- Wash Weekly
- Posts
- Should I report that?
Should I report that?
Pros and cons of operating your laundromat off the books
Hi Wash Weekly Family.
I’ve been asked a question on several occasions that I want to answer for you today:
Should I pay my employees off the book and not report all the money my store makes?
One of the lures of owning a laundromat is that it’s a cash business.
Laundromats provide a great opportunity to build economics, but it can be tempting to operate the business and pay employees off the books.
Now, I’m not here to tell you what to do with your business.
BUT, I will share with you some of the pros and cons I’ve seen other small (emerging) businesses go through when trying to decide if they should pay someone off the books.
My hope is that they will help you make the decision you are comfortable with.
Pros:
You avoid paying taxes on the income that was off the books
You avoid all the payroll expenses, taxes, worker’s comp, insurance, healthcare, disability insurance, and everything else when paying employees on the books
There is a lot more hiring flexibility. You don’t have to pay minimum wage and can rationalize it because they don’t have to pay taxes on it, so they are making more.
You avoid a lot of regulations like wage laws, labor laws, safety regulations, and the like
Cons:
There are a LOT of legal consequences if you get caught 😬
You can be fined, face legal consequences, and face imprisonment
You can damage your business reputation if/when the community finds out
You face limited access to financing when you don’t declare all of your income on the books.
Your business will be valued at less if/when you try to sell
Your growth opportunities will be limited
You’ll face employee dissatisfaction as they can’t participate in health insurance, 401(k), worker’s comp, disability insurance, unemployment insurance, and the like
An angry employee paid off the books is much more likely to report you to the Department of Labor
I know some of you are looking at those pros and thinking they look really attractive.
But hopefully, the cons give you a sense of the risk that may be involved so you can make an educated decision of what works best for you.
At the end of the day, you have to do what you’re comfortable with for you, your business, your family and the level of risk you’re willing to take on.
Me? I need less things contributing to the amount of gray hairs I have!
I also want to be able to capitalize on the upside of my business years from now, whether that’s a merger acquisition, partnership, or selling the business.
Operating off the books may give you some short term cash, but you could be leaving a lot of money on the table in the long run.
I support you in whatever you do for your business, just make sure you take the pros and cons into consideration.
—---
TL;DR:
Laundromats are considered cash businesses
Pros of operating your business off the books
Cons of operating your business off the books
My final two cents
Til next week.Waleed 🏴☠️
I would love to hear your thoughts on this week’s topic– let me know in this issue’s survey below. And for more on the garment care business, connect with me on Youtube and Linkedin!
🧰 RESOURCES
🗞 IN THE NEWS
📆 EVENTS
❝ QUOTE OF THE WEEK
Be narrow. It's much better to mean a great deal to a few people than next to nothing to a huge amount.-David Hieatt
🎤 WEEKLY WASHERS REVIEW
Selected 😁 Loved It and wrote
Reply