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Bounce House Rental Business - Liability Question

2,053 Views | 19 Replies | Last: 5 yr ago by Gary Johnson
Bird Poo
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AG
So my neighbor just purchased about a dozen bounce houses. He's wanting my 16 year old son to work for him over the summer to help set up and tear down bounce houses---all cash.

This is a side business, so I'm not sure what kind of liability coverage, if any, my neighbor has. He may have just a simple release of liability form.

Suppose my kid sets up a bounce house and he sets it up wrong or it malfunctions, injuring a child. Is it possible that my son could be liable for damages for this kind of incident? He won't be an official employee of the company since he's being paid cash.

Ragoo
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AG
This does not sound like a good situation for your son to put himself in.
The Anchor
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He's still an official employee. He's just being paid illegally.
Bird Poo
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The Anchor said:

He's still an official employee. He's just being paid illegally.
Okay. So legally, he wouldn't be liable aside from being paid cash? What if it's under the gift tax threshold of $15K?
Ragoo
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If it were me and my son I would want to have my lawyer review the contract this owner has their customer's sign. if this contract doesn't remove liability from my son I would either have a clause added, see how much it would cost him to get insured or decline the job offer and have him gain employment from an above bar organization.

Also, the person paying your son cash is doing themselves a disservice by not taking this distribution as a cost of the business.

edit: the last thing I would want my son caught up in is an injury to a kid and an aggressive mother out to make someone pay. not in 2018.
Picard
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AG
This is a bunch of NOPE NOPE NOPE.

However, this is likely how most bounce house companies operate.
Bird Poo
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AG
Here is what google says about civil suits for teenagers:

A person under the age of 18 years of age, can not be a defendant in a civil lawsuit. So it is not possible for your child to be a defendant in a lawsuit.
Ragoo
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OneNightW said:

Here is what google says about civil suits for teenagers:

A person under the age of 18 years of age, can not be a defendant in a civil lawsuit. So it is not possible for your child to be a defendant in a lawsuit.
does the google say the parent of said teen is also protect from suit?
Squirrel Master
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AG
Your son wouldn't have anything to worry about. Getting paid under the table isn't a big deal either, especially since he's hardly making anything so only screwing the gov out of pennies of medicare and SS taxes, not federal income taxes. If he wants to, I'd let him. Of course, you may also want to teach the lesson of being a moral business person, and thus not wanting to participate in this kind of setup. That's more of a personal choice.
DadAG10
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OneNightW said:

The Anchor said:

He's still an official employee. He's just being paid illegally.
Okay. So legally, he wouldn't be liable aside from being paid cash? What if it's under the gift tax threshold of $15K?
What type of logic can equate employment/pay with a gift?

Ribeye-Rare
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OneNightW said:

This is a side business, so I'm not sure what kind of liability coverage, if any, my neighbor has. He may have just a simple release of liability form.

OneNight,

I really can't believe that anyone would operate bounce houses without first buying a G/L policy. If the guy has any assets at all he is opening himself up to being totally financially dismembered at the first accident.

If he can afford it, he needs to buy a G/L policy. Even if it costs him a grand a year, it's worth it, just to know you've got somebody who'll defend you if something bad happens.

A 'simple release of liability' won't stop the hungry dogs from having him for lunch when some kid bounces on his head and gets hurt, whether or not it's due to the owner's (or his help's) negligence.

If he can't afford it, I might suggest another line of work.
The Anchor
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AG
OneNightW said:

The Anchor said:

He's still an official employee. He's just being paid illegally.
Okay. So legally, he wouldn't be liable aside from being paid cash? What if it's under the gift tax threshold of $15K?
I take issue with this. This is the perfect time to teach your child what's right and wrong. He needs to pay taxes on his income. Chances are he will be getting those taxes back in a refund anyways.

I do contract work and some of it is paid cash. I report every penny to my CPA even if the companies paying me don't issue a 1099.

I have a different take on taxes than most. I have had the privilege of going to third world countries where you can't drive down a single paved road (because there aren't any), you can't rely on police or EMS, there isn't a municipal power provider, etc. I know there is waste in the US, but we still need to pay our taxes that we owe based on our laws.
Bird Poo
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Ribeye-Rare said:

OneNightW said:

This is a side business, so I'm not sure what kind of liability coverage, if any, my neighbor has. He may have just a simple release of liability form.

OneNight,

I really can't believe that anyone would operate bounce houses without first buying a G/L policy. If the guy has any assets at all he is opening himself up to being totally financially dismembered at the first accident.

If he can afford it, he needs to buy a G/L policy. Even if it costs him a grand a year, it's worth it, just to know you've got somebody who'll defend you if something bad happens.

A 'simple release of liability' won't stop the hungry dogs from having him for lunch when some kid bounces on his head and gets hurt, whether or not it's due to the owner's (or his help's) negligence.

If he can't afford it, I might suggest another line of work.
Thanks Ribeye.

He does have a G/L policy. I'm just wondering about my son's exposure since his employment would be "off the books". Would that place more liability on my neighbor?

I somewhat understand the sentiment about the taxes. His grandmother pays him to mow the yard. Should he report this to the IRS?
Zemira
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For minors earned income is untaxed up to $6350, it's the unearned that is taxable above $1,050.

Unless he is being paid really well on a summer job it is unlikely he will owe the IRS. That said FICA (social security and medicare taxes) should be paid. Unless he has significant income I don't see anyone paying FICA as a self employed teenager.

On another note lucky kids today have 529 plans. When I was a kid my generous grandparents setup investments for college but they were taxable. My Dad made me do my own taxes since I was 14 or so, although he did pay my tax bill each year. I finally had earned income when I was 18 so I started breaking even paying in and withholdings.

Maybe I'm a bit jaded about taxes and the IRS since my Dad or I have been paying my taxes for 10+ years!
idAg09
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No wonder why you don't see teenagers working anymore unless it is at a grocery store or coffee shop
Bird Poo
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Zemira said:

For minors earned income is untaxed up to $6350, it's the unearned that is taxable above $1,050.

Unless he is being paid really well on a summer job it is unlikely he will owe the IRS. That said FICA (social security and medicare taxes) should be paid. Unless he has significant income I don't see anyone paying FICA as a self employed teenager.

On another note lucky kids today have 529 plans. When I was a kid my generous grandparents setup investments for college but they were taxable. My Dad made me do my own taxes since I was 14 or so, although he did pay my tax bill each year. I finally had earned income when I was 18 so I started breaking even paying in and withholdings.

Maybe I'm a bit jaded about taxes and the IRS since my Dad or I have been paying my taxes for 10+ years!
This is exactly the kind of tax info I was looking for. Thank you.
Reloadags1998
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AG
The GL policy will include the employees as an insured on the policy, this usually includes temporary employees. As such, your son will be fine. My concern falls more on the likely lack of workers comp. If you son is injured, there would be no protection for him.
Reloadags1998
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ddp
BigPuma
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you're assuming that most businesses have workers compensation insurance. truthfully, most don't that it isn't required because it is a wee bit expensive.
Reloadags1998
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BigPuma said:

you're assuming that most businesses have workers compensation insurance. truthfully, most don't that it isn't required because it is a wee bit expensive.
Nope, I don't assume that at all. That's why I said "My concern falls more on the likely lack of workers comp."


It's certainly not required in Texas (one of the only states in The US) but that does not in anyway relieve the business from it's responsibility to their employees. It's expensive for certain businesses because the likelihood of needing to use it is actually pretty high.
Gary Johnson
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Will still have to pay 15% FICA taxes right?
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