Episode 224 – 1099 vs W2 Employees for Your Cleaning Business
What You Need to Know About Your Cleaning Business BEFORE You Decide
Today Mike coaches return guest Michelle Reed on hiring her first few cleaners. Discover what questions you need to ask about your cleaning business to make the right decision for you. Michelle is looking to make her first 2-3 hires in the next few months. She isn’t sure if she should hire then as 1099 contractors or W2 employees.
For many cleaners out there looking to transition from first hand cleaner to starting your cleaning business there can be some mental and emotional hurdles. Especially if you have been cleaning for 14 years like Michelle. It’s all too common to have fears or feel like:
I have to do it myself
If I hire someone, they will screw it up
I can’t afford to pay someone else to clean
Michelle likens cleaning her accounts to being a mom. Much like with our kids, she folds their laundry because she can fold it better or cleans the bathrooms because she knows it will get done right the first time. Your cleaning business can definitely be like your child and you don’t want to worry about your “kids” aka employees cleaning your accounts poorly when you know you can do it so much better.
That “mothering” mentality can really cause you to have mental roadblocks to delegating that part of your growing business. It’s crucial to your success that you resolve those issues before moving forward with hiring for your cleaning business
KEY POINT: Address your mental roadblocks before tackling the next step in your cleaning business
In order to tackle any emotional or mental hang ups, start with your goals. Michelle gets fulfillment and truly enjoys the cleaning aspect of her job so letting go of that won’t come easily without understanding her true goals.
Currently, Michelle is deeply involved in mom’s groups. It’s where she gets the bulk of her clients and recently she decided it’s where she can find her workers.
Michelle loves cleaning because it fits into her kid’s school schedule and allows her to work when she wants and still be a mom. Over the last year it occurred to Michelle that she has a big heart for other moms out there and wants to be able to help them provide income for themselves and their families.
Michelle discovered her ultimate goal is to help other moms create income for themselves by hiring them to do the cleaning. In order for that goal to be reached she is going to have to make that emotional switch from ” I can do it better so I have to do it myself” to “I need to teach and support them and be OK with it being a learning process until they can do it just as good as me”
Let’s expand on the children analogy a little. If your goal is to clean your child’s room, it’s just best that you do it yourself. But if your goal is to raise a functioning member of society that can take care of themselves and clean their own room, you are going to have to take the time to teach them and be OK with it being a learning process.
KEY MINDSHIFT: I am not here to clean this person’s house, I am here to provide an income to other mom’s like me
If your goal for your cleaning business is to feel good knowing you’ve done an amazing job, hiring employees may not be the right move. Having to go through a training process is going to get in the way of your goal and ultimately make things 100x harder if not impossible for you to succeed.
But, if your goal is to develop people and provide income to other moms and ideally income for yourself for work you don’t have to perform NOW you’re ready to hire!
With Michelle’s goal in mind Mike recommends hiring W2 employees.
Disclaimer, Mike is a podcast host who has run multiple businesses for the last 20 years. He is NOT an employment lawyer. All of these views are just his own opinion and experiences.
We strongly advise anyone in this situation to find an employment lawyer who is an expert in your state. If you decide to hire 1099, make sure they can help you set it up correctly and will stand by you in court should you ever get audited so you aren’t there standing all by yourself.
With a 1099 contractor, you lose a lot of control. They can come and go as they please, work for other people, technically wear whatever they want etc. They have a ton of freedom and you have very little control over what they do.
An example of a 1099 employee would be your CPA. He/she works for other companies too, you don’t dictate when they work or what they do other than providing you the service you both agreed to.
The benefits to 1099 workers are that there’s no workers comp, less paperwork, and generally less onerous of a process.
The disadvantage is if they want to go work for a competitor at the same time they absolutely can do that. If they won’t wear your uniform you can’t really make them. If they don’t want to work a schedule that caters specifically to your cleaning business, they don’t have to.
KEY POINT: 1099 Contractors are a little less paperwork but a lot less control
Often, when people use 1099 employees they’re trying to circumvent the law. They want them to act like an employee and they want to treat them like an employee but they don’t want to have to pay them like an employee.
There’s nothing morally wrong with that, but there’s always a risk you run of them taking off whenever they feel like it. Or worse the government coming in to audit you and deciding that they were not really 1099, but a W2 employee and you owe them taxes for the last 5 years!
RESOURCE ALERT: Check out this blog by Quickbooks on W2 vs 1099
If you aren’t sure and don’t want to risk your cleaning business should you get audited, the safer bet is to always hire W2 employees. The government isn’t going to come in and audit your W2 employees and say “hold on, these were contractors, here’s your money back!”
Now that you are armed with that knowledge, if you’re ready to hire follow these simple steps:
Understand your true goals
Decide if hiring employees for your cleaning business works towards your true goals
Decide if you want to hire W2 contractors or W2 Employees
Consult an employment lawyer to make sure you’re setting them up correctly and protecting your cleaning business from future audits/lawsuits
Listen to a few of our podcasts on Core Values and Hiring
Finally, Michelle shares her 14 years of cleaning wisdom in the…