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Employee Leasing

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KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
For the first time, I'm going to try using an assistant to help with scheduling and other office tasks. Having seen a couple of appraisers go out of business because of payroll tax problems, I am anxious to do this completely above board. Also, my attorney has given me a stern lecture about how easy it is for a plaintiff's attorney to prove that my independent contractor is actually an employee and how I carry full liability for any damages they cause. (Your "independent contractor" hits a kid with their car and you are in deep trouble.)

After sending out a bunch of e-mails to HR companies, I found one that seems to good to be true. Here's the deal:

I pay them a flat $55 per month.

They "hire" the person I designate and handle all the payroll chores including withholding, workman's compensation insurance, tax reporting, bi-monthly paychecks, etc.

I "lease" the employee from them, retaining all control, but without any paperwork!

Compared to doing my own payroll, this just seems too easy. Is anybody else here leasing employees?

Thanks for any thoughts on this.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
This is becoming more and more common, especially with small businesses who cannot afford benefits. It allows the company to hire the personnel they need and be competitive with larger firms. That being said, remember that even though they may be technically an employee of the leasing company, anything that they do as a representative of you comes back to you, i.e., hitting a kid with a car. What it does do is separate you as an employer for tax purposes, but not for liability purposes.

Roger Strahan
 

KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
"What it does do is separate you as an employer for tax purposes, but not for liability purposes."

I understand that, but if everything's above board, I can be properly insured for it. It's my understanding that when you try to go the independent contractor route and fail, you can be left wide open for liability claims, with no coverage. But, that said, I'll probably not assign anything but clerical work.
 

Mike Seward

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I recently hired a full time assistant and couldn't find anyone who would write a workman's comp policy for one or two employees. I went the employee leasing route.
I pay 20% of my assistant's salary to the leasing company. That covers my share of FICA, workman's comp, unemployment insurance and all payroll accounting. I would be afraid to have an employee without having workman's comp.
Mike in Tampa, FL
 

KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Mike,

They told me about 17.5%, but it probably varies from state to state. I'm under the impression that the 17.5% (or 20% in your case) is exactly what payroll deductions would be if you were to do it yourself, and that the company's profit is the $55 per month. Does that sound about right to you?

Thanks,

Koert
 

bobburnitt

Junior Member
Joined
Jan 16, 2002
You should not be asking a bunch of strangers, on a public forum how to handle your tax business. Even if they know what they are talking about, how would you know?

Most appraisers I know can't even appraise real estate honestly, they are too afraid of offending the client, and not getting any future business, therefore they favor the client.

I will give you a tip though. From the cold hard experience of owning another business (not real estate related), I was ruined by the Internal Revenue Service. They can go back YEARS, and declare ALL of your independent contractors EMPLOYEES. At that point you become a non filer of a trust account. They will strip the bark off of you. They will go back YEARS & YEARS and 'estimate' taxes. Their number is the only number. No negotiation. Case closed.

My tip is this: NEVER, NEVER NEVER, accept tax 'advice' from a non-professional. NEVER use a 'CPA' unless he is ALSO an attorney. A CPA is nothing but a bean counter. If he is not also an attorney, don't fool with him.

Been there, been ruined, now it's your turn.

BB
 

KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Bob,

This is the last place in the world I would turn for tax advice, or legal advice for that matter. I was just hoping there might be an appraiser who could recommend a particularly good employee leasing company.

Sorry about your deal with the IRS. I've heard the same story from a few appraisers. It seems so innocent to hire a friend, but when someone gets hurt or files for unemployment, it can be devastating.

Koert
 

Mike Seward

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Koert,
All I pay is 20% which takes care of everything. No $55 monthly fee or anything like that.
Mike
 
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