Should you hire a household employee or an independent contractor?
This is the most important piece of information you will need to know when you hire a service person for your vacation home. Anytime you hire someone to perform household chores, such as housekeeping, caretaking, or mowing your lawn, you need to determine if you are hiring the person as your employee (household employee) or if you are paying him or her for a service he or she provides through a business.
If you hire someone, tell that person how it should be done, when it should be done, and provide that person with the things he or she needs to get the job done (such as providing cleaning supplies for someone you hire to clean your home), then the person is probably a household employee, and you are responsible for withholding and paying taxes for that person’s wages once he or she earns a specific amount. In the U.S., The Internal Revenue Service determines the guidelines for this, and you should check with them to determine whether or not you have a household employee and what you need to do to be in compliance with employment and tax laws. Click here for more information on IRS rules and the household employee.
It can be hard to determine whether or not the person you hire for this type of domestic help is indeed running his or her own business or not. Despite what the person tells you, you need to check this out to make sure the person is indeed legitimately running his or her own businesses. Check to see that the person has registered his or her business name with the state and ask for proof of insurance.
Maybe you are okay with hiring someone to clean your home or mow your lawn who is not truly self-employed or running his or her own business. You can get outstanding service at a below-market rate going this route.
However, be aware that taxes are not the only concern when you hire a household employee. If the person performing work for you does not own a business, the person is probably not insured either. If the person causes damage to your property or injures yourself or others on the property, don't expect them to pay for it.
Be wary of someone who claims to be self-employed, but does not have the proper machines, tools, or supplies to get the job done. Also, if someone is providing a taxable service to you, but is not charging sales tax, something may be goofy.
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