advice on how i should employ/pay staff (self employed vs volunteers vs internship)

Discussion in 'Growing and Managing a Business' started by roamingandy, Feb 29, 2012.

  1. roamingandy

    roamingandy
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    Hi, i'm planning to open a new social enterprise running events in the local community. i dont have much money so i wouldnt be able to employ staff full time and have been exploring other options, i was wondering if anyone here can give me any advice - i would like to pay a group of recent graduates on a percentage of money earned deal but am finding it difficult to work out what employment format i can use.

    i'll make very clear that its quite likely that they wont earn any or much money, but that the pay will be divided equally between us so if they dont get apid neither do i and they are welcome to leave at any time without notice for a job offering a stable wage. if the business is going well after the 1st few months its my intention or hope that i can turn the positions into full time paid employment.


    the options i've explored are:

    self employment; its my understanding that this would allow staff to claim working tax credits deductable against their income, which would be a great safety net if we fail to make any money but i have heard that claims can take a long time to process.

    volunteers; although i believe this would prove a problem as i would not be then able to give them any money.

    normal employment under 16hrs/week so they could stay on job seekers allowance, but i wouldnt be able to commit to paying minimum wages.

    an internship, which i have struggled to find reliable information on but i believe that it would be possible to have them work unpaid and still give 10% each of any income at the end of the month. i expect this is the most likely format but i'm not sure what forms etc i would need to fill in.


    i would be really grateful if anyone has any experience in this type of thing and could offer some advice as at the moment i'm quite lost.

    thanks very muchly,

    Andy
     
  2. Business Attorney

    Business Attorney
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    You don't say where you are located and that can make all the difference in the world when it comes to paying for help.

    In the United States (which is all I know about), you have to be very careful when you treat people working for you as self employed. Mis-characterizing workers as independent contractors vs employees can create serious tax liabilities, as well as possibly leaving you open to claims under minimum wage laws.

    Treating someone incorrectly as a "volunteer" when they are expecting an economic benefit or treating someone as an unpaid intern also leaves you open to minimum wage claims if you are wrong. I have seen several articles recently about states cracking down on the use of interns by businesses where the businesses are really just using people as cheap or unpaid labor. Unless there is a substantial educational or training component that the intern is receiving for his or her efforts, simply calling a part time employee an "intern" is not enough to make it so.
     
  3. rjd1265

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    I am selft empoyed and hate it when it comes tax season. In WI you have to pay the full 15% SS tax and i get dinged another 12% self employment tax. THey make it impossible to work for yourselft in this state.

    I feel this way so I am sure if you hire self employed they will eventually feel this way too and then they work just a little less hard for you.
     
  4. roamingandy

    roamingandy
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    thanks very much for the quick replies, sorry i forgot to mention i'm in the UK.
     
  5. roamingandy

    roamingandy
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    i guess essentially its an internship i'm offering; great experience of working in their field and a good reference afterwards. its just that i feel internships are being used to rip graduates off by a lot of employers these days and i dont want to do that, if the schemes are a success i want to be able to reward them.

    also if they were able to continue claiming jobseekers allowance or tax credits for the first month while working that would be a big advantage.
     
    #5 roamingandy, Feb 29, 2012
    Last edited: Feb 29, 2012

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