Ruth has always worked solo but is thinking about hiring an assistant. She’s wondering where to start and how to pay someone. Great question! Michael & Allissa discuss their thoughts on this episode.
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Michael Reynolds Hey, everyone. Welcome to a Q&A episode of the Massage Business Blueprint podcast. I’m Michael Reynolds.
Allissa Haines I’m Allissa Haines.
MR And we’re your hosts. Welcome, welcome. Thanks for joining us for another Q&A episode. We have a great question today. One of my favorite areas, which is hiring and, you know, teams and stuff. So we’re going to play this one and after our sponsor we will talk about it.
Listener question Hi, Michael and Allissa. This is Ruth, and I have a question. I have always worked entirely by myself, but there are times when I fantasize about hiring an in-person, not virtual, assistant. One of the things that blocks me from doing that is just feeling overwhelmed by the legalities and the paperwork. I have no clue what to do about taxes or tax forms or, you know, I would want to be completely legal and not under the table about this, but I truly don’t know even how to begin. So any input you could do — you could provide that might make this prospect of hiring someone local to help me with some clerical work would be super awesome. Thanks.
MR Cool. Thank you, Ruth. Great question. All right. Let’s hit our sponsor, and then we’ll talk about it.
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MR Cool. We love Yomassage. Thanks, guys.
All right. So what are you thinking? I know what I would do, and as —
AH I want to hear what you would do because you’re the guy who has employed people previously.
MR Okay. So here’s what I would do. So first of all, there’s more one path to doing this. I don’t think there’s necessarily one, like, set in stone, right way to do this. There are plenty of wrong ways to do it, [laughter] but there are some, you know, a couple — two or three or a handful of right ways, I think, to do this.
So thank you, Ruth, for the question. I think a lot of people probably find themselves in this situation. You know, a lot of solo practitioners are thinking, okay, I want to hire my first team member. Maybe it’s another therapist, maybe it’s an assistant, like you described.
So first off, Alissa and I talk a lot about employee vs. independent contractor. This is actually one of those situations where I would probably say it’s perfectly fine to make your assistant a contractor, if that works better. This is not what I would do, specifically, but I’m saying it’s not wrong, in my opinion, because if you’re hiring one person — or contracting, in this case, one person to do one specific thing and there’s no other employees, you’re not really running into that situation where you’ve got multiple people doing the same thing, which kind of bumps up against that IRS, you know, definition of people doing the same work in your company. So that, I think, is fine, and it’s probably a lot easier for a lot of people.
And so what that would look like is you would work with someone and say, hey, do you want to be my assistant. Okay. Great. Okay. They would send you an invoice, maybe every month, with whatever hours they worked, and you would pay the invoice. And depending on what their entity is, you could issue a 1099 for them, which is a tax form that your accountant can put together for you at the end of the year, or if they’re an LLC or their own business, you can just pay them via invoice, and it’s really kind of simple. That’s perfectly fine.
You just have to be careful that you don’t bump up against those other boundaries and definitions of a contractor vs. employee by, you know, dictating what they wear or dictating the hours, specifically, they have to be in your office or wherever you’re working. So you have to treat them like they’re running their own business because they are. So that’s one path. It’s perfectly fine. That’s not what I would do.
What I would do, just because I just like this path a little better, I would just make them an employee. If you want to set them up as an employee, it’s actually pretty easy — pretty straight forward. I use a payroll system called Gusto, that I love. There’s a cost to it. It’s, like, 40 bucks a month. There is payroll, through QuickBooks as well, that’s like $30 a month. It’s a little bit cheaper. They take care of all the taxes for you. They do the payroll taxes, the filings, the employee will not have to worry about their own quarterly estimates. So if you want to proactively make it a little bit easier from a tax standpoint for your employee, that actually is helpful to them.
You know, unfortunately, a lot of employees get in a situation where they’re actually contractors and they should be setting aside quarterly taxes and they don’t, and they can get in trouble. So one thing you can do is make them an employee, which means they won’t have to worry about it. They might not understand it, necessarily, but it’s helpful in the long run in a lot of cases.
So put them on payroll, make them an employee. You click a few buttons at payroll time and it direct deposits. It’s really easy for them. You just put your hours in. That’s what I would do, personally. You can be a sole proprietor and run payroll. I would probably take this opportunity, though, to become an LLC as well, if it’s cost-effective and it makes sense for you. The liability protection is useful. And to run payroll, you will have to get an EIN. So you’re going to have to go to the IRS website, spend about ten minutes there, get an EIN for free, which is an employer identification number, which means you have a tax ID for your business.
So again, employee, contractor — both paths, I think, are okay. I, personally, would put them on payroll using something like Gusto or QuickBooks payroll. The software does all the work for you for the most part, and it’s just a nice, clean way to employ them. So that’s what I would do.
But I’m curious what your thoughts are, Allissa.
AH I would do the same thing. I would put them on payroll, but I would use Square Payroll because —
MR Oh, I (indiscernible) Square Payroll. Interesting.
AH — yeah. It’s Square Payroll, and I’ve heard really good things about it, and I think it’s a little bit cheaper than Gusto. But if you’re —
MR I’m going to look it up right now.
AH — and it’s, like, a service. I’m a big fan of consolidating whenever you can. So if you already use Square to accept credit card transactions or online transactions and things like that, I would definitely use it because it’s one less thing — one less software or subscription or, whatever, you have to purchase. But yeah. I think I would ask your tax preparer if — what — how they feel about an assistant, like, an in-person live, local assistant being an employee vs. a contractor, and I would go with what their opinion is. I think it could go either way on that. I’m hesitant to say it would be okay to be a contactor. I think you should get the advice of a tax preparer — your tax preparer, who knows your business and your situation and give you advice on that.
But yeah. I would go with a payroll service. I wouldn’t try to do it myself. There are plenty of services where they’ll give you, like, the little W-2 that your employee needs to fill out, and they fill it out, and you punch that information in like a trained monkey, and it spits out what they need to do. You can set up an auto deposit. It will automatically take out and send in your taxes. It might not automatically send in your taxes.
That’s, actually — I think everything can be hooked up federally. I think states, when I looked into this, are a little bit different. But it will tell you — the IRS will tell you what you need to do to pay the appropriate taxes for the feds and your state. Use a service and just — I would probably run payroll every two weeks or, if your employee agreed, once a month, just to take all the admin crap out of it. Less admin is better than more admin. So you know, twice a month would be great or every other week would be great. Yeah, you’re going to add a little admin time to run payroll, but you’re going to have an assistant taking a whole bunch of other stuff off your plate. So there are services that take the pain out of this. I would use one of them. And that is my —
MR Yeah. I looked up Square and it’s the same price as QuickBooks. So $29 a month, plus $5 per person. So it looks like it’s pretty identical to QuickBooks payroll pricing.
AH Yeah. And there’s a lot of other options out there. I was searching on this a little bit. There’s plenty of payroll services for small business, varying from $20 a month up to, you know, whatever. It’s pretty easy to google and find more information about any particular payroll option, but there’s plenty out there.
MR Yeah. And I’ll take this opportunity to just also note that it’s really important to have a separate bank account for your business, especially when you’re doing this. So you know, a couple of housekeeping things that go with this are make sure you have a separate business banking account, the EIN for payroll, and again, I do encourage you to consider becoming an LLC. You know, talk to your accountant, but I do encourage you to consider that as well.
Great question, Ruth. Congrats on expanding your business and hope you find the right person.
All right. Well, thanks everyone. Appreciate you joining us today. We love the questions. Send more questions to us at massagebusinessblueprint.com/talk. You can click the button there and record your voice, and we’d love to hear your voice and answer and discuss your question.
So thanks, again, for joining us today. We’ll see you next time.