Often times when clients talk asset protection with their CFP® professional, they want to discuss how to avoid poor investment choices and how to save their profits from taxation to create a strong foundation of assets that protect them and their lifestyle. But asset protection is more than that; it’s making strong, smart decisions that shield the assets you’ve already earned and will earn. Whether you are a CEO of a well-oiled machine or are just starting a new business venture, you may not realize that you’re already running a business from your own home that could be putting your assets at risk–the employment of domestic staff.
Domestic staff is sometimes a luxury but often a necessity for many households to function. And whether you have a casual babysitter twice a week to run the kids around or a full roster that tackles regular cleaning, driving, personal assistance, etc., one thing is for certain– in the eyes of the law, you are an employer. By hiring staff without proper precautions, there may be ticking time bombs set to hit your assets at any time.
Potential risks include:
- Theft and damage by a domestic staff member.
- Domestic staff member is in an accident while conducting errands on your behalf.
- Domestic staff member is injured on your property.
- Providing a 1099 to hourly staff members, opening yourself up to the risk of non-compliant payroll taxes.
- Staff member is not performing to your standards.
- Family members or other staff members threatened or injured by another staff member.
- Unprofessional conduct by either the household staff member or the employer.
- The list goes on!
While the potential damage is high, there are smart decisions you can make to protect all parties. The first of which is to treat it as a true employee-employer relationship starting with the hiring process. To start:
- Make a clear, concise job description: By setting up expectations for both you and your new employee, you alleviate a fair amount of conflicts. Map out how a staff member’s work is going to be assessed, work hours, payment, etc. Go as far as creating an employment manual and an employment agreement that both you and the staff member will sign.
- Referrals are great, background checks are better. While candidates should provide professional and personal references as part of the interview process, candidates should also be instructed to do a full background check and drug screening.
- Consult your legal counsel to discuss potential risks and liabilities.
- Understand your employer-employee relationship (1099 vs. W-2 employees) and set up proper payroll including payroll taxes where applicable to reduce back payments, penalties, and even criminal charges.
- Set up proper insurance coverages: From Worker’s Comp to umbrella coverage, having proper insurance minimizes the threat to your assets.
Your home should run just as streamlined and efficiently as your business. Take the time now to develop a plan for your domestic staff in order to avoid financial loss down the road; both you and your staff will benefit from it. From insurance deficits to payroll tax compliance, a WorthPointe CERTIFIED FINANCIAL PLANNER™ professional can identify the gaps in your asset protection plan and give you the answers you need to protect your home and family. As part of our goal to keep you financially secure and on track to your financial goals, WorthPointe has the expertise to help you protect your assets and your family. If you haven’t sat down with a WorthPointe CERTIFIED FINANCIAL PLANNER™ professional and want to set up an asset protection plan, call (800) 620-4232.
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