutch at 11:21 AM on September 14, 2007

Ugh... OK, I did this back in the day when *I* was a one-man web app dev shop, and ... let's just say that I'm still paying for it now.

The answer to most of your questions should be sought from whomever does your books, preferably a CPA. You do NOT want to try to do the taxes yourself. (That's what I'm still paying for.) Don't just go with a payroll *service*, use an actual accountant. There's effects that employees have on your taxes as well... both extra tax liability and extra things that you can expense.

If you're looking at hiring someone because you think it'll be cheaper or more effective than a contractor, it's really not. Ex: I paid a full-time employee $32000 per year. That $2666.67 per month. The employee's share of social security alone bumps that take-home down to about $2400, but bumps YOUR cost up to $2864. Do the same for state employer share taxes like unemployment. Each paycheck ended up costing me WELL over $3,000 to write in the state I was in, Oregon. Makes the cost of a laptop seem paltry in comparison, doesn't it?

(FYI: Someone is a contract worker if they bring their own equipment, i.e. laptop. Someone is an employee if you provide equipment. I think you either have to provide equipment or provide a stipend instead of equipment if the employee uses their own stuff.)

You just need to find some really good contractors. Really, I'd do anything to avoid the paperwork if I were you... contracting something is just a direct expense that you get to write off.
posted by SpecialK at 11:36 AM on September 14, 2007 [1 favorite]

Thanks, everyone. Great info so far.

Re: the computer, I'm just trying to keep costs down. I run OSX, so it is a pretty good chunk of change to get a decent system and then buy some apps, specifically Photoshop. I don't really like the idea of letting the part-timer use my computer b/c that would make me less efficient. My target employee was someone with intermediate web experience, so I assumed (maybe mistakenly) that that type of person would have their own computer. It seem like a waste to buy a full system that will be underutilized (i.e. 10-15 hours per week).

@lisa - thanks for the links. Very useful stuff. And good point about Costco. I am a member and will check out their service.

@SpecialK - Wow. Serious advice. I really need to do some thinking. In the back of my mind I was afraid of that.

It's kind of a shame that this is such a hassle. I really just wanted to find someone to simply help out around here. I thought in return I could give a college kid a little extra spending money. I'm nowhere ready for a full-time employee, but I definitely need help.

As I mentioned, I do work with remote contractors for definable projects. That works fine. The challenge in front of me now is that I have a lot of very small website 'maintenance' and similar tasks. To me it seems much easier to work with someone in the same office to get these accomplished.

I'm getting away from the original topic of this questions, but I have concerns about farming out a laundry list of website maintenance projects to a (potentially remote) contractor. In a typical day, that person might be working with about a dozen different sites. That means I need to provide FTP and/or admin access for those sites. For some reason, I feel more 'secure' handling that through an employee.

I've looked into services such as BrickworkIndia (www.b2kcorp.com/), but again, I'm concerned about security.

Any other advice (even off topic) is appreciated.
posted by jpep at 12:40 PM on September 14, 2007

shameless self-promotion sent to your email, jpep.
posted by heeeraldo at 1:08 PM on September 14, 2007

@heeeraldo - never received anything??
posted by jpep at 1:15 PM on September 14, 2007

You can subcontract that boring web site maintenance work and let your "helper" handle their own taxes and paperwork. For example, I do web site maintenance for a bunch of different sites, with FTP access to each. I just keep track of how many hours I spend on each one and turn in a bill for services at regular intervals. I'm responsible for my own taxes and "self-employment" social security payments. I have a full-time job that covers the bulk of my tax liability, but if you contract with a student, they'll have to think about making quarterly estimated payments. But that's their headache, not yours. It's the web; there's no real reason they have to work in your office. You just need to find someone you feel you can trust.
posted by Joleta at 2:23 PM on September 14, 2007

If you feel uncomfortable trusting someone (and it sounds like you are not planning to hire someone you already know), if you provide the computer, you have the right to track what goes on, on it.

I got nothing, but I just happened to think of that. If they provide their own computer, you don't have any right to look at it. (Excluding some contractual arrangements that would sound hard to enforce and not likely to get a student to allow what you'd need. IANAL.)
posted by unrepentanthippie at 1:14 PM on September 15, 2007

jpep, I'm one of those guys that would LOVE to have your laundry list of small tasks to do. I've got about a spare hour each evening right now, and I could use the income. :-P I'd just set it up so that you send over a to-do list (OmniOutliner, from Omni Software Group -- Mac software -- is great for this, because you can attach things like pictures and zip files to bullet points in an outline) or set up an online to-do list and they can get checked off as things go. There's ways to make this manageable for both of you... just think about it for a bit. There actually are a few consultants I know of that specailize in this kind of thing.

And also, not having a college-student type person in the office doesn't mean that you can't contract one. Find someone who's really involved in web dev and throw some money at them.

It's not unreasonable to ask contractors / consultants to come into the office for training on a system or a meeting, but they can't work specifically from your office and you can't tell them how to execute their job besides training them on your systems.
posted by SpecialK at 9:58 PM on September 16, 2007