It’s a common spot to be in. Your calendar is full (our guide to close rates and booked-out weeks covers that problem), and a friend or relative offers to take the siding jobs for a cut. On one pressure washing forum, a new owner asked exactly that: what percentage to pay a helper off the books. Replies mostly debated pay structure. The question underneath matters more: what kind of worker is this?

The three options, side by side

W-2 employee 1099 independent contractor Cash, no paperwork
Who decides the status The facts of the relationship (IRS common-law rules; DOL rules under the FLSA) The same facts. The label alone doesn’t make someone a contractor Not a status. The worker is still an employee or a contractor
Your tax side, per the IRS Withhold income tax, Social Security and Medicare; pay the employer’s matching share and unemployment tax Generally no withholding or payroll tax IRS Publication 15 says employee pay “may be in cash or in other forms” and still counts as wages
Records, per DOL Hours each day, pay basis, total wages each pay period; keep payroll records at least 3 years The IRS asks you to document the factors behind your classification DOL says covered employers “must keep certain records” for each non-exempt worker
Paperwork at hire, per the IRS Form I-9, Form W-4, the worker’s Social Security number for the W-2 The IRS lists separate forms for contractors The IRS and DOL pages above treat cash pay as wages and call for records

How the IRS decides: control

The IRS groups the evidence into three buckets:

  • Behavioral: do you control, or have the right to control, what the worker does and how?
  • Financial: do you control the business side, such as how they’re paid, whether expenses are reimbursed, and who provides the tools and supplies?
  • Type of relationship: is there a written contract or benefits, will the work go on, and is it a key part of your business?

The IRS says there is no “magic” number of factors, and no single one decides it. A typical first helper uses your rig, your chemicals and your schedule on houses you sold. Weigh your real setup against the IRS page.

If it’s still unclear, the business or the worker can file Form SS-8 and the IRS will make an official determination. The IRS warns it can take at least six months.

The DOL runs its own test under the Fair Labor Standards Act. It says employers are responsible for deciding whether a worker is an employee. It also says misclassified workers may miss out on the minimum wage and overtime they’re owed.

What having an employee involves

The SBA’s hiring checklist starts with getting an Employer Identification Number, checking for state or local tax IDs, choosing employee or contractor, and collecting a W-4. The IRS adds Form I-9, which every U.S. employer must complete for every hire.

For 2026, IRS Publication 15 puts Social Security tax at 6.2% and Medicare at 1.45%, each paid by both the employer and the employee. On pay, the federal minimum wage is $7.25 an hour, and DOL notes that where a state’s minimum is higher, employers must follow both. Fold these costs into your pricing; our pricing guide shows where labor fits.

Percentage-of-job pay doesn’t dodge any of this. Publication 15 says it “doesn’t matter how you measure or make the payments.” DOL’s recordkeeping list includes the basis of pay, giving “piecework” as an example.

Why cash under the table isn’t a shortcut

Put the agency statements together and there’s no gap to slip through. The IRS treats cash wages as wages. It requires the employee’s Social Security number on Form W-2. DOL requires accurate records of hours and pay. The SBA warns that if a “contractor” turns out to meet the legal definition of an employee, you may owe back taxes and penalties. The IRS adds that misclassifying with no reasonable basis can leave you liable for the employment taxes.

If you’ve already misclassified someone, the IRS runs a Voluntary Classification Settlement Program that lets eligible businesses reclassify workers as employees going forward with partial relief. Ask a tax professional whether it fits.

Workers’ comp: the “what if they get hurt” question

The SBA lists workers’ compensation as a required employer benefit, bought through a commercial carrier, self-insurance or a state program. The rules are set state by state. Florida’s Division of Workers’ Compensation shows how much they vary:

  • Construction-industry employers need coverage with one or more employees.
  • Non-construction employers need it at four or more, counting corporate officers and LLC members.
  • A contractor must confirm subs carry coverage; if a sub doesn’t, the sub’s workers become the contractor’s employees.

Which bucket a washing business falls into is a question for your state’s agency. The same goes for anyone planning to hand jobs to subs, a topic our commercial bidding guide touches on.

What about an unpaid apprentice?

DOL Fact Sheet 71 says for-profit employers must pay employees. Courts use a “primary beneficiary” test with seven factors to judge whether an intern is really an employee. Whether an unpaid ride-along at a small washing business qualifies is a question for DOL.

If you’re still setting up the business itself, start with our startup guide. For how we source pages like this one, see our methodology.

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