205: Switching from ICs to Employees with Amber Van Denzen Suarez
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Summary:
What do you do if you currently have independent contractors (ICs) and want to make the switch to employees? There are national initiatives underway to make it harder to properly classify staff as ICs, so switching is something to consider.
Amber Van Denzen Suarez, owner of Atta Boy! Animal Care shares what the process was like for her. She explains why she decided it was time to make the change and how the switch has helped her business.
She walks us through the numbers required to make it all work and shares how she structured her employee’s pay.
Topics on this episode:
Working with ICs
Why make the switch
Stumbling blocks
Making the numbers work
Working with employees
Main take away? Transitioning from ICs to employees has its pros and cons, but the security and benefits it brings to your business are priceless.
About our guest:
Amber is the founder of Atta Boy! Animal Care. She been working in the animal field for over 16 years. She started in the field by working in the horse industry - stable hand and pet sitter. She then trained as a local Veterinary Kennel hand, Veterinary Assistant and then an Emergency Veterinary Technician for both small and large animals for over 13 years. She has a bachelors of Animal Science from University of Florida. At home she has 1 husband, 2 human children, 3 dogs - Benji, River + Sookie, 8 chickens and 3 turtles- Blue, Zorro + Stewie
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A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
SUMMARY KEYWORDS
employees, independent contractors, business, pay, staff, payroll, visits, independent contracting, clients, company, pet, big, state, tax, transition, person, sitter, process, switch, year
SPEAKERS
Amber, Collin
00:17
Hi, I'm Meghan. I'm Collin. And this is pet sitter confessional, and open and honest discussion about life as a pet sitter brought to you by time to pet and pet sitters International.
Collin 00:30
A big topic in our industry is having independent contractors or employees. But something that several have had to experience is moving from having independent contractors to then having employees and we're really excited to have amber Van dusen Suarez, owner of Adeboye Animal Care on to talk about this very topic and really excited because she's been on with us from episodes 51 and 108. So Amar'e, thank you so much for coming on again. And if you wouldn't mind, introducing yourself to the new listeners and reminding us a little bit about what you do.
Amber 01:03
Absolutely. Thanks so much. My name is Amber van Denton Suarez Yes, a long name. I know. I own Adeboye Animal Care since 2013 that previously did petsitting Allah cards unprofessionally. Prior to that was a veterinary technician for 13 years, have a bachelor's degree in animal science as well and a Certified Professional pet sitter duly through naps in a psi
Collin 01:27
been in the game for a long time with a lot of experience. And when you started out, oh, boy, did you originally intend to start off with independent contractors? or How was that process of bringing on people for the first time?
Amber 01:41
Yeah. So when I first started bringing on people, for the first time, I did opt to do independent contracting for two main reasons. One, the company that kind of helped mentor me into this industry, that's what they did. And that's what they were knowledgeable with. And I was kind of following their footsteps. So they were able to help me with that process versus employee, it wasn't as well aware or common even in the pet care industry in my area, because it wasn't even common to have a team that much when I started in that timeframe. So independent contracting was really like the only option I knew. And as for employees, it just seemed like a bigger fish that I wasn't able to fry at that moment. So I did start with icees, mainly for that. And to when I started with ICS, I didn't have consistent work. So I thought if I didn't have consistent work, why would I have an employee? Because I didn't know when I needed them, or how often I was going to be able to offer them financial compensation, obviously, for the work that they're doing. So because of that, that's why I kind of opted for ICS at the beginning of this journey.
Collin 02:57
It is it's always a journey. There's always things changing and learning to Yes, when you had like your mom, did she but you know, yeah. When you when you had independent contractors, how was it set up in your business? What How did they operate? How did you you book with, um, all that stuff? Yeah.
Amber 03:19
So I was originally just by myself doing pet sitting on the side while I had a full time job, being a professional veterinary nurse. And when I started adding independent contractors, we didn't have any software at that time, but clients were just calling us or emailing or texting us for requests. We had our calendar of clients requests on a hard paper copy situation, we would just text them updates. And during that time, we probably only had less than 20 clients, I would guess, when I first hired my first independent contractor. So I had one that I hired at the very beginning. And she was with me probably for a solid year prior to me adding on a second independent contractor. And I continued that process until I probably had nine to 10 independent contractors over a five year time span. Up until last year, actually, I've transitioned employees, January of 2021.
Collin 04:27
That's a long time to be to be operating with them. Was it easy to get them on the schedule? Whenever you needed the service? Or did you kind of have reoccurring things that it was more predictable for them?
Amber 04:39
Yeah, so it wasn't not easy. So during that time, it was the fact that when clients requesting services, back then it was more common to have twice a day visits for dogs once a day visits for cats. So it kind of made them only available for the mornings and the evenings to be able to fit that around my full time schedule as well as the contractor that I had on boarded originally. So usually it was the contractor would say I'm unavailable. And so I ended up doing most of the visits myself, as well. So it was not easy to schedule that process by any any means. I also was working overnights at the emergency clinic. So sometimes I would work a midnight to 8am shift at the emergency clinic, and then drive to my pet visit, maybe 15 to 30 minutes away, do a 30 minute visit. By that time. I've been up since you know, 11pm the night before. And it's 9am when there was a handful of time leave and fell asleep like I was like, I need to fall asleep in this client's driveway, because it's not safe for me to drive right now. Because I was just doing so much, you know, to do that. So it was not easy to schedule with original independent contractors. When I did add on more independent contractors that made it a little bit easier. I did have software by the time I had more than two. So that made it a little bit easier. But I had to have more staff than I actually needed just to cover the sporadic visits I needed covered because of their in availability as well.
Collin 06:14
Yeah, I think that may be surprising to many listeners to hear that they told you whether they were available for that sitter. And there wasn't anything that you could do about that. Because I think yes, we think oh, well, I hired the staff person bringing them on. But that's one of the key fundamentals of what separates the independent contractor from an actual employee.
Amber 06:34
I did not know much about what delineated an independent contractor from an employee, or what I like to call that gray area in between that, you know, I feel like a lot of petsitting companies now or in the past kind of distinguish independent contractors as because when you start looking at the government regulations of what independent contractors actually mean, they kind of tell you to ask these key questions to yourself, and about your business process and protocol. And if you answer a certain way, it clearly defines if you're working as independent contractors, or if you're independent contractors are really misclassified. And should be employees, according to government regulations in rules.
Collin 07:21
There's a lot that goes into that. And I think, yeah, looking at how your business is structured, and your expectations on the people that you're bringing in, is really going to help you decide which which one is going to be the best.
Amber 07:33
Absolutely, you know, when I Every business has their own quality of standards and care. And when you have independent contractors, you really can't regulate that because technically an independent contractor you're not allowed to train, you're not allowed to require them to wear a uniform, you can't tell them when they show up to visits or how to do visits, how we played that when we had independent contractors, it was the clients that were telling them what the visits were, the clients are telling them what the request, what to do during the visits, were not us at Adeboye. We didn't require uniforms, but we gave them freebie swag, we would call it you know, and if they chose to wear it, that's cool. And we couldn't require training by any means. So it was kind of just conversation, you know, it notes and what ideals were and you know, all this, you know, quote unquote, gray ways to try to get around the process of what actually dependent contractors are because independent contractors should have their own business insurance they are, they should have other clients outside of your business. So technically, you can't have them sign a non compete, because they should essentially have their own business and you're hiring them to do their services for your company. Technically, they don't have to wear uniforms, technically, you can't train them, technically, you know, technically, technically, they have to, they have to invoice you and you have to pay them the rate they choose to be paid, and when they want to be paid. So and one of the biggest things in some states too is if you have a person and a primary duty of your job, or of your company, so the thing that primarily makes your company what it is, then it shouldn't be an independent contractor, either.
Collin 09:13
You touched on there about pay scale and pay rate because many of us set our pay rates and we go okay, it's $20 for a walk or it's $80 for an overnight or whatever. And then you but you know you set a very key phrase there of the independent contractor then tells you what their rate is. So how did you make that work with them?
Amber 09:31
So when I started with independent contractors, I specifically said this is what I can offer. And then they would say yes, I'm okay with that. And I did it per visit. So piecemeal or pay per project type job, not hourly. And so I kind of said this is what I can offer and they agreed and then the independent contractor for my husband sign, which was just like a contract indicated the price I would pay per time. Visit I offered 30 minutes, one hour overnight, etc.
Collin 10:03
But then they would have to invoice you showing all the work that they had done and match your records and things. So
Amber 10:09
every sinner which they hated, that was one of the big perks that when we did transition, the person that were independent contractors with us now employees, they hated invoicing, they would have to create an invoice, they would have to go on to the software and look up all the visits, copy and paste the visits and the amount of time for each one, calculate how much we owed them for each type of visit, send us an invoice and then we paid out them. They're there, the wages of you know, their invoice that they sent off to us. And some senators would forget to do it. And it would be two months to back day that we'd have to, you know, they would have to do their invoice and we'd have to pay them two months and others would do it every week. And so it was very a pain in the butt for us myself too. Because when I got an invoice, I had to pay it in a timely manner that was required. So sometimes I'll be doing payroll every day because one person sent in their invoice on Monday, and you haven't sent it on Tuesday and the other didn't send it for two months. And I'm like waiting to pay out their wages, which makes your bank bank you know, numbers monkey too.
Collin 11:07
Yeah. Yeah. Well, I mean, you mentioned already have already, you had to have overstaffed because of filling in all the gaps or the one offs, then that you had to as independent contractors, and then the headache of all the paperwork and keeping everything organized. What else was it that maybe wasn't exactly, you weren't able to run the business that you wanted to when you had independent contractor?
Amber 11:30
Right. So the biggest thing for me was training, I really had a, you know, a process and procedure that I wanted each one of our visits to abide by, I really had, you know, our secret sauce of what makes Attaboy Attaboy. And I wanted to ensure that our staff was living in eating and drinking that process and procedure. And I couldn't do that with having independent contractors, I couldn't have them come in for training and teach them about how to clean litterboxes properly, or how to hold a leash properly. I couldn't offer them trainings through third party companies, you know, certifications or whatnot, because that would be illegal for independent contracting purposes. And I didn't like that at all. And I saw major problems with it too. There was inconsistency is across the board from center to center on how they did a visit or what the expectation of quality was. And that just wasn't it made. It stalled our progress for sure as a business.
Collin 12:30
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12:35
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Collin 12:51
If you are looking for new pet sitting software, give time to pet a try. our listeners can save 50% off your first three months by visiting time to pet.com forward slash confessional. So what was it about that time when you realized, you know what was the thing that finally puts you over the edge to Okay, I need to make this switch now it's finally time.
Amber 13:14
So not only the training piece of it, but I actually so I'm in Florida. So there was actually another company that through the grapevine I knew of that actually got audited. And a general audit, which you know, to your books, right and shouldn't be a big deal. But they also review your staffing process. So independent contracting versus employment process. And they had independent contractors, and they were doing everything based off of how you should as much as possible, again, in that gray area of independent contracting, they didn't require uniforms, they didn't tell them, you know, it was all the client telling them what the visits were supposed to be in, blah, blah, blah, they didn't do training, all that fun stuff. The staff invoiced the company, blah, blah, blah. But the reviewer of that audit, it's really just at that point, that person that's reviewing your cases, opinion, and if they really feel that your staff should be employees, and that auditor said that they really should be even though she was fine, the gray area of independent contracting requirements that you can find on your state by state case. That auditor said no, it really should be employees. And she had to back pay taxes on X amount of years that she had these independent contractors, which was 1000s and 1000s of dollars, like a five digit number. And on top of that, they they make your business reclassify as like a new business and then workman's comp is required. And then your wages can be higher because you can pay back taxes to pay and it gets super messy. And I've heard of this multiple times across the board. And sometimes it kills business and sometimes it leaves that person in debt. Because no matter if you close your business or not, you still have to pay that debt to the government. So I didn't want that because I'm a rule follower. To the core, the money scare on top of the training needs. That's really what pushed me to say, I need to suck it up, I need to get this done. And we need to switch to employees. The last bit of that also, I feel like was we're having a hard time hiring for independent contractors, because most people don't really know what independent contracting is necessarily. Or when you tell them that they have to pay 20% in self employment taxes at the end of the year for whatever they make over $599. They were like, sticker shocked on that. So nobody wanted to do that. So it's getting harder and harder to hire, as well. We weren't getting the quality people that we wanted to apply because it wasn't consistent. It didn't make our business look as legitimate. I believe in some applicants eyes
Collin 15:45
is switching something that you think everybody needs to consider is that need to be on the table for a lot of people who have independent contractors.
Amber 15:52
Yeah, 100%, I think more and more states are getting more and more strict on independent contracting, what that means. And if you haven't heard about that, and be clear example is like California with the Uber business process, you know, of how they were misclassifying independent contractors versus employees. And the chaos that ensued, more and more states are getting more strict about it to its better, less liability on your end. for tax purposes, for auditing purposes for workman's comp, if your staff gets injured on the job, even if you have them sign, you know, any document you want that says we're not liable, that doesn't prevent them from trying to still get resources or financial compensation for issues that occurred during a job while they're working for you. So I think it's if there's a person that owns a company, and they have others that work for them, and they're not just a solo person, they definitely need to consider switching to the employee status for sure.
Collin 16:55
Yeah, I think the winds of change are definitely moving in the direction of making it harder and harder to have legitimately classified independent contractors. And I think many of the people who worked with the California legislation are now at the federal level, yes, pushing some of those same initiatives coming out there. So it's definitely something to start looking at, in your business to see how you're going to make that work.
Amber 17:20
Yes, I think it's also a huge thing. Like with anything, I'd rather be self regulated as much as possible for before government regulations start going into place. Because if we start self regulating ourselves, like with anything, whether it's licensure of pet care, or you know, employment status, or pet sitting businesses, it's going to make it an easier transition for everyone involved, because transitioning to employees is not the easiest process it shapes up. For me personally, it took a while to figure out all the Q and A's that I needed to make smart, educated decision to transition. And you don't want to do that, in the midst of everyone else needing to do that as well, because it was forced on to everybody.
Collin 18:00
Right. So what was that switch? Like? What were some of those first initial steps that you took to get that ball rolling?
Amber 18:08
Um, the first thing was I, in Florida, we have a website that's called sun biz. So it's like what we use to register as LLC is or DBAs, or s scores or whatever. I went on that website originally to see what kind of information they had regarding employment status. They didn't have anything really.
18:28
And then, but you know, shocker. But then we then went to I went to a local
Amber 18:35
college has resources for business entrepreneurs, to help them with a bunch of business question type situations, most states, and most colleges have some type of business education resource of some sort that's usually funded by the state. And I looked towards them, and I asked them a bunch of questions. And honestly, they said, financially don't switch to employees, employees are so much more expensive. They kept saying, don't do it. And then I went to my tax guy, and then he's like, don't do it unless it's forced upon you because of money again, so these two big professional persons that are in business, both in tax and traditional business, we're like, don't do it mostly because of the money. So that was, that's what made me pause for so long, because I was listening to these professionals that said, No, it's just going to cost you out the rump. You don't want to do that. Just avoid it as much as possible and deal with it until it's forced upon you. And that's not who I am. I'm kind of like a progressive get it done when it should be done versus reactionary person. So it was messy. And it did take me I think I started considering employees a year or two prior to switching. And I just kind of kept pausing it because it seemed overwhelming how to find a payroll company because I wasn't using payroll, how much is it going to cost me and payroll. How much are these taxes going to cost me because I couldn't find them. great examples or numbers of what it was actually going to cost me, in addition to paying for these taxes, such as Medicare and unemployment taxes, and state taxes, and whatever that's going to be couldn't find a good resource or general concept to tell me, what does that number actually going to be? So how do you make a decision on something when you don't have specific details? So it took a bunch of resources. And ultimately, I started just connecting more with other businesses, pet sitting businesses, especially in the state that I was in. And I just asked, hey, I'm thinking about transitioning employees, how much does it cost you and payroll? How much does it cost you in taxes? How much does it cost when workman's comp and with a few companies that were local to my state, I was able to get a general idea of when I when they paid out X amount of dollars, how much they were paying in taxes, payroll and workman's comp as well. You can also also get a quote from business insurance of Carolina's shout out to get a workman's comp coach as well. So they were able to do that, which is based off of how much you pay out to your staff, on a yearly basis as well. So once I was able to get those numbers, and then answer some detrimental questions of, you know, do I have to pay travel time? Or do I have to pay gas mileage in my state, which every state is different, by the way? And how do I have to pay for training or certifications and making sure I had a an employee manual and either creating that on my own or purchasing it from somebody. And once I started getting those things kind of in the place, that's when I started, you know, slowly having that process completed. So it took a long time. And it was messy and complicated, in my opinion, by far, because there wasn't a one all walks step walkthrough process for my state, for my industry at that point, which I think is something I really want to work towards helping others do as well. So the first very first step I did besides research, the very first purchase I made, was an employee manual, because I wanted to make sure I knew what I wanted from the staff when I was transitioning employees. And it was clearly written down, which took a long time for me to even put my thoughts into words written word, and transition that to ensure when I was ready to switch to employees, it was all ready to go in those processes procedures are in place.
Collin 22:27
Yeah, there's so much to consider there. You know, you mentioned taxes workers comp, did you have to adjust your insurance coverage that you had for your business now that you had employees.
Amber 22:40
Um, so I had insurance policy for my company through big as well. And that did cover independent contractors or employees. So that base business insurance didn't not need to be changed because of an IC or employees status. The only thing I had to add was workman's comp insurance for purposes of employees, which some states only require if you have X amount of employees, and after a certain amount, then you have to have it. So because of my numbers, I had to have it in the state that I'm in
Collin 23:15
committed to end up getting transitioned from independent contractors to employees,
Amber 23:18
eight, eight transition totally, and then actively we have 10. Now,
Collin 23:24
did you have any that were hesitant to make that switch? Or transition? Did you have to convince what were those bucks for them?
Amber 23:32
Yeah, so when you're transitioning to employees, you know, as a business, you have to consider a handful of things, your costs increase for your back tax, you know, purposes, all that behind the scenes costs. And what you're paying your your sitter is actively now, you know, so on average, any business, you know, they kind of say your goal would be that your payout is 3035 ish percentage of your revenue. And some people were paying way more than that. So if you have your you have to make sure your numbers are right first, because you're adding on an additional, when I calculated 12% in taxes and payroll, plus at least probably 50 cents of visit approximately for workman's comp purposes. I needed to make sure I can I afford what I'm paying them as independent contractors, or am I going to have to reduce their wages, which can be shocker, unsettling for most, when you say, Hey, I have to decrease your pay potentially. So what that was one of the things I chose to not do, I chose not to decrease their pay, because I was already luckily in a position that I was in the right percentage for profit still, you know, because we always want to think about that profit first, obviously, and so that was already transitioned and ready to go. The other concern was some of them our staff did work for other app based companies, which we had discussions about and how that worked and what our expectations were in blah, blah, blah about clients. But they still worked for apps and they wanted to know, are we allowing them to still work for those apps? When we switch to employees? So that was a big concern for a handful of our staff? And then last was, Do I still have to do invoices? Am I still gonna have to do my mileage for tax purposes? So those questions they want to know is basically how much it was going to cost them in different and how much work or less work was going to change? Ultimately?
Collin 25:28
Did you feel like the cost differential between what was going on before versus what's operating now? Was it a big difference, or were you able to keep it relatively the same?
Amber 25:39
Oh, it's a big difference. So you know, when you're paying out, you know, say I charge on to just an example $25 for a 30 minute visit, and I pay a pet sitter on average $9, for that 30 minute visit or approximate chastens. Of course, that's what I was paying my costs out the door to that staff person was $9. Now you have to incur approximately every state's different for us, it was like 12%, in taxes, and then payroll, whatever it cost, because most payroll companies charge you per person that's on the payroll per payroll processing. And then you have to factor in your workman workman's comp. So I literally just looked at my last one of my last payrolls as an example, on a slower week, or bi weekly, and it was like 20 $500, of payout to staff. And it was about $350 in taxes. So it was approximately 12%. And then my workman's comp, I estimated how much I had to guess how much I was paying in revenue for the coming year, or it's not revenue, employee cost, and then they give you a quote on how much you pay, and you can pay it in bulk or, you know, quarterly, etc. And if you end up going over that at the end of the year, because we'll ask you, like, how much did you pay out at the end of the year to your staff, you then have to pay the difference. So based off of that, it costs us about 50 cents per visit for workman's comp purposes using travelers through bFc. As well,
Collin 27:13
part of that sounds like is that was there an associated price increase of the services that you were offering?
Amber 27:19
Yes, I actually. So we transitioned January, one to employees, and January one, we increased our prices by $3 per visit and dropped overnight options, as well.
Collin 27:29
Wow. How did you communicate that to your existing clients? Were they receptive of that? Or were they kind of wanting to know what they were getting for that?
Amber 27:39
So since I knew I was switching to employees, at least by that fall, prior in monthly email that we send the clients, which has about, you know, like a 40%, open rate, we started putting the we're switching to employees, what does that mean to our clients, so they had a benefit to them, prior to even the announcing our price increase. So they saw Oh, look at we're getting more, and I started, months, months prior, probably six months prior in those emails, highlighting the perks of our company, the certifications, our client, our staff has our backup process and procedure, our team based approach, blah, blah, whatever was our niche that really makes us different from any quote unquote, competition locally. And so I started highlighting our pros and cons in those emails on our social media, showcasing our staff to really kind of get them to kind of drink the juice of our company. And then we announced a couple of months prior to the price transition right before holidays, that prices were going to increase by $3. And that's our we chose to allow them to book services prior to a certain date would be grandfathered in. So maybe two clients, I'd have 200 plus decided to take advantage of that. And book multiple visits after January one prior and they had to put down their deposits and pay for them, though, because it had to be out the door. So we didn't have any verbal complaints. Did we see some of our clients drop off? Absolutely. Was it clients that I was upset about dropping off? No. So they kind of naturally called themselves, which I kind of feel in any price increase. It's always working smarter, not harder. And so because of that, you're going to call naturally, some of the clientele that maybe wasn't the best fit for your company anyways, if that's really going to be a big factor of change for them is if two or $3 can be a big change for them, then it's probably not the best client for you anyway, so it wasn't a end of the world situation when they did.
Collin 29:46
Right. Well, it's really interesting to hear that these three big components there's of each stage, overcoming these, these fears of the unknown and always being concerned about change like you You had to overcome some of those fears and uncertainty That was and you had to convince your staff members that that changes well, and then you're having to do with the clients that you're you're you have on hand and each step convincing them of all the benefits that this entails and what each party is getting out of it.
Amber 30:15
Yeah, exactly. So to clients, it was, you're getting better quality staff, you're getting longer term staff. They're getting properly trained staff, to employees, it was, hey, we're paying half of your taxes. We have options now offer you benefit if we want to as well, which we started adding on just recently, things like supplemental insurance and dental coverage and things like that, and what you're not allowed to do if they're independent contractors, so there was perks, they could see were more established business, and we had longer term goals. So we're having longer retention with our staff because of that, as well. And as for my tax guy, he's still shaking his head going, why did you do that? He's just a money guy. So it makes sense.
Collin 31:02
And that's right, I think I think you have to weigh a lot of these pros and cons based off of what you actually want. Because you're right, if you just look at the dollar and cents manner, it sounds like it would never make sense to go employees employee track. However, if you're wanting to build a more inclusive, more consistent, more reliable, more cohesive company with staff members, you got to go that way.
Amber 31:30
Absolutely. And you know what it comes down to? Okay, and where you keep saying it's gonna cost you more, why in the heck would you still increase. So obviously, my prices increased, and obviously, my costs increase. But like, as an example, we've been in business since 2013. So that's eight going on nine years. And we had very low revenue for many of the first five years, even with independent contractors, I was barely paying myself, and I had just stopped working my full time job like three years ago. And when I did that, that's terrifying in itself. But you go look at that. Okay, so revenue wise, pre COVID, 2019, we made a certain revenue, then COVID, 2019, we made slightly more than our 2019. Still, so we pretty, we were lucky to remain pretty consistent, and then grow a tiny bit. And then this year, you know, halfway through the year, essentially plus one month, we've already made our revenue where last year and or 2019. So we are at the point that we're planning on doubling this year. So if it's that the case, is it because we're more consistent, is it because I have better, you know, more consistent staff? Is it because we have better training, or process and protocols and procedures? Who knows? It could it be drove the luck as well, very potential. But it comes down to I switch to employees, and my business grew.
Collin 32:57
I was also curious the feel of the company, when you're with staff, when you're talking with them and interacting with them? Does it? Does the company feel different?
Amber 33:08
I think it feels more professional and less loosey goosey. If you may, I feel like if there's concerns, it's easier to address them in a more professional relationship type manner. versus going, Hey, by the way, we really can't do no blah, blah, blah, cuz I wasn't allowed to tell them proper process and procedure prior as independent contractors. So you had to really like walk that line to ensure that you weren't trying to stay with the government regulations. What I see is, so yeah, that definitely didn't change. Now for my staff that I've had for a long, long time that have been with me at the beginning of icees to middle icees to transition to employees. Now I kind of always tell my staff, when there's a conversation that needs to be had. I'm putting on my friend hat and my amber hat or I'm putting on my amber boss hat. Yeah. Okay, Amber, bossy amber is going to talk now, let's talk about this. So they understand and then there's a respect so that we can still be, you know, friendly and docile and have a good time. But when it comes down to business stuff, it's, I always say I have to do my job. And if I'm not doing my job, right, you can't do your job, right, and vice versa.
Collin 34:21
Well, yeah, so for you, how is it different managing independent contractors versus employees and have you found it to be something that you enjoy better or maybe that you found that fits better with how you operate?
Amber 34:33
I would definitely say it fits better with how we operate because I'm big on education. As a veterinary nurse, many persons that come into the animal care pet setting industry are not from animal backgrounds professionally, necessarily. So I'm big on teaching my staff, not just basic pet care information, like how to enter home without a cat escaping and how to clean a food and water bowl, but also major risks. have big issues such as cat urinary blockages and key signs and red flags for that, or GVV bloat in dogs. So I wasn't able to really do that professionally Trier, with my staff, and now I can. So that definitely fits with more our vibe of having not just pet lovers, but pet professionals is what we always say in our team. As far as easier versus not easier, I think it's similar, just with different processes and procedures, instead of using PayPal, we're using a professional payroll service. I think hiring is a lot easier. Now we've had a lot more increase of good or good option, resumes that came in through hiring processes. Not saying they're all great, though, because hiring is still difficult as heck. But it's still made, the person that we're getting better, we're successfully completing our onboarding process are definitely more quality in the long run. And then what took us a lot longer to find our staff that we had in the past, say 600 applications for one Howard hire, we're now having about, you know, 300 applications for one hires. So what I had to weed through so much to get the quality staff that we had in the past. And currently, it seems like I don't have to lead as much now.
Collin 36:22
Do you think that is because it's easier to communicate what the position is, and they can see themselves as part of it?
Amber 36:29
Yes, I mean, from the time that we're, you know, youth, most of our parents are employees. And so we've grown up with knowing what employee kind of means or what the expectation of an employee is, in a potentially good or bad quality business, but still employees. Not everybody knows what independent contracting is, unless they've worked with other companies that may have done similar sorts in the past. So previous to me, and starting this business. I've worked as an employee, but I also worked as an independent contractor doing mystery shopping. So I was more familiar with what independent contracting was an expectation, not most word, and it got very confusing to onboard persons with independent contracting. So I think when we hire for employees, now, it's so much easier because they kind of have a general idea that probably worked as an employee in the past and to know what that w two is, and they know what that means. I know
Collin 37:28
you've mentioned your tax guy a couple times these days, during this interview,
Amber 37:33
how me wrong, I literally traveled two hours, because at the end, he's been doing my taxes since I was 15. And my parents, both own businesses self employed of their own, and he does, there's so I think he's great, but he's definitely was not going to be transitioning.
Collin 37:49
Well, I think a big part of that, and you mentioned it as a reason for me people try not to do employees is because tax time becomes kind of burdensome, and kind of a lot. So how have you found preparing for tax time is these days.
Amber 38:06
So since this is my first year having employees, I haven't processed taxes with employees yet, that will be coming in the next tax season. But I'm approaching it similar to what I approached previous, which is the software that I use, has report functions to show revenue, in compensation for our company and our staff. So that's kind of our main reports, log of all things, financial purposes. And then our payroll company, which I highly recommend, if you're going to do employees just hire a payroll company, much easier. They handle the tax expectations for payroll, and they automatically send that off to the government needs and the annual report or the quarterly reports that you have to send they do all that in the company that I chose to, to hire, because I know nothing about that. And I think that's also important is you can't be you can't know everything, and you can't hold all half, especially if you're going to a point where you're growing and you are now at the point that you're considering employees, there's a point where you need to start delegating, and that is one of those things that delegation was key to me, because when you're using tax professionals, and payroll professionals, one the probability of auditing is way less. Two, the probability of it being wrong is way less because if you're doing it, you have a dozen other things on your plate and the potential mistake is way higher. So last, but not least, is some people for tax like end of your tax annual tax purposes, pay off taxes quarterly, sometimes on some doing as a bulk at the end of the year. That's a concept you have to consider which option you want to do based off of how much your revenue is for the year ultimately. So for now, I'm planning on preparing just as much as I normally do. Having all my receipts uploaded to like a QuickBooks type option. So they're all virtual, having my software petsitting have all my reports for compensation and revenue. And then having the payroll company also having all those compensation and payroll options readily available that they hand me all those documents for end of your tax purposes as well.
Collin 40:21
Yeah, payroll is one of those things where you go, Oh, that's like, I don't feel like I want to be doing that. And the best option is to not do it and have somebody else do it, right. And it's still
Amber 40:30
literally just pull reports from my client, you know, my software that I use, I pull a report to say, How much do I need to pay each sitter that's already there. And I just copy and paste it into my payroll, and then reviewed and make sure everything's not mistyped. It literally takes me like 10 minutes to do payroll, I could easily delegate that off to a management position, if I had one at the time to do that instead, because it's just so stinking simple. And our payroll company does everything digitally. So when we onboard a staff person, we just literally put in their name and email address, and it sends them the link and they fill out all the information for their tax purposes and payroll purposes. It sounds
Collin 41:09
like looking at each one of these things of going, Okay, like how can guess it's going to be more costly? Yes, there may be more time involved. But there are ways to get around that and ways to operate differently for your business, that are going to actually put you in a better position as you've already kind of experienced through this year.
Amber 41:25
Yes, absolutely. I go back to it's not harder, it's just different. And a lot of us hate trying something new, hate change, hate transitions, all that fun stuff. And I totally respect that. Because I'm not one to be the first one out the gate with anything that's new or changing. But I also know that my main goal, which I think everybody needs to consider is, what's my main goal of my business, if my main goal of my business is to have extra cash on the side, you know, that's a different path. If you are doing this as a full time job, because you pulled out of a different type of industry, and you just want to be the one person only solopreneur type person, then that's a different path. If my goal was for my company to be self regulatory, eventually and this be passive income in the future, potentially. So because of that I needed to grow and I needed to have a team. And because of that I needed to have employees, so you can have management's, but they can do those dailies, scheduling and care tasks, without me being in the business 100% in the future. And because of that, that naturally said well, then the only option then, is to formally be employees, and get your process and procedures new ones in the place. So when it is time to get bigger, they're already ready to go.
Collin 42:47
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Amber 44:06
Oh, good questions and reflecting back, when we always wish what we would have done differently is such a huge thing. What actually ends up happening or what how much time we actually have. So one of the things was I did learn about something called the voluntary reclassification settlement program. And if you've previously had us independent contractors, and then now that you've learned a little bit more about what independent contracting actually is, and you realize oh, and sort of don't words here, I may have messed up. And you need to realize that you want to transition but you're worried about getting audited or what if I get audited and they say I was misclassifying am I gonna get taxed in the back, you can actually go on to this voluntary reclassification settlement program and you basically take pay only 10% of their tax liability from the year prior. So even if you've been using ICS for 20 years You only pay 10% of your last year's tax liability. And so for example, if you had $50,000, and payout last year, you would only pay like $500. Which is way, way better than what they could literally tax you, right? into catch up for all of your past years. So I was planning on doing that personally. And then I didn't, I dropped the ball and did not submit the paperwork. By the time I, in the amount of time I needed it to have time to process before I wanted to start employees. So I did not do that. But many companies have, and I would highly suggest you consider doing that. Because once you do, they can never back tax you for any years that you've ever potentially use ice is in potentially a misclassified situation. So that's a big learning thing right there, highly recommend you look out on that. The other biggest things I would have changed was the fact that originally when I switched to employees, I did allow them to work for other app based companies. I do not do that any longer. Because I just didn't want to leave staff, I was scared to lose staff at the transition. And I really just wanted to be the peacekeeper as much as possible. But what ended up happening was kind of what happened when they were icees is they be like oh sorry, I can't do this job. Because I have this app based company, you know, clients I have to do instead. So it was competing with my own business that I couldn't even use my employees. And I was, you know, doing a lot for them, I'm paying half of their tax. Also, with respect relation have control over that. So now we do have, you know, non compete type situations, but some states don't use any more, but it doesn't hurt for necessarily to have them on just in case or non solicitation clauses. So that's a big thing for us now. So I would not do that. And I think those are the top two things I would change, or that I thought was huge to learn about with this employee status. And of course, just knowing what your tax liability is going to be for purposes of payroll taxes. And I think that's going to make a huge difference in determining you need to increase your cost to your clients as well.
Collin 47:12
Sounds like an awful lot of number crunching for those decisions,
Amber 47:15
numbers. If you haven't done algebra in the past, it's not crazy. It's just you have to take some time. And I really want to know like, how much did I pay out $1 to this employee? How much am I actually having in overhead cost for that employee? So I want to know, for purposes of that how much that was? Now I know it's plus 50 cents plus 12%. You know, so you're looking at 6070 cents per dollar in overhead costs for my potential purpose of cost as well. So that's what you also want to keep that payroll percentage at, you know, in the 30s ish, which I don't even have I have like up to 4042. So I'm not speaking out the wrong way. I definitely am not quite that the 30s necessarily yet either.
Collin 48:09
But as you had already mentioned, fine, just finding those numbers can be really hard. So reaching out to other other businesses or getting connected with colleges, or if your state has better resources, you know, to just start looking at that information to begin the process.
Amber 48:25
Yes, absolutely. That was the biggest thing. And I'm super grateful for the companies that were super open with me. And which actually I already had rapport with because I was in like a professional care group or my state. And so I kind of already chatted with them virtually. So when I said, Hey, I know this is a bit intrusive. But is there any way you can show me kind of like the numbers of your payroll? And both of them right away?
48:48
We're like, Oh,
Amber 48:49
yeah, absolutely. I wish somebody did that to me when I did this. So I thought that was a huge, huge asset. And you can't do it from out of state because every state different, even sometimes County, but depending on your state, but definitely super helpful to just ask another local pet sitter that you know, has employees or an employee as well for sure.
Collin 49:13
I really appreciate you helping us understand this major shift in your business and all the benefits that it's brought to you but also how you can overcame some of those, those hurdles of understanding and communicating the benefits to others. But as you've already mentioned, this is a big topic, and if so, if somebody needs help with algebra, how can they connected with you and to start picking your brain on some of these things?
Amber 49:38
I probably want to contact my husband because he's an engineer. Know, my email is info inf o at Adeboye att a boi Animal Care calm and if you email that, it'll get sent to me away if it needs to be to me as well. You can also follow Find me on Facebook, small name amber Ban denzin, SUAREZ And feel free to, you know, add friend on that as well. I'm alone most I'm on the petsitter confessional group page and other industry group pages as well. So feel free to reach out for that night. I just, I'm totally open with any type of numbers, I'm open with my business numbers across the board, my staff even know how much our revenue is for the year, and how much sitters get paid. Our payroll and wages are open book in my company. So I will gladly be open books to you as well.
Collin 50:38
Wonderful. Absolutely. I really appreciate it. And we're that's that's a huge help. And you're such a wonderful resource. So thank you so much for coming on the show again today.
Amber 50:46
No, absolutely. Absolutely. I hope I can help somebody is emplacement for everybody, not necessarily. But if you think you want to grow and be bigger, then that employee journey is probably for you.
Collin 51:00
Just as amber said, Is this switch for everybody? Maybe not. But we should all if we have staff be taking a hard look a hard critical look at our current structure and whether we are using our independent contractors, appropriately, given some of the major changes happening both at the state and federal level here in the United States, making an independent contractor work is getting harder and harder. And so I love Amber's story of struggling with it herself and trying to come to terms of exactly how to make it work. But she knew there were benefits out there. And the benefits that she laid out to both the clients that she had to her staff as well and then trying to ultimately convince herself and her poor tax guy that it would be worth it in the long run. Are there costs involved? Yes. Are there things that we have to overcome in our businesses as far as changing structure changing pay and convincing people? Absolutely. But as amber said, it's been worth it for her and I think it would be worth it. For a lot of us to at least consider if you have made the switch or maybe if you've considered it we'd love to hear from you and what your perceptions are and the things that you're hearing if your state and local level. You can email us at feedback at petsitter. confessional calm and to let us know more. We want to thank our sponsors for today's episode, time to bed and pet sitters International. And we want to thank you so much for listening and joining us today and we hope you have a wonderful rest of your week. We will be back again soon.
