Independant Contractors

Replies to This Discussion

Permalink Reply by Marissa on October 11, 2009 at 6:18pm

I am an IC for a physical therapy company. This is all going to depend on how much you are going to put in to it. Will you be doing all scheduling? Marketing? Supplying materials such as linens, lotions, washing services, table, etc? If you are going to supply everything and she is just coming in to do her "job" and leave the rest to you, you need to charge 50% per massage. Adjust from there depending on what she is going to provide. Set aside a separate account for the massages she brings in and pay by check through that account weekly. If you run specials for your business, she should still be paid her 50% and any "losses" are covered through the account. I would have a contract drawn up that at the end of 6 months, you can re-evaluate the circumstances and decide what to do from there. Just suggestions! I've been working this way for 7 years and have had no issues. I also own my own business that brings in the better income, so I'm not picky. I hope this helps!

Permalink Reply by Julia Mims Edwards on October 11, 2009 at 7:25pm

Exie,
I work with a chiropractor I do not pay rent, I provide my own supplies, the office manager usually makes the appointments for me. whenever I plan specials I remain at 50/50 since i do not pay rent. I usually like to get paid once a month, to keep the money stress off of the Dr. and the office. If your collegue is coming along side make sure he or she knows the "climate" of the office to try and be as unified as possible.I wish you the best, I strongly believe we as healthcare workers have to know that we do not need to compete since we all have different levels and different skills to offer.

Permalink Reply by Tom Florio on October 11, 2009 at 8:35pm

I have ICs work for/with me at my private massage practice. I pay $/hour of MASSAGE time. So if they have a 60 minute massage they get paid the hour rate, if they have a 30-minute or a 90 minute they are paid proportionately. They are expected to be at office 15-20 mins before client appt and to change sheets after appointment. I do all the scheduling, laundry, and provide all the supplies and do all the marketing.

I usually start at $5 less per hour than I expect to pay them- with the understanding that when they get clients on their own (an agreed upon #) their rate will increase. If I offer discounts or coupons that DOES NOT affect the ICs pay. I provide business cards to the IC with their name and my business name/contact info.

To make it simple I cut checks 2x's/month. Periods run 1st-15th and 16th to EOM. Then I usually write checks within 2-3 days after those dates. I will either mail or leave at office, whichever the IC prefers.


I would strongly suggest that you create a formal contract and that you BOTH sign it and each retain a copy. This is the best way to avoid misunderstandings. Hope I answered all your questions!

Permalink Reply by Joan Cole on October 12, 2009 at 4:29am

I have worked on this basis.
I was paid a percentage - 50%.
How discounts were shared depended on who initiated the discount. If it was a discount solely to promote my massage business, we split the "hit". If it was solely to promote the hosting business, I got paid my normal cut.
I was paid monthly.
I handled creating my own business cards and had my own website.

Big tip: if she is an independent contractor, you ARE NOT her "boss". Thinking that you are her boss is going to lead to you making the wrong decisions on issues that lead you to be considered an employer by the IRS, and thus liable for the employer share of FICA, etc. She must have control of how she does her business - you can only control the result, not how it is done. If you want "boss" control, you are better off setting it up as an employer/employee relationship from the start.
Read and reflect on this: http://www.wwwebtax.com/general/independent_contractor.htm

If it is really an independent contractor situation, you are probably better off thinking of yourself as her landlord. You are simply handling rent as a percentage of sales rather than a flat monthly rate.

How long is it worth it to the IC therapist to continue doing business as your "tenant" on a 50/50 percentage rent? When a therapist only has a few clients, it is highly beneficial to pay a split for the right to work in your facility. However, at some number of appointments per week, the therapist would be making a bigger profit if she only paid a flat rental. In the geographical area where I practice, it is possible to find flat rental spaces at around $400 a month. So, at a 50% of $60/hr rental, once a therapist has more than 14 appointments in a month, she is better off moving out and going somewhere that will give her a flat fee rental arrangement. Unless you provide valuable things she considers worth losing that money to stay with you - such as if you consistently funnel new clients into her schedule (so that if she left she wouldn't have more than 14 appointments in a month). If the therapist is financially literate, and you aren't supplying something she can't find elsewhere, you are likely to lose her. If her presence improves your business, perhaps you might structure your agreement with her to encourage her to stay should that level of success occur - at some sales level she pays a flat rate perhaps, and you get an additional fee per appointment for whatever variable costs you are incurring (booking appointments, laundry, supplies, etc.)

I agree with the advice to set things down in a contract. I would recommend that you put some thought into how the relationship can end amicably, because things change. Does she compensate you for clients she has received from your marketing efforts if she goes out on her own and takes them with her? That would be a good thing to address. Perhaps a confidentiality agreement - if you have any trade secrets (processes unique to your business, client lists, etc.)

Good luck!

Permalink Reply by Vicki Walther on October 12, 2009 at 9:00am

All the posts are great and hit the majority of the topics.

in order to alleviate the therapist's likelihood of seeking her/his own space once the % nets enough clients to pay rent elsewhere is to put a ceiling on the fees.

For example, if the agreed upon amount of rent value is $400.00 then the % split applies up to that level of payment. Any fees for services beyond that amount could be dealt with at a reduced % split or no split at all depending on what the facility is offering the therapist.
This should be detailed in the contract that defines responsibilities, marketing expectations etc.

Permalink Reply by Kris Stecker on October 12, 2009 at 9:34am

These are good questions. I recommend that you start by looking at the mission of your business. That should give you more clarity on what the arrangement should be. At http://spatech.edu we always have our graduates be clear about their personal mission and if they have their own business that they do the same. A clear mission should guide all decisions.

The other thing is to take the time to draft a complete written agreement so there are no misunderstandings. (The notion of there being no misunderstandings is a myth of course, but at least the written statement gives you both something to reference for the future when you want to make revisions.)

Permalink Reply by Exie Buehler on October 12, 2009 at 2:26pm

Hi everyone,
First I want to thank you all for your great comments. It gave me a lot to think about. I spoke with a 30-year veteran tax preparer who has helped several small business with their initial start-up. She helped validate my colleague's IC status. So, I am updating you about that and hope to get more suggestions regarding the standard rate to charge her for using my admin/scheduling services to build her client base and my table.
She will be added to my online scheduler and website, but the scheduler will list her own phone number. She will have to supply her own linens, lotion, etc, and do her own laundry. She is free to advertise her services to the public and can choose her days to work on clients in my space during the hours that I am not in it. For simplicity sake, client payments will be accepted through my central business location, but she will decide when she wants me to write her a check to compensate her. I will be using the 1099 form to show what payments were made to her. She will also be responsible for maintaining proper certifications, licenses, and training. All of this will be in a detailed contract that we both agree on and sign.
It is for these reasons that the arrangement passes the "test" as an IC. The only question now is compensation. More suggestions on how much that should be is greatly appreciated.

Thanks so much for all your help and support.
Exie
PS, the online scheduler is free, except for when a client requests a text message reminder. this is important because if she chooses to allow her clients to receive text reminders, it costs me a nominal fee each time a text is sent, but those fees do add up. Also, I have a credit card account so that clients can use debit/credit/health savings cards to pay for their sessions and a fee is deducted from each transaction upon processing as well as monthly.

Permalink Reply by Tamra Nelson on November 15, 2009 at 6:49pm

Hi Exie,

I have always worked as an independent contractor. I originally paid a percentage of each massage completed. The clinic I worked at actually provided the linens (except for the face rest covers). The normal percentage in the Kansas City area for IC's is about 40/60 (40 to IC and 60 to business) but you can do anywhere from 25% and up. I could choose to have my business cards to match those of the clinic or use my own, which is what I chose to do. As for checks/credit cards, checks were made out to me personally and cash payments were given directly to me rather than to the business. Credit card payments could be run through the clinic and I would be paid once a month for those and had to pay a fee for the credit card usage. I had to have the paperwork in by the 25th of each month with a detailed listing of massages completed, gift certificates redeemed, and credit card payments. Then my monthly "rent" payment for the massages completed had to be paid on the first of the month and I would receive a payment at the same time for any gift certificate redemptions and credit card payments. I still have the paperwork if you need examples of what they looked like.

The place I'm at now, I actually pay a monthly rent and if I put business cards up front at the salon I have to have ones that match everyone elses. I definitely agree with everyone else though, no matter what you decide to do, you need to have a written agreement!

Tami