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Don't Relocate Any New Employees
by Mike Mayberry
October 9, 2009

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Are you thinking about relocating someone you'd like to hire or have you considered it in the past? Well don't ... at least not yet.

Why wait for 2-3 months for them to get moved and start working for you? Then, what if it doesn't work out? What if they aren't what they say they are? Heck, what if they move and they don't like working for you?

Well, there's a way for you to get them to start working within 1-2 weeks without them actually moving. You get to try them and they get to try you.

Have you ever heard of "Per Diem"?

Well, Per Diem is the maximum daily rate that you can pay someone "TAX FREE" to help offset any additional living expenses while they are working in a location other than where their primary residence is. You can look at your areas daily Per Diem rate by going to www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_BASIC&contentId=17943. Per Diem rates can vary based on the time of year in certain metropolitan areas or it can be a fixed daily rate all year long. (see the rate schedule for details on your area)

For example, we’re located in the Dallas area. According to the 2009 rates, we can pay someone up to $174/day in tax free income to help them offset their living expenses. That's $115/day for Lodging + $59/day for M & IE (Meals and Incidentals) for a total of $174/day.

That's $870/week (5 day work week) in Tax Free income that you can legally pay them ... $3,480/month; money that they don't have to claim on their taxes as income, saving them 20% — 35% depending upon their tax bracket. That's equal to paying them $5,000/mo of taxable income. Plus, it saves you the matching taxes of 7.5% +/-, which would be $375/mo based on the $5,000/mo if it were taxable income.

Now, you don't have to pay them that much, but you can. The fact is; you do have to pay them something reasonable as “taxable income”, but you can offset that by the Per Diem, which will help everyone. Sure it's still going to cost you a little more per hour to have this person working for you then it would if you hired a local guy, put it's well worth it if they work out long-term.

You only have to pay the Per Diem for as long as they are still working for you. If they quit or you fire them, you're done. Heck, for someone to stay in an extended stay hotel or furnished apartment would cost between $600 and $800/mo. ($30 - $40/day (based on a 5 day work week)) and Meals would be about $25/day +/-. So, in reality, you could get by with paying someone an extra $65/day in Per Diem to cover all their additional living expenses. That's only $325/week.

If it works out...then they can eventually move and everyone lives happily ever after. If it doesn't work out, they go back home without risking a thing. I think that you can continue to pay someone Per Diem for up to 18 months, but you should definitely check with your payroll company or accountant to get all the facts straight before you start paying Per Diem to anyone.

Mike Mayberry is the president of HVAC Agent, www.hvacagent.com.


Mike Mayberry

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