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Old 11th July 2010, 07:26 PM   #1
CloudTenOwner
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Default Small, Out-of-home Pastry Shop. Employee Pay?

Hi.
So, I operate a small, out of home pastry business, called "Cloud Ten Pastries", and, I was wondering: My little sister, cousins and friends help out. Now, I feel bad about taking this help without pay, so, how much should I pay them?

While I do all of the cooking, they do most of the janitorial work and some of the driving.

Any ideas? Per hour please.


Last edited by CloudTenOwner; 11th July 2010 at 10:06 PM.
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Old 12th July 2010, 08:55 AM   #2
ArcSine
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That's more of a subjective matter which depends on the dynamics of the relationships.

So thus far they've been happy to pitch in for no compensation? It sounds like then you need some 'pay rate' that (a) will keep you from feeling like you're taking ongoing advantage of their friendships; (b) will similarly prevent them from thinking that you're making an undue imposition on their kindness; and (c) isn't so large that it makes it no longer worth your while to keep running the biz.

While (c) can easily be reduced to a calculation, (a) and (b) are subjective calls that depend on the nature of the relationships, the situation, and the people involved.

As a start, though, you might place a few phone calls around to see what's the going rate in your area for people who are doing similar work.

Couple of tangent thoughts, though, that you'll want to keep in mind (although not directly addressing your question). For one, you mentioned that some of your worker bees are doing some driving (deliveries, I suppose?). If they're using their own vehicles, you'll want to add a mileage or gas reimbursement to their hourly pay.

Also, whenever you're paying for personal services in a business, there are some employee / independent contractor issues that unavoidably become involved. Tax withholdings, W-2s or 1099s, some paperwork, etc. That's another topic, and you should bounce it off of an accountant who's got the expertise in this arena.

Best success wishes for your biz (great name, BTW!) Cheers!

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Old 25th July 2010, 01:11 PM   #3
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Just a further note on what was said in the other post, the IRS is starting to come down hard on employers that use independant contractors. In fact, there is a bill in Congress right now that if it passes, every single business you do business with will require a 1099. That means, if you buy something at Office Depot you would have to send them a 1099. It is completely crazy and HOPEFULLY it won't pass, because it will be a nightmare.

Also, if the person working for you as a contractor is working at your place of business watch out. If you are telling them the hours to work and how to do the work, then they are your employees and you have no choice but to pay payroll and unemployment taxes.

Best of luck,

Beth

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