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risk by paying employee cash(under the table) or not?

Husband & wife owns a tiny neighborhood convenience store(sells groceries, beer & wine, lottery) & works 7 days a week (about 80 hrs/week). They've been working in this arrangement for past 5 years. They're getting a little tired physically cause they don't have any days off & bills need to be paid.

One day one of customer asks if we would hire him part time.

He says he has a regular full time job(cashier at some market similar to ours but bigger) where he pays taxes. Since he currently works Mon-Fri, he says he can work for us just on Sundays(9 am to 8 pm). But he'd rather want to be paid cash(at minimum wage($7.50/hr)). If we hire him, we can have Sunday off to relax.

Should we hire him with this arrangement? Any problem with this arrangement? Would you hire him with this arrangement? The store is in Los angeles by the way if that matters. I am just afraid of IRS or employement agency or some government agency might come after me later on. Or will IRS give us a break since we pay taxes and the potential part-time employee pays taxes on his other full-time job?

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Reply to
Lee Lee

Reply to
Lee Lee

DISCLAIMER: I'm not an accountant, and I'm in no position to give legal or financial advice.

withhold income tax. You also need to withhold FICA tax, pay unemployment insurance, and workers comp. It doesn't matter that he is already being taxed at another job. That other job is paying taxes on the income _they_ pay him. All income you receive must be taxed.

If you have two jobs, _both_ jobs must pay taxes on the money they are paying you.

This PDF file from CA should answer all your questions:

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Reply to
Peter Jones

The ethical answer is to raise his hourly wage to offset any taxes he has to pay and keep him on the books. It's a small price to pay to get to have a Sunday off while following the law.

Reply to
Rocinante

Should we hire him with this arrangement?

The ethical answer is to raise his hourly wage to offset any taxes he has

The potential "employee" does not want to pay taxes on those earnings but the employer is assuming more risk with unreported earnings. (extra FICA penalties & interest) I agree with previous posters about adjusting the wages and following the labor reporting rules.

Reply to
John

You may be able to get away with it, as long as everything goes well. Meaning that there isn't any excessively intimate audit. And that everybody keeps their mouth shut.

But, imagine that some auditor, or licensing person (for taxes, or immigration enforcement, or the city/county business licence, or the booze, or the lottery tickets) walks in. And asks the guy behind the counter, "Who are you?" Followed by, "I need to see the paperwork for this employee."

Or imagine that you have some serious conflict with this off-the-books employee. Like maybe you have to fire him for stealing. And he may want revenge. With the first idea to turn you in for your failure to make the payroll tax filing, etc.

And, if he is inclined to cheat the taxman, then maybe he is inclined to cheat you, as well.

And FORGET about the IRS "giv(ing) you a break." Not a chance. If they catch you, they will tell you to either pay up on the RETROACTIVE payroll taxes, SS deductions, penlites, etc, all the way back to first hiring him... or they will order you to shut down the whole business.

Reply to
Usenet2007

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