Hiring interns, what's the easiest way to set it up business-wise?

[beej67]

I run a small shop consulting operation, currently just me, and I have the business set up as a single owner LLC disregarded entity for tax purposes. I occasionally hire subcontractors for services, such as surveyors or archaeologists, but that's it.

I may end up in a position soon where I would like to take on a couple of college interns to help on a project or two. I have no guarantee that the work will be steady enough to put them on any kind of salary. I would like to pay them on a 1099 basis by the project, while overseeing their work and taking responsible charge of the engineering effort. Are there any legal problems with this? Am I, for instance, forced to hire them on a W2 basis by law? Business is in Georgia. Thanks in advance.



Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[TheTick]

Lots of problems associated with paying employees by 1099. Doesn't matter what you call them, the IRS has their own rules for determining who is eligible for such treatment. Tread carefully.

All of the interns worth hiring will be attracted to positions that pay, as those are the positions seeking the best talent.

 

[IRstuff]

You should read this:

http://en.wikipedia.org/wiki/Independent_contractor#Independent_contractor_versus_employee

TTFN
faq731-376

 

[KENAT]

You could consider getting some kind of job shop/staffing agency/temp agency or similar to be the middle man to alleviate at least some of the IRS issues. However, I'm not 100% sure it covers all the basis and they will want a considerable cut of the $.

Posting guidelines faq731-376

http://eng-tips.com/market.cfm?

(probably not aimed specifically at you)
What is Engineering anyway: faq1088-1484​

 

[MiketheEngineer]

A lot of inerns work for free??

 

[berkshire]

I used to run a business in Georgia, and would hire through a temp agency for short term jobs.

If you go the 1099 route as IR Stuff says you are setting up an independant contractor relationship.
If you have to unlock the door for them, and supervise their work, you have employees in the eyes of the IRS.
B.E

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them. Old professor

 

[moltenmetal]

Using engineering interns as free labour in a for-profit business is something I personally consider to be unethical and which our local code of ethics similarly frowns upon. I know unpaid internships are widespread for journalism, advertising etc., but in engineering we pay our interns- good money, a significant fraction of a fresh grad engineer's salary- and we get good work out of them, and we bill their time when they work on client projects.

You said that the work wouldn't be steady: that's no problem- but if you make money from their labour, you need to pay them, and you need the business structure which permits you to do so. Whether or not you can pay them as independent contractors (I'm not American so I don't know what 1099 means, but presume that's what it means, is not something I can offer an opinion on, other than to say that it is no problem for anyone to be considered an independent contractor in Canada as long as they don't work for only one client for a period of more than a year. After more than a year with only one client, you're definitely an employee per the tax rules and you're at a high risk of being audited.

 

[beej67]

Any college student I'd use would be paid, because I'd be charging for their work. Hard to justify to a client that I'm billing him for work I got for free. Also, as you say, hard to justify to myself.

There is a local high school that has an "internship" program where kids work an hour a day unpaid and get school credit for it, but I'm not sure I have anything that low level for them to do anyway. Once I get big enough I might nab one of them to do nonbillable or super easy stuff.

While I appreciate the input, moltenmetal, non-American opinions really do me no good here. I'm trying to figure out what the least amount of American Government Induced Headache is with this. You foreigners have no idea how complex our Idiocracy has made something as simple as hiring a guy to do some work.

Berkshire - if I set up with a temp agency, do I just use them as a vendor to pass the money through, less a cut? I just give the person I want to hire the phone number of the temp agency and move on, or does he have to jump through some sort of temp agency hoop as well? Do you have a good sense what the cut is the TA will take?



Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[TheTick]

You foreigners have no idea how complex our Idiocracy has made something as simple as hiring a guy to do some work

You really haven't heard much about hiring and firing in Europe or India, have you.

 

[beej67]

Nope. Can't believe it'd be harder. (well, maybe firing in Europe)

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[KENAT]

beej67, I'd talk to some local temp agencies to find out their typical terms etc.

If I remember correctly, we hired a temp checker and we wanted to avoid the 1099 issue. He had a staffing agency he'd worked a lot with before and so he spoke to them about working through them. Given the we'd done the work to find him we were all hoping the agency would reduce their overhead rate significantly since all they were really doing was payroll. The still wanted something like 15%, or may have been more and we ended up making the 1099 work.

Posting guidelines faq731-376

http://eng-tips.com/market.cfm?

(probably not aimed specifically at you)
What is Engineering anyway: faq1088-1484​

 

[MiketheEngineer]

I have been told that in Germnay - you have to have a new job for someone BEFORE yo0u fire them!!??

 

[DRWeig]

I use college kid help all the time, whether it's an official internship for the school or just a part-time job.

In my opinion (and practice), it sure is simple to take a W-4 from them and add them to the accounting/payroll system as part-timers. No worries then about the IRS or the Georgia red tape machine and their hunger for penalty dollars.

The extra it costs in taxes is worth every penny to have them here helping out, without worrying about getting nailed later on. The kids are generally happy with ten bucks an hour, so it's not much. They're learning.

Best to you,

Goober Dave

Haven't see the forum policies? Do so now: Forum Policies

 

[berkshire]

beej67
If you use a temp agency, you have several choices, in my case I would contact the agency, tell them I want to hire somebody, Then they could find me somebody, or I could give them the name of the person I wanted to hire.
The temp organization would put that person on their payroll, and rent that person to me. When the assignment was done I would send the person back to the agency.
I would pay a premium to the agency for the use of "their " person, it was about 1 1/2 times the hourly wage.
I would also use this as a method of screening prospective employees, I would hire through the agency for 3 months, then if the applicant turned out to be good, I would pay the agency a severance fee and put them onto my payroll full time.
B.E.

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them. Old professor

 

[berkshire]

beej67
I also used a high school work release program, where teenagers over the age of 16 could come to the shop for 2 or 3 hours during the school day, work in the shop , gain real world experience and get lesson credits.
There were a lot of limitations because of their age, in that they could not handle rotating machinery, or get near things that might hurt them. This restricted them to hand work , sweeping the shop floor or office work, but for the most part you got an exited enthusiastic person in the shop eager to find out what work was about.
B.E.

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them. Old professor

 

[IRstuff]

A job shop has the advantage of cranking the numbers for payroll, if you don't have the infrastructure. Generally, job shops have minimal requirements, particularly if you have someone already in mind. The worker just has to submit some sort of timesheet, it gets approved by you, and the job shop does the billing to you and the payroll to the worker.

TTFN
faq731-376

 

[joehvac]

In a different field I used an Employee Leasing company. I found the people, they did the paperwork and drug testing and charged me 30% of what I paid. There were no minimums. You might find cheaper companies. It was worth it to me as the employee had a legitimate job with paperwork. I didn't need to set up a payroll system. I emailed a timecard to the agency every week, they mailed out checks and billed me.