Using Subcontracting To Launch A Cleaning Business
A reader writes: "My wife and I subcontract janitorial accounts so we can get experience and earn some extra money. Are there any downfalls to doing this?"
First, congratulations on showing initiative and investing in your future by getting experience before striking out on your own. I encourage you to be professional and honorable in your dealings with the contractor since he/she may end up mentoring you over time. Based on how you described your job, you may actually be an employee; rather than a true subcontractor. Please use a search engine to research your rights and responsibilities in the relationship. Note the following concerns:
1. On the surface, you are making "good money" for simply providing labor. What you need to understand is that the contractor will provide a 1099-MISC at the end of the year that is forwarded to the IRS. There can be tax consequences since you will be liable for Social Security and FICA. On a regular paycheck you would note that your employer pays half and you pay half which is deducted and forwarded for you.
2. You do not currently have a business license or identity which may cause some problems in the future.
3. You only subcontract for this one contractor who tells you when to start work, provides all the equipment, supplies, uniforms and insurance. These are all aspects of being an employee, not a subcontractor.
4. Try to branch out and get other janitorial contracts on your own so long as you do not attempt to acquire any of the contractor’s account. You could face breach of contract and litigation that would cost a lot more than it is worth at this stage in your life.
Good luck in your endeavors and make sure that you understand your rights and responsibilities from this point forward.
Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean...
Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net.