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Lesson 8 of 17

Employees And Contractors

Craig Heidemann

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Craig Heidemann

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Lesson Info

8. Employees And Contractors

Lessons

  Class Trailer
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1 Small Business Failures Duration:11:34
2 The Business Plan Duration:11:28
3 Four Types Of Business Duration:10:34
4 Creating An LLC Duration:08:16
6 Obtaining A Federal EIN Duration:13:15
7 Sales Tax Duration:08:51
8 Employees And Contractors Duration:11:34
10 Releases And Permits Duration:05:31
11 Relevance Of Copyright Duration:08:35
12 Copyright Registration Duration:11:55
13 Copyright And Infringement Duration:09:19
14 Licensing And Transferring Duration:11:26
15 Accounting And Goal Setting Duration:11:36
16 Financing Your Business Duration:10:37
17 Bookkeeper Vs Accountant Duration:06:18

Lesson Info

Employees And Contractors

we are going to talk about employees and contractors, then we're going to talk about the contract. So this is great stuff buckle in. Again, If you have employees, if you have independent contractors and if you're a creative professional, you must understand this and I've summarized it for you on the next slide. If you're an independent contractor, the copyright is owned by the independent contractor. If you've hired the independent contractor, you don't own it. So if I'm a graphic designer and I farm some work out to another graphic designer and he sends me the design, I don't know the copyright to that design. If I'm a photographer and I hire a second shooter to work as an independent contractor to a wedding, unless they have a written agreement, he owns the copy, owns the copyright to it makes sense your employees. The copyright will always be owned by the employer. If there is a true work for hire agreement where it is in writing that I am hiring you on a work for hire basis, then t...

he copyright is owned by the commissioner or the person that hires the person doing the work for hire work. These are three fine points that you have to understand in order to manage your intellectual property as a creative business. Let's recap Hey, independent contractors. Second shooter's non employees. Somebody that I'm not holding taxes out on, somebody that I don't have a W. Four form from an independent contractor at 10 99. R they own the copyright to whatever they create. Every time they push the shutter button, they own it. How do we get around it? We convert it into a work for hire. And I'll tell you later, I've got my independent contractor agreement on my forms disk. If you have that, you'll use the independent contractor agreement and it transfers that copyright to you as the owner. Again, your employees. No problems. The forms that we use uh to to bring an employee on board or the IRS. Form four, that's where they give us their Social Security number. The state form, which is a Washington W. Four, a California W. Four. And then don't forget the I. Nine because there's some immigration requirements to hiring folks. You have to fill out the I. Nine. Now when we have employees on the next slide, you'll see that we have to withhold taxes possible or comp issues. This is minimum wage. Everybody understand there's a federal minimum wage of about 7 65 an hour. If you're working excessive 40 hours a week, you have to pay on time and a half um with the overtime requirements. And there are certain deadlines to issue them, W twos. But employees are generally worth it because you can control them. We're gonna talk about this right to control later. But I like employees don't be afraid of them. The I. R. S. Gets to decide whether or not you've hired an independent contractor or an employee. The heck you say the I. R. S. Can't tell me that that's an independent contractor because I told him he was a 10 99 employee and I wasn't holding any taxes out on him and I certainly wasn't going to give the government any texas because he's an independent contractor. The IRS has a 20 factor test that we're gonna look at right here if you're an employee. Um And I don't want to get bogged down in this because I want to get to the contract discussion. But we we can't pass this up. An employee generally is only gonna work for, you were an independent contractor, is gonna work for lots of folks. Okay? An employee generally the employee can't lose money on the gig. An independent contractor has the opportunity to lose money on the gig. What's that mean? Well, An employee, if they show up for work, what are they going to get their hourly rate or their day rate or whatever? They don't have an opportunity to lose money. If I hire a plumber and the plumber comes in and says, I'll fix your sink for 30 bucks. And it turns out the part for the sink Is 60 bucks. Can the employer, if you're going to include the part, lose money on that gig. Sure. Generally the employees are going to use your equipment. Independent contractors are going to use their own equipment. So if you've got independent contractors, as you call them and you're handing them cameras and equipment and lenses and lights yikes, um you have the right to control your employees as far as the time scope and manner of their work and again see what says the word right doesn't mean you actually have to be cracking the whip, telling them what to do. But do you have the right to do it if you do that you're an employee. If you have if they're not subject to your control. Independent contractors generally employees do work typical of employees and independent contractors are typically independent but here's a big one. Uh The value the benefit of independent contractors are I don't withhold taxes, there's no work comp but my insurance doesn't cover them. So when bob drops his what we can get that Nikon D 800. Is that what you're gonna get when you drop that on the baby at the christening or whatever we're shooting or you hurt somebody or you do something. My insurance is going to say, I'm not covering bob bob, he doesn't work for you, bob's on his own. So my insurance doesn't cover bob bob being a cheapskate. He doesn't have his own insurance because I didn't bother to get a copy of his insurance form, which my independent contractor agreement requires bob to certify that he's got insurance, don't hire people as independent contractors that don't have insurance or you're gonna be out of luck. Uh there are 10 deadlines. So if I pay bob more than 600 bucks, he's got to get a 10 99 at the end of the year. And the big one is independent contractors. They get to compete against you unless you have a non compete agreement. Okay. The pros of employees or they have to be loyal. Independent contractors can compete against you. So I'm never worried too much about competition. Um, so I like, I tend to like the the, well I use them both, so it really depends on your situation. All right. What do we got on the next slide, employees? In contrast with independent contractors, contractors, we do withhold the taxes, we have some work comp, we have to pay a minimum wage. Uh, let's call it done and go to the next one. Okay? So what can we do? I can use an independent contractor agreement. And again, this is on the forms disk. What's it say? It says blue steel photography located here. We're going to have an event and it's uh, it's the smith wedding and it's going to be from 1 to 3 On, you know, December 31. Here's the fee I am paying. Here's any mileage I'm paying. Who's providing the media cards, any special equipment required, um, who's doing the post production deadline to deliver images, if any, maybe bob's just given me the cards at the end of the gig and I'm doing post on it, but we go through this and in the independent contractor agreement, um it talks about that, this doesn't create an employment relationship, it doesn't make him a partner, a co adventurer or any agent of the studio. He's holding himself out to the public, performing the services of a photographer and works for other people. See what I'm walking bob through. I'm walking him through The 20 factor test. Well, trust me, I'm not gonna read this whole agreement to you, but I deal with most of the 20 factors in the agreement and then we get down to the indemnification provision that says, look, if bob hurts somebody and I get sued for bob's negligence, bob's gonna make it right and pay me back for any expenses that I incur on his behalf, including attorney's fees. And then we go to the term sheet that's on the back and it says he's going to bear all the financial responsibility, I'm not responsible, He exonerates us, um etcetera, He's got insurance and then he signs it. Um and also in there is let's see here. So he gives that to me and I save it. I keep that with the job file for that wedding. All right, then we've got what's called an employment agreement. So if I were hired an employee, I just make sure that I describe that what that employees gonna do, they're not gonna compete against me. They're not going to disclose any of my information, they're going to devote their full time and best efforts to doing their job. Um They're going to get these benefits. I'm gonna pay you as follows. Here's their job description, it's got the studio info, etcetera. I also have for the independent contractors and the uh employees confidentiality agreements. So as I train them and I tell them about my business and my customers and who I deal with, they agree to keep all of that information confidential. Um because we want to protect our confidential information to prevent competition. We can use these confidentiality and non compete agreements to protect our livelihood. We can limit it geographically. All right. So here's the non comp agreement. Here's the read paragraph. That's the one that might be too broad. Might not be broad enough. And I've got a note on it. All of this stuff in white with the yellow is all on the disk. Um And again, here's the confidentiality and non compete agreement. Okay, So payroll, quick note. We've talked about employees. Payroll is a headache. All right. Um I love payroll companies. They are cheap. They're so cheap. Um With your first payroll, here's the things you're gonna have to do withhold some state taxes. We talked about that. Withhold your federal tax. Withhold 6.2% of the employee's salary for social security, 6.2 for social security, another 1.5 for Medicare. You gotta pay 1.5. All this adds up to who's got a calculator. That's 12 4 plus 12.4 Plus 3.9. What is that? Come on bob. You're a scientist. What is all that? 12.4 plus 2. 15 3. That's what the that's what the combined FICA is 15 3. So half is paid by the employer has paid by the employee. We pay that monthly. Um By the 15th of the month, we gotta file the reports for the government. Take a look at IRS pub 15. It is a great resource. IRS publication 15. We'll tell you all that you need to know about payroll taxes. So next slide a quick note about discrimination and employment. It is illegal. There are different ways that we can get sued by our employees. It's generally an at will employment. So I always tell folks you can fire somebody because they were a red shirt to work. But with that there's also some poster requirements. And if you don't put up these posters, if you have employees, even in my house, I've got posters in my house for my employees there, you know, in the laundry room. But I've got my posters. The bonus materials do include posters, a link to get free posters. Who doesn't want some free posters and you can get it in Russian, That one is in Russian. So how about that? We put the poster up in Russian that will help those employees figure out what their minimum wage obligations are. 7 is the federal minimum wage. I can't even read that in Russian krilic. But anyway, that's included in the bonus materials.

Class Description

Ready to turn your creative side project into a thriving business? Join Craig Heidemann for an introduction to the business and accounting principles every creative professional needs to know. 

In this class, Craig will take you step-by-step through the process of setting up, running, and growing a small business. You’ll learn how to use QuickBooks to manage your finances, including managing client contracts and invoices. Craig will also help you navigate the potentially confusing tax, legal, and copyright issues surrounding small businesses. You’ll also learn how to contract and/or hire people to do the tasks you can’t do yourself. 

Whether you’re just starting out as a business owner or you’re a longtime entrepreneur ready for a refresher course, this course will give you a roadmap to business success.

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