How to deal with someone who only wants to be paid "under the table" legally speaking ?

**Ambrosia** · 06-04-2010 10:15 AM

I am starting up my online business with a new line of clothing.

I have met several seamstresses over the past few weeks and found one that really have all the requirements and skills I need.

The problem is that she INSIST on being paid cash "under the table" with no IC contract or paperwork associated with her work.

She has solid references in terms of reliability and worked with several other business owners, so I am not too worried about her being dishonest with me, but I really want to start my business on solid grounds and being able to sleep at night, knowing I could be audited the next day...

How could I address this ? Should I start looking for a new seamstress then ? Could I pay this seamstress cash but keep a record for myself and put that in MY tax report at the end of the year ? Please, give me some input on that one !

Much appreciated,

Kathleen

**ciaossu** · 06-04-2010 01:29 PM

Legally, I would say you should at least have a contractor type contract with her to be able to write off taxes. This is by far not legal advice but if you want to keep her talent, the only other possible way is to pay her like paying a service (think dry cleaners to get your clothes done) as a customer (your business is her customer) and write off the payments as a business expense. Otherwise legally, you need someone who is willing to be a contractor for this to work, at least in my opinion. Again, this is not legal advice and I wouldn't recommend it normally.

**Parvaze** · 06-04-2010 05:11 PM

If you want to start your business on a firm legal footing you really need to have people who you will be able to have written contracts with. Keep in mind that if you keep records of payments you make to individuals you are required to file the relevant paperwork with the IRS and that in turn could trigger an audit if you are not reporting correctly.

**riddings** · 06-04-2010 07:06 PM

I'd read the IRS classification for an Independent Contractor and just follow the necessary steps to maintain that relationship...

I think it's perfectly acceptable to pay in cash - however, I would keep a CASH receipt book and have her sign it everytime you pay her - this give you a receipt which is good enough for the IRS... To really make the IRS feel all warm and fuzzy, you should also have this person fill-out W-9... This is for your records and any bad information on that form is between the person filling it out and the IRS...