How do you pay the help

[Mark Slade]

I'm to the point where I need help with shoots.....most notably I need a sound/boom person. It is not my intenet to have this person be an employee but rather a contractor....(though I need to check with my acct on things).
Do they usually get paid at the end of the job....end of the month.....or do you just go with the flow as to what the help wants??

Thanks
Mark

[Don Bloom]

It works both ways for me. What I mean is this. FIRST and foremost, I am an Independent Contractor so I get a 1099 (or a bunch of them) at the end of the year. I have no benefits provided by the people I might do work for, be it a hotel for AV work, or another studio as a camera operator or whatever it is I do.
I invoice the client after the job (generally within a day or 2) and expect to be paid by that client within 30 days. This is for jobs where I am hired as a 3rd party. IOW if a friend of mine gets a call from a client of his and he needs help on the job he calls me. I am not working for his client per say but my friend, so the invoice goes to him and he pays me not his client.

On the other hand if I hire him for an AV gig at a hotel, he invoices ME, I pay him and at the end of the year, we trade 1099s back and forth.

We are all independent contractors and as such have no benefits such as pension, insurance etc..A 1099 of course is only needed if you have earned $600 or more for the year (or if you are writing the checks to someone else if THEY earn that amount for the year on your jobs)

There should be no question about this subject. Employees are expensive. Insurce, 401ks, unemployment insurance, liability insurance, workmans compensation...I have never had an single employee in 40 years of self-employment but I have had a lot of peole work for me just like I've worked for a lot of people and have never gotten a W2.

If someone does a job for me or helps me on a job, if they don't invoice me or they don't put down the right hours and they don't correct it within 30 days, well they have a problem. I will probably have already invoiced my client and they pay me based on the invoice I send them. I can't go back to my client and say "oops, the idiot I had working with me forgot to invoice you for the 2 hours of OT"..my client would say "too bad" which is exactly what I say to the guy working for me on that job. This is a business and needs to be run as such and BTW, it works the other way around as well. I have been told I am pretty anal about my invoices/times etc and I am. That's my money. I hate working for free.

[Kevin McRoberts]

So far I've only hired PA's, who get free lunch/dinner and cash at EOD.

Larger roles and paychecks require invoice and check payment simply to appease tax regulations.

[Chris Davis]

If you're telling them where to be and what to do and provide direct supervision, they're not a contractor, they are an employee.

If you give them a project that they complete on their schedule without your supervision, then you can probably get by calling them a contractor.

You can get into serious hot water with the IRS by simply calling someone a contractor to avoid paying the costs involved in employing someone.

Part-time employees are not that expensive. I have two full-time and two part-time employees. The part-time employees basically cost me about 8% over their hourly wage. Running afoul of the IRS is MUCH more expensive.

[Don Bloom]

Originally Posted by Chris Davis

If you're telling them where to be and what to do and provide direct supervision, they're not a contractor, they are an employee.

If you give them a project that they complete on their schedule without your supervision, then you can probably get by calling them a contractor.

You can get into serious hot water with the IRS by simply calling someone a contractor to avoid paying the costs involved in employing someone.

Part-time employees are not that expensive. I have two full-time and two part-time employees. The part-time employees basically cost me about 8% over their hourly wage. Running afoul of the IRS is MUCH more expensive.

Sorry to disagree Chris but not true according to my lawyer who is also my accountant and worked for the IRS. If they are not a W2 hired with benefits or work for multipe employers they are an independent contractor without benefit of unemployment insurance, liability insurance unless they provide they're own, workmans compensation if they get hurt on the job, steady hours, paid vacation, paid time off, 8 hours with a lunch break and breaks according to the labr laws. If you get or give a 1099 at the end of the year you are not an employee.
Large AV companies do this as a practice. I recently did a seminar where the hotel it was at rented all the gear from the AV company and supplied the labor as well. Yes the people that brought it over in the truck and loaded it in are employees making $10-$15 an hour. The crew, soundman, lighting guy, myself and another camera op don't get paid by the hotel (obviously) but provide an invoice to the AV company who then pays us and at the end of the year we get 1099s. The AV company provides no beneifits to me or the other contractors what so ever. We are not in the employ of the AV company but used on an "as needed basis" and my checks come in written to my business name not my name.
Just because someone tells you where to be and when to be there doesn't mean you are their employee in the legal sense of the word.

[Brian Brown]

Yes, I'm with Don on this one. The IRS themselves state that there is no "magic formula" for determining one over the other. See Independent Contractor (Self-Employed) or Employee?

Gig-work like video production lends itself well to independent contractor work, since it's often sporadic, rarely regular, and the paperwork and hassles are much, much less with a contractor to contractor relationship between professionals. Just because I tell someone what to do on-set doesn't mean that they should be an employee of mine. My clients tell me what to do all of the time, and often directly "supervise" or advise me, but would be laughable to ask them to be my employer. It's similar to general contractors hiring sub-contractors in the construction fields, and the practice is common there. GC's tell their subs what to do on jobsites. If they don't perform, they're "fired" i.e. not hired-on for the next job.

Back to OP's question on pay. I always pay talent, DPs, sound techs, and grips at the end of shoot day and usually in cash. This makes them much more likely to show up on-location the next time I crew up than the producer that strings their people along with "the check's in the mail next week, I promise" line. I do keep track of payouts, and it's not that difficult. I 1099 the few people that rack-up more than $600 a year from me.

Chris, I question that 8% figure. That likely covers the employer's matching FICA and unemployment taxes, but what about workman's comp insurance?

[Mark Slade]

Thanks guys.
Brian....I like your idea of paying in cash at the end of the day. Certainly would make me want to come back.

As to contractor/employee....I talked to my accountant at length today and he says that it doesn't matter whether I tell them what to do/where to be. That would seem to me to be correct at least in so much as my clients tell me what to shoot where to be and I get 1099's from them. That certainly doesn't mean he's right.....but he knows more than me about it so I'm going the contractor route.

Mark

BTW....I've read that link to the IRS before....and again today since it was posted. I still have yet to figure out where in that document it tells you "for sure" how to determine contractor vs employee!!

[Don Bloom]

Mark,
I think it comes down to thinking about it in a logical sense.

Let's say I hire Mark Slade to work for me in my video production company doing things like answering the phone, filing paperwork, driving the truck to deliver equipment to a gig, loading that equipement in, helping to set-up, running the camera, striking the gear, loading out and driving it back to my office. You agree to come to work for me doing all of those things and anything required of the job. You agree to work Monday thru Friday from 8AM to 5PM with a 1 hour lunch break daily along with 2 15 minute coffee breaks daily.You agree to do this for $15.00 per hour. I on the other hand agree to pay you once a week based on your time card that you use to punch in and out with. I will also pay you overtime at the rate of 1 1/2 times your hourly rate for any hours over 40 per week, I agree to pay your health insurance for single coverage, if you want family coverage you pay the difference, I agree to contribute in matching kind to your 401k up to a certain agreed upon dollar amount and I am also paying for workmans compensation insurance for you should you get hurt on the job. You are covered under my blanket liability insurance for my business and also covered under my blanket auto insurance policy when you are driving my vehicle(s). Of course there are limitations placed on those policies but nothing out of the normal scope.
At the end of the year (actually by January 31 of the following year) I send you a form called a W2 which lists your wages earned, FICA taxes withheld, Federal taxes withheld, State income tax withheld, money contributed to things like Pensions, health insurance, dental insurance anything considered PRE TAX dollars. So your W2 reflects the proper and right figure of your GROSS income from my company.
In this situation are you an Employee or Independent Contractor? It's obvious you are an Employee.
If you don't get or give any of the above you are an independent Contractor.

I've been self employed as an Independent Contractor since 1971. Trust me, back then the IRS didn't take kindly to home office deductions, thank goodness my wife carried our health insurance, people looked at you funny when you said "I'm self-employed and work out of my home" but certain things haven't changed and the difference betwen an employee and IC can be hugh and can mean the difference as to wheather some people can survive in this industry.

BTW, I have never been paid in cash nor do I ever pay in cash. I want to get or send an invoice so I can not only track my income or outgo for a particular job but at the end of the year, it's simpler for my accountant to do my rather complicated taxes. I'm glad I don't have to figure them out. If I pay cash or get paid cash it's too easy to "make a mistake" and having dealt with the IRS on an issue back in the early 80s I don't want to do that agian. It cost me a lot of time, heartache and money. But that's just me.
BTW, this above explaination came to me from the IRS some years ago so I can only hope its correct.

[Jim Schuchmann]

One thing that generally gets missed here is that it not only depends on how you treat this employment situation, it also depends greatly on the person/company you are hiring to provide this service to you.
Is this something that they do as a business or is it just some side work?

If I hire Don Bloom to operate a camera for me, he is a business making a profit or loss from year to year from this type of activity, therefore a sub-contractor.

If I hire my neighbor that works as a camera operator for a local TV station, he would be viewed as an employee because he is not in business providing this service on an ongoing basis. His employment at the TV station is as an employee because he does not directly control whether or not the TV station makes a profit.

The critical point is whether or not the person being employed has the ability to do or has been doing similar work and running a business with the decision making responsibility to make a profit or loss from that work.

[Brian Brown]

Rather than post conjecture here, there are PLENTY of resources online to assist a producer in determining the "freelance employee" or "independent contractor" decision. Other than my IRS link above, here's another good one.
IRS Guidelines - Film & Video Industry Contractors - Feb 1 2003: Media Communications video production multimedia producer director editor camera operator writer

And yet another one, from the IRS:
http://www.irs.gov/pub/irs-utl/emporind.pdf

At the end of the day, there are no fast and hard rules. Why else would we have such well-heeled tax attorneys and accounts out there?

Intellectual property is a similar quagmire that gets beaten to death on this forum. Do your research and/or pay an advisor, and make your choices. Any advice dolled out here won't save you from the tax-man, if he comes a knockin'. Or the copyright police, for that matter.

[Chris Davis]

Irrespective of all the minutiae, you can't just decide someone is a contractor because you don't "feel like" going through the hassle of being an employer.

You can certainly get by with it for the one-off, irregular gigs. But if you have the same person accompany you week after week doing the same thing, you might find yourself in hot water.

[Mark Slade]

Don....good point about cash and an invoice from them. Didn't occur to me initially that I should have a paper trail for the $$$ I pay out.
All this extra rules stuff gives me a headache....but I guess it's good that I'm to the point in my business that I need help!!

Mark

[Jonathan Levin]

To the OP,

If you are hiring outside people to work with you, i.e. and assistant, DP, sound, make-up etc. and they are not your full time employee, then they are independent contractors.

I make it my business to always get money up front from a client to at least cover the costs of all my out of bank/pocket expenses, like those independent contractors above, as well as any rental, location fees and so on. This is just insurance (and common sense) that if I get screwed, at least I have the resources to pay everyone else. And that they will work with me again. And I'll be able to walk into a rental place and rent that Red Epic again.

You only need to send a 1099 to any of your freelance crew if you have paid them $600.00 or more. I also tell the crew to send me an invoice (or even hand me one at the end of the shoot) and then pay using a business check. Not cash. I'd avoid that. It's easier for bookkeeping purposes come year end to keep track of who was paid what and when and for what project. Bank programs like Quickbooks and Quicken do a great job of generating year end "reports" to give the accountant, and then they will issue the 1099 to the appropriate person(s)

You will need to get the freelance person's social security number, or if they are a Corporation, their FEIN number to give the accountant.

Jonathan

[Brian Brown]

Jonathan, your statement about fulltime employees vs. I.C.'s is not based upon the IRS designations and shouldn't be taken as fact. Take a look at some of the links I posted above. There are three major "litmus" test categories and up to 20 so-called questions that the IRS places upon the designations. There is a category you failed to mention with the IRS called "freelance employee" that falls squarely within many of the film industry job descriptions, and places a much larger onus on the producer as an employer. Apparently there was a crackdown within the industry back in the 90's that are referenced in some of the articles.

[Chris Davis]

Originally Posted by Brian Brown

Chris, I question that 8% figure. That likely covers the employer's matching FICA and unemployment taxes, but what about workman's comp insurance?

As I pointed out, I already have two full-time and two part-time employees. Adding another part-time employee to my payroll makes a negligible change to the worker's comp rates I pay. I think the last part-time employee I added caused an increase of $30 per year.