I am a professional baker with a small business.
Recently a friend also with a business asked me if I can bake for him, doing prep work i.e.
Mixing, scooping, storing cookies, Mixing cakes and freezing, Baking Pie shell, Mixing frostings ect...
I am wondering what would be the best approach to charging him for the work I provide.
hourly or by piece..
Is wholesale an option? Should I use my ingredients and his recipe and charge for a normal whole sale account?
Thoughts,
Thanks.
Since you already run a small business it makes the most sense to provide product to his specification. You’re already set up for production, so it’s just a matter of adding additional product or increasing production of existing product lines.
Having worked in human resources I can tell you going to work in your friend’s restaurant will probably be more hassle than it’s worth. It’s not going to be a simple little deal between the two of you because how you are classified is ultimately determined by the government. The IRS will determine if you are anemployee or an independent contractor.
The status is very important because it determines how your friend pays you, and how state and federal employment taxes are collected.
If you are an employee, then your friend is required by law to deduct state and federal employment taxes from your wages and then pay you the balance.
If you are an independent contractor then your friend pays you the total amount, and you are responsible to file pay your taxes at the appropriate time as an independent contractor.
Your status is not one that you or your friend arbitrarily decide on your own. There are factors that determine whether you’re an independent contractor or an employee. The government has guidelines in making that determination.
You need to do some research; then you and your friend need to
determine if your work will classify you as an employee or independent contractor.
If you are an employee, then you should be paid the at least minimum hourly wage and covered by overtime pay under the Fair Labor Standards Act.
If you’re an independent contractor, then your friend cannot control the method in which you produce the baked goods. So a lot can go wrong when you work in someone’s kitchen but they can’t really direct your work.
That’s why I say if you’re already running a business make a product to his specifications and let him buy it directly from you. It’s a lot easier for both of you. And it will probably save your friendship.
Government website on independent contractor versus employee
https://www.irs.gov/businesses/smal...ependent-contractor-self-employed-or-employee
And article that explains independent contractor versus employee‘s in laypersons terms
https://www.thebalancesmb.com/independent-contractor-or-employee-what-s-the-difference-397912
