contract labor versus employee

Originally Posted By: greg jones
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Is it normal practice, that home inspection companies hire their inspectors as contract labor rather than employee’s to avoid payroll taxes and is this legal or just never been challenged? Please comment!

Originally Posted By: Russell Frame
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In most cases, I do not believe that an HI business could legally hire an HI on a subcontracted basis to conduct home inspections for them, unless perhaps in the rare situation where a particular HI has specific skills worth subcontracting.

The government isn't stupid and they know that it is more attractive to hire people on a subcontracted basis than it is to deal with all of the responsibilities of having employees...that is why there are many rules which apply to this area.

For example. You can't specify how a subcontractor performs their work, you cant train them to do their job, they can't be integral to the core business operations, you can't interview or hire a specific individual to do the job, they can't work full-time, etc. etc. etc.

If you act like an are an employee in the eyes of the IRS. Regardless of whatever scheme your employer and you have cooked up.

Originally Posted By: kmcmahon
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It’s not illegal or unethical…if the inspector has the required training licenses, etc, you can contract him to provide inspections for you on a contract basis.

Heck…it works for some as they only want to do this part-time for extra cash, and don’t really care to be an employee for the extra work…heck the owner finds the work and contracts it to you…what could be better? You still have to pay taxes on the income, so uncle sam still gets his cut.

My parents have contracted out cleaning help for 20 years at their resort…they only work one day/week.

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Originally Posted By: tallen
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I worked as a sub for awhile. It wasn’t to bad.Got my feet wet. Steadier work ,but I only received 40% of the fee.

I have put the past behind me,

where , however, it now sits, making rude remarks.

30 Oct 2003-- 29 Nov2005

Originally Posted By: gjohnson
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It is possible to have a sub do work for you. The problems arise in what the IRS defines as an employee and an sub contractor. You have to be very careful in how you define their work rules, tools, and various tasks.

Taken directly from

The IRS is probably the most important agency to satisfy when it comes to classifying a worker as an IC. Under the IRS's test, workers are considered employees if the company they work for has the right to direct and control the way they work -- including the details of when, where and how the job is accomplished. In contrast, the IRS will consider workers independent contractors if the company they work for does not manage how they work, except to accept or reject their final results.

Gary (Snicker's) Johnson - Free NACHOS
The NACHI Foundation
Executive Director