On-site property manager - w2 or independent contractor?


#1

Hi,

Can an on-site managers can be hired as an independent contractors instead of an employee?

We have an on-site property manager in our park in Indiana. Ideally, she would be an employee (W2) but the overhead is too great: On top of the taxes we need pay, we found out that worker’s compensation insurance is going to be around $1000 a year, which is close to the insurance for the whole park. Of course adding additional employees will be cheaper once we have a coverage, but we currently just have one park.

Now, if she were an independent contractor, it would be easier on our budget. Though I am not sure if she can be classified as an independent contractor. IRS seems to have a guideline about the classification, but it’s ambiguous. From the IRS site we found this:

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker


#2

Unless they manage other properties and have a viable business for providing property management to others, then this is clearly an employee/employer relationship. Keep in mind, you leave yourself vulnerable to a disgruntled former manager by not playing by the rules.