I am purchasing a 25 lot MHP that is too far for me to self-manage. Through networking, I found someone local who is willing to manage. Being all TOH and public utilities, I predict that it may only require 10-15 hrs a month.
What is fair compensation? Also, is it best to just have them as a 1099 employee?
Compensation depends on your market, and what you will have this person do. Will you have them do small repairs? Give park tours and answer questions, etc.
I would not confuse the term ‘employee’ with contractor as they are very different. For me, I plan on using my park greeter as a 1099 contractor but I have not determined rate of pay yet.
Yes thank you for the note. A 1099 contractor. I figured that was easiest.
Their responsibilities would be to collect any rent checks in the dropbox and mail them to me, drive through the park once a month and report any violations. Post park violations, updates, etc. Show the park. There are only a few unoccupied lots and two POH that we will sell off, so they will assist in showing the POH too. I will be actively involved, but need some boots on the ground to help with regular duties.
Brandon and Rene
My wife is an accountant and does payroll for companiies and I wish I had a dollar for every beat down I have taken regarding this topic and how I wanted to run our parks. Ultimately it boils down to 'you can do anything you want as long as you don’t get audited…
The IRS defines 1099 contractors very very specifically. I could roll down the list but it is pretty extensive. Some of the highlights are:
These are just the ones I remember through the fog of war as my wife would slowly crush my spirit… and the list is longer than you could imagine. You can’t even do reduced pad rent for a park manager… that qualifies as payment. And again it would only come into play if you got audited and I don’t see the IRS targeting single mom and pop MHP operators in the future. Bear minimum though I would think you would want to make sure he has a business license, he invoiced you monthly and have a business contract in place. They also need to know you are submitting a 1099 for their income every year and they need to report their income it on their taxes too- as that would trigger a ‘glitch’ with the IRS.
You can go to the IRS website and get a look if you want and my wife would be happy to visit with you on the phone if you want to ask questions. Share my pain… just kidding she is super nice.
Good point! Wonder how everyone is paying / classifying their park greater, p/t manager, etc.
Probably the same way it has been done for years… reduced rent, free pad rental, cash under the table. And it probably is not worth worrying about. I doubt highly that the IRS is going to start targeting park greeters/part time handy persons. Only thing is if someone has on going bigger issues with the IRS it can sometimes get caught up in all that. Wife saw that happen once…
I was also thinking just cash under the table, but was wondering if having a documented payment would lessen my tax requirement for the LLC.