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  1. #1
    Kathy Thompson's Avatar
    Kathy Thompson Guest

    Question Pay Structure for "Newbies"

    We have had our inspection company for 11 years. Last year my husband passed away and I am keeping the business going. Now that business is picking up I want to hire another inspector but....for those of you who have been at this for a while, what type of a pay structure would I put him on. The guy I have in mind has been doing remoldeling for over 15 years and has some construction background. Do I just start him out on a flat rate? If so, what would be fair? I would like to use him as a sub-contractor which means he will have to have his own insurance. I plan on getting him into ASHI and also sending him to classes for further education.
    Any input you all could give me would be appreciated! As you can tell I'm new at this side of the business.

    Kathy from OHIO!

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  2. #2
    Join Date
    Oct 2003
    Location
    Rockwall Texas
    Posts
    4,519

    Default Re: Pay Structure for "Newbies"

    Does the state you work in require a license? If so, he'll probably have to attend HI classes before he could become licensed.

    Did you husband have other inspectors working (or still working) for him?

    Are you yourself licensed or knowledgable of the home inspection business and requirements in your state?

    Just curious,
    Rick


  3. #3
    Join Date
    Mar 2007
    Location
    Mesa AZ
    Posts
    1,181

    Default Re: Pay Structure for "Newbies"

    Quote Originally Posted by Kathy Thompson View Post
    We have had our inspection company for 11 years. Last year my husband passed away and I am keeping the business going. Now that business is picking up I want to hire another inspector but....for those of you who have been at this for a while, what type of a pay structure would I put him on. The guy I have in mind has been doing remoldeling for over 15 years and has some construction background. Do I just start him out on a flat rate? If so, what would be fair? I would like to use him as a sub-contractor which means he will have to have his own insurance. I plan on getting him into ASHI and also sending him to classes for further education.
    Any input you all could give me would be appreciated! As you can tell I'm new at this side of the business.

    Kathy from OHIO!

    If your considering him as a sub-contractor with a 1099 you may want to check with your accountant.. My understanding of this is if you are providing all of his inspections you may be considered his employee and should do withholdings.. Those witholdings, matching social security, work comp, ect. can add up to 30 plus percent alone.

    Phoenix AZ Resale Home, Mobile Home, New Home Warranty Inspections. ASHI Certified Inspector #206929 Arizona Certified Inspector # 38440
    www.inspectaz.com

  4. #4
    Join Date
    May 2010
    Location
    Durant, OK
    Posts
    117

    Default Re: Pay Structure for "Newbies"

    If you pay him as a private contractor, the IRS will view him as self-employed, so there will be no tax implications for you to worry about. He will have to report the income you pay him on his 1040 schedule C and pay his own self employed income tax. The fees you pay him, you can claim as business expense on your own Schedule C.

    An ounce of prevention is worth a pound of cure
    Jubilee Home Inspections

  5. #5
    Join Date
    Jul 2008
    Location
    Snowbird (this means I'm retired and migrate between locations), FL/MI
    Posts
    4,086

    Default Re: Pay Structure for "Newbies"

    I am sorry to learn of your recent loss.

    THOMPSON James V. "Jim" Thompson, age 58, passed away Monday, August 16, 2010. He was born in Lancaster, Ohio on October 9, 1951, to the late Paul and Betty Thompson. Jim graduated from Millersport High School in 1969. After working several years in the automotive industry, he and his wife Kathy started their own successful business in 2000. Jim was on the board of the American Society of Home Inspectors and was also a member of the National Association of Home Inspectors. No matter how busy he was, he always made time to help his friends and family, and made sure he was able to spend time with his grandkids. His family learned his work ethic by the great example he set for them. His family will truly miss his love and devotion. He is survived by his high school sweetheart and wife of 41 years, Kathy; daughters, Jamie (Stephen) and Shannon; proud "Papa" of grandkids, Erin, Cameron and Connor; sister, Charee Thompson; brothers, Jon (Terry), Matt (Penny), Mark (Suzie), Rob (Betsy), Pat (Kim) and Tom; several nieces, nephews, aunts and uncles.
    Contact Franklin County Home Inspector || Franklin County Building Inspector || Residential inspection services Ohio || Commercial and residential home inspections in Franklin, Fairfield, union, tickaway, delaware, clark, madison, and licking countie

    If you are going to continue on with the HomeFront Inspection Services enterprise, I suggest first that you check into acquiring ASHI membership credentials and/or NAHI membership credentials in your own name, as you might need to remove those logos from the website until you do.

    You may have yet to address any "paperwork" regarding the business entity/ownership of the closely held business (sole prop, "S" corp, "C" Corp, LLC, LLP, etc.) transfers, tax returns, etc. Continuing to work/operate into the present calendar year, only in the name of your dearly departed may have some negative consequences.

    Insurance, imdemity, etc. you'd still require, now with yourself as the principal, even if you attempted to "sub contract" or employ someone outside of the marriage for some of the work.

    I suggest you address these concerns with personal trusted attorney, accountant, and insurance agent specialized in the HI business. Perhaps one of the local chapter board members may be willing to recommend some resources for you. Your professional advisors/consultants can help you navigate the legal and tax issues both of the estate, business, help you value and evaulate the pros and cons, should you continue in that endeavor, and can advise you further regarding the liabilities, pitfalls, consequences of becoming an employer in general, and the special circumstances of the HI business, especially if one wishes to direct such a business and direct/supervise/contract/employ others to perform inspections. You may wish to take some classes.

    As I am sure you know, its a "skinny" business in a "scant" market in not the greatest of economic periods. Small employers have it the toughest. The transition from self-employed small service business to employer is a dramatic one in many ways.

    With deepest sympathy, I am

    Sincerely,
    H.G.

    Last edited by H.G. Watson, Sr.; 04-10-2011 at 08:06 PM.

  6. #6
    Kathy Thompson's Avatar
    Kathy Thompson Guest

    Question Re: Pay Structure for "Newbies"

    Sorry guys, guess I wasn't real clear....We typically train our newbies for 3 months before we turn them loose (if they are ready). What or how should I pay him during the training process. My inspector I have now is paid as a sub-contractor and I will be paying him to do the training. He is on a 1040 schedule C. My accountant said this is the best way to go.
    We do not require a license in the state of Ohio (yet).
    My experience is with the real estate end and learning through the past 16 years working with another inspection company prior to starting ours, in marketing. I do learn alot just reading all the posts. As for being an inspector, can't see that happening.


  7. #7
    Join Date
    Nov 2009
    Location
    St Paul, MN
    Posts
    1,628

    Default Re: Pay Structure for "Newbies"

    Before I started my own company I was an area manager for a national inspection company. We'd start our "green" inspectors at 35% of the inspection fee. However, they were employees and we covered liability, e&o, association dues, medical, etc. But, they had to get most of their own inspections.

    MinnesotaHomeInspectors.com
    Minnesota Home Inspectors LLC
    ASHI #242887 mnradontesting.com

  8. #8
    Join Date
    Mar 2007
    Location
    Chicago IL
    Posts
    117

    Default Re: Pay Structure for "Newbies"

    Hi Kathy,

    The typical split in our area is 60/40. You, the owner gets 60% and the inspector gets the remainder. I believe LandAmerica or whatever it is now called is right in that ballpark. Good luck and kudos to you for following on with the business. God speed!

    Dan

    Dan Cullen
    www.domicileconsulting.com
    Chicago IL

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