For those that have manager as a 1099 contractor how do you go about getting workers comp for this person?
If they have their own corp, they should be providing their own through their corporation.
That is part of the overhead.
How are they an independent contractor instead of an employee? Do they:
Set their own* hours?
- Use their own home for an office?
- Have an office off-site?
- Have a business name?
- Have a business checking account?
- Provide you with written or oral reports?
- Bill you regularly for the work they’ve done?
- Do they direct when/where/how business is done (or do you?)
- Do you provide them with tools like a cell phone or computer?
- Do they work for others as well?
- Are they available for hire to the public?
- Do you provide training?
- Can he/she assign his/her work to someone else to carry out, such as their own employee?
- Do you have an Independent Contractor Agreement with them?
- Do they pay self-employment tax (the other half of FICA and Medicare that an employer normally pays)?
Depending on how you answered the above, they could be an employee. In which case you need to withhold taxes and pay things like workers comp. See http://www.oregon.gov/ODA/shared/Documents/Publications/NaturalResources/20FactorTestforIndependentContractors.pdf for a 20-factor test regarding whether they are an employee or contractor. But, in my opinion, your on-site manager who keeps office hours you supply, in a home you supplied, using a cell phone you supply and a computer you supply, they are likely employees.
Don’t try to skirt the law here: The IRS and your state’s worker’s compensation authority are coming down hard on employers who try to avoid taxes by classifying employees as contractors.
Zepp is correct. In my state, if you’re an officer of a corporation or LLC, you are exempt from having to carry worker’s comp on yourself.
But if you want to avoid their classification as employees, you need to take a lot of extra steps to make sure they are in their own business. For example, help them register as an LLC, get an EIN and bank account, charge sales tax to you if your state collects tax on services, get their own cell phones and computers, let them set their owner hours, help them advertise their services to others and keep copies of those ads, etc., etc.
Personally, Brian_Z, I think it’s a all ruse you’re trying to pull so you don’t have to collect/pay taxes and provide health and workers comp insurance. If you’re a legit businessman, then do things legit. Yes, it’s more expensive, but doing things right will get you a good reputation among fellow investors, actual outside contractors, employees, and outsiders. Not trying to put you down personally, and LOTS of park owners treat employees as contractors, so you are not alone at all.
I’d ask Frank or Dave how they handle park managers and worker’s comp. They’ll likely tell you they toe the line and do it legit.
I am not offended, and don’t assume I have my park managers classified as independent contractors. They are actually all employees of my management company and they are all receiving W-2’s. I asked the question because I have a park under contract and the manager is an independent contractor now with the current owner.
Thanks for taking the time to educate me on the criteria for independent contractor vs W2 employee.
I simply was asking if any park owners have their managers as independent contractors do they provide workers comp.