Jim is correct, and furthermore, your state may use different definitions. Last year, InterNACHI was fined $10K by our state’s unemployment department for paying Kate as a subcontractor, even though Kate doesn’t work at our offices, isn’t in our city, sets her own hours, works for others, and isn’t under our control (I can testify to that last one ;-)). She was clearly a subcontractor by IRS definition. Our only option was to make her a full-time employee of InterNACHI, which she is now.
Payroll is an easy, automated thing to setup these days.
60/40 - 60 to contractor or company? I did this but had issues with people leaving and starting own business. Anyone have a good noncompete contract?
Seems to be the question that is never answered here. I don’t know how someone is not an employee in many instances discussed here.
Looks like Nick touched on it
In my multi-inspection firm it was 60% to the contractor. I can only relate to that of my own state of California; each state warrants its own tax implications. As far as Federal, it is a personal choice as to whether you want to bring someone on as an employee or contractor. One should seek tax questions from their CPA would be my suggestion.
InterNACHI has an excellent non-compete agreement http://www.nachi.org/employmentagreement.htm
I hear you.
I am reading several inspectors who think they are using independent contractors who are not in compliance, IMO.
The IRS is cracking down on real estate brokerswho have been calling their part-time straight commission real estate agents “independent contractors”, as well. They have no problem letting you do it for six or seven years before calling you on it and imposing years worth of interest and penalties.
I’m in CA myself, are you indicating that the employee vs subcontractor rule is somehow different here than the IRS guidelines?
As far as going multi, I had looked into it a bit, and when there is time and financial control, there was no more choice, they are employees. That is fine, except wc is very expensive here, and many activities we perform can be considered kind of dangerous. Ladders, crawlspaces, attics, electricity etc.
I would not want to put a property owner or worker in an adverse position. God forbid, an injury and not having ducks in a row.
However, you may have found a way to be compliant, I think it would be great to share.
Technically they are considered to be employees as they are working for the inspection company, (irregardless of whether they are on payroll with deductions or you issue them a check of 60% and allow them to be responsible for their tax situation) and yes, should there be any type of mishap, the inspection company would be held liable. Anytime an inspector is representing your company and performing any type of service for you; you are primarily responsible for all actions.
Isn’t that why there is liability insurance and E&O?
I pay hourly, I pay taxes, I pay workman’s comp, I pay unemployment. Price of doing business properly.
I ran into people leaving and starting their own business, hence the birth of my multi inspectors on a job concept. They only know certain aspects of the inspection. Let them leave, they can’t perform a home inspection.
People say having employees is a pain. To me it’s a necessity. I would never have people use my company name and do the job themselves. Sooner or later some leave and those who leave will nibble at your Realtor Base.
Example…I do numerous Jobs for Realtor Rick Romicko. 2 years later, I tell Rick I am now on my own and can do the jobs for about $25 less than what I was doing them for with the other company. Who would he call in the future?
It works for many people, but the sub contractor doesn’t work for me. To each his own. A ton of people have made alot of money that way, its just not for me.
This is some of the best business information have have run across on this message board. Thanks
I have been receiving a couple of calls on this topic and remember, your prospective CPI will be an extension of you. It is a little more than the simple credentialing and certification process, your potential candidate must have a sense of customer service as well. Take a first-time home buyer for instance, your new CPI will need to address multiple questions and be able to address those questions with patience and ease.
Get to know your candidate before you hire. You don’t have to be their best friend, but go to lunch, heck share a beer. See how they are in a social situation. Foremost, pay well. Whether you hire on as an employee or independent contractor (either way, they are representing you) and you want to maintain that sense of loyalty.
I called Sheilenna today and picked her brain for a bit. She provided great insight and helpful information which will help us in our transition to a multi inspector firm. It is great to have her as a resource.
Thank you Sheilenna!
Yep. She’s the best… because she built a very successful multi-inspector firm.
Sheilenna I’ll be giving you a call tomorrow! Thank you for offering advise!
Some excellent conversations are occurring off the forum; I wanted to copy and paste here so you may have the privilege to hone in as well…
-------- Original message --------
From: Green Valley Inspections
Date:08/27/2014 9:21 PM (GMT-08:00)
Subject: Multi inspector questions
Good evening Sheilenna. I am at a point I am considering adding a part time inspector. When you added was it at part time or did you wait till you had enough to keep them going full time.
Right now I could give out 2 to 3 a week. I was always under the impression that 40 percent to the inspector was standard, the guy I am talking to wants 50 percent. I am having a hard time wrapping my head around that since I take all the liability and marketing expense as well as software, insurance and assoc dues. For their 60 percent are they required to market? Will you be at the Vegas convention?
Green Valley Home Inspections
-------- Original message --------
Date:08/28/2014 9:14 AM (GMT-08:00)
To: Green Valley Inspections
Subject: RE: Multi inspector questions
Start out with them part-time, as your business grows, increase the number of inspections.
As your inspections increase, schedule two per day, per inspector. (9AM and 2PM). This is a good general schedule.
Pay well. Yes, 60/40 is a lot for your new inspector, but there are many advantages to this:
- you want quality-conscious individuals
- you want to minimize any non-compete
- you want your new inspector to maintain a sense of loyalty and excellent customer service
- availability to answer customer questions after the report is complete (this may or may not hinder their family time), but you as a business owner expect those questions to be responded to promptly and efficiently.
To your last question, as of right now I do not have plans to be in Vegas, but I’m sure if Nick receives enough momentum on the topic I would be present.
As always…To Your Success!
Sheilenna, Some people I have recently read are promoting the hiring of employees. I’m sure there are as many advocates for each, but I’m about to bring on a contractor. This is the camp I am in, but what do you think?
Also, on the contractor’s agreement, would you allow them to put their company name as the contractor?
Welcome Sheilenna, you will be a great help to a lot of us. Will be going more into government inspections soon, finishing up my VOSB verification. May need some advise on a few items.
Whether or not you choose to elect the employee route or the independent contractor is truly your discretion. I can only lead by example of what I have already accomplished. My suggestion is to discuss it with your CPA or better yet, go to nachi.org/counsel-on-call and discuss with InterNACHI’s in-house counsel to find out which avenue will better serve you.