Question by Anonymous: My boss wants me to become a partner in his business. But his financial advice worries me.?
My boss owns his business and wants me to become his partner. I enjoy the work I do and see opportunity to make money with him, but his “financial advice” seems awful. Does this make him a bad person to partner with? His suggestions for me to save money: (1) Drop my private health insurance, (2) Reduce auto insurance from full coverage to liability, and (3) cash in my IRA to pay off my debt – a 43% tax penalty rather than the 5% tax deductible interest home equity loan that I took out to consolidate. These seem, to me, to be some of the worst financial decisions one could make. To me, they are risky and represent “living for today”. I feel that doing these things would be financially irresponsible and gambling with my future. He doesn’t pay taxes (cash business), doesn’t use banks, cashes customer checks at a check cash place that doesn’t report, registers his home and vehicles in his wife’s name out of state, and pays me under the table. Am I crazy for even considering his offer?
Everyone thinks I am crazy when I describe it. But, with the exception of his dishonesty with the government, he is an honest guy – very rare in the contractor / home improvement industry I’m now in. He doesn’t rip people off but makes a good living, every customer he works for loves him and refers him to others, has a decent customer base, and is a very moral person (again with the exception of the dishonesty to the government thing). There are certainly some things that bother me. He is licensed and insured, but if I were to get hurt and couldn’t work right now, I’d have no disability or worker’s comp or anything like that. If I became a partner – or maybe even if I don’t – I’m guessing I might want to get some sort of private disability insurance or something so that I wouldn’t lose my house and everything I’ve spent the past 10 years working for – if I couldn’t make the payments for a few months because I fell off a roof or something.
P.S. My Home Equity Loan to consolidate debt is a long story. It was not due to my own irresponsibility. I had 3 heart attacks by my 25th birthday, and needed to make a life style change to save my life. I changed careers after a very successful 9-year career in Healthcare IT Management, to pursue a less stressful, more active career in construction. To finance this, I built a basement in my house and took on 3 roommates so that – while I search for a new career – even if I am in between jobs, I will always be able to pay the mortgage / keep my house. It put me in debt quite a bit, but it is the “insurance” for my home for the career change that saved my life, quite literally. I bought the house when I was only 20; I’m 27 now and have around $ 125,000 in equity in it and no MIP.
RE: By the way, if he’s paying you under the table, does that mean you have unreported income also? Doesn’t that put you in the same boat with him as far as not paying taxes, etc. Just a thought.
I plan to report my income. I even report my roommate income. I anticipate and save for a hefty tax bill at the end of the year.
RE: And, if you do report the income, you are letting the IRS know about this guy – so you’re sort of in a no win situation.
I have thought about this as well. I guess I should have a talk with him.
Best answer:
Answer by Dont_taze_me_bro
Run
Run as if your hair were on fire.
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i would stay as far away as possible because when the IRS catches on they will see you and go after you as well now if u have everything in order then u r fine but they most likely will find something to penalize u for i mean come on u don’t mess with the IRS
Run, dont walk away from that deal. A lot of young people are duped into large debt by someone like the character you describe. Dont risk it. Yes, you are crazy for considering the offer. Why you?
Yes, you are crazy for even considering his offer. He is committing a laundry list of crimes that could and should wind him up in jail. Go into business with him and you’ll go down with him.
By the way, your 5% HEL(L) loan gives me the shivers. You just risked your house as surety for a CON-solidation loan that fools you into thinking you are gaining ground while not addressing the behaviors that got you to the point that the loan was needed. Granted, your situation is benign compared to your boss, but you can’t change his behaviors. You can only change your own. I would quit that job tomorrow and run for the exit.
This guy is living on the edge. One slip, and he will be IRS fodder.
They will be on him like a ton of bricks, and you may be held liable if you did not declare your income from him – I presume if he pays you “under the table”, that there is no 1099, or W-2 form?
And, if you do report the income, you are letting the IRS know about this guy – so you’re sort of in a no win situation.
I suggest you walk away from the deal; better yet quit the job, and cease all dealings with the guy.
My boss wants me to become a partner in his business. But his financial advice worries me.?
The rest of your question can’t possibly be useful. I wouldn’t recommend a partnership under ‘ideal’ conditions. You would literally put you financial life in his hands. If that makes you uncomfortable, you have your answer.
You sound like you are intelligent and have yourself together after dealing with quite a bit of adversity. I can’t understand why you would consider doing something like this which would more than likely put you back into a similar financial situation that you’d have to pull yourself out of again.
By the way, if he’s paying you under the table, does that mean you have unreported income also? Doesn’t that put you in the same boat with him as far as not paying taxes, etc. Just a thought.
i think you answered your own question, you’d be crazy for even considering this. don’t you dare give up what you have and do not give this person any $ $ . despite your defense of his honesty, he’s not honest.
Run the other way
Your boss seems to be an energetic , good hearted individual, and a hard worker, with lots of people skills. You sound like opposite personalities, and perhaps he would like more of your conservatism in his business structure, which is why he asked you to be his partner. If more sound business structure would make you comfortable, why don’t you prepare a written point by point proposal of conditions under which you’d like to work. Like reporting income, and paying taxes and health care insurance benefits:) Build on his positive attributes, and don’t forget to start off with mentioning your appreciation of them when you talk to him about a possible partnership that would benefit both of you. Ideally you can help him avoid a lot of potential aggravation and misery from the IRA down the road, while helping make the business prosper.
your conscience is not clear on this and whatever you keep thinking about in an unclear conscience will do nothing but bring pressure on your mind and cause you to not be as productive and positive as you can be. Dont hurt yourself – back down and bow out of this one gracefully – it can help you in the long run — you dont want to have a future behind bars for NO ONE –