USE OF LICENSE, Fair Percentage ?

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growler

Senior Member
Location
Atlanta,GA
Ok, so you guys have convinced me it's an accounting/legal/liability/insurance nightmare to "sub-contract" work; and I don't want to even appear questionable to anyone (esp the AHJ). So let me tweak the question. Assuming a $50/hr bill/bid rate, what would you think fair to pay someone as a W-2 employee (truck and tools provided by employee; brings in 100% of his jobs). Assume a total of 700 hours/yr for this equation.

As a W-2 company employee you would need to be paid for every hour that you are on company business and this includes driving to and from jobs to work and bid them. You would need commercial insurance on the vehicle and would need to be paid mileage ( best for you at the highest rate allowed, tax deductable with no workman's comp. or unemployment holdout). You would need to be paid hourly so you would be covered by workman's comp.

To bill 700 hrs. you would spend well over a 1000 hours by the time travel and biding and other paper work and such thing as stocking vehicle for jobs and call backs.

We have only got 35K billable labor and if you drive 20K miles we are out about 10K$ just in milage payments. So now we have 25K$ and a thousand hours to pay for.

Now if we paid you $12 an hour for work X 1000 hour =$12K and 3K$ rental on your tools and 10K$ milage there could be around $5k left over for the company.

This would give you a little over $35 an hour for the 700 hours that you think you are working.

If you can find someone willing to do it this would be your best bet. Low hourly rate with vehicle mileage and tool rental payment. Lower taxes would leave more in your pocket.

You would still come out better with you own business because there are more tax write offs.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
Ok, so you guys have convinced me it's an accounting/legal/liability/insurance nightmare to "sub-contract" work; and I don't want to even appear questionable to anyone (esp the AHJ). So let me tweak the question. Assuming a $50/hr bill/bid rate, what would you think fair to pay someone as a W-2 employee (truck and tools provided by employee; brings in 100% of his jobs, and in 15 years has NEVER taken longer than he bid the job for?) ((ok, ok, maybe in reality that's not true, but sometimes by the time I get around to filling out a time card my memory gets hazy...)) Assume a total of 700 hours/yr for this equation.

Look at it this way.

Billable Hours = 700 = $35,000
Paid out hours = 900 (covers the things that can't be billed but he legally has to pay you)
Medicare and FICA = 7.65%
WC - varies widely but is likely to be about 2%
Unemployment - might be as much as 5% (varies widely from state to state and by employer and job title and is often really offensive for PT employees)
Lets call it 15% total


Does not cover anything for him such as administrative, insurance, overhead, or profit.

My guess would be that somewhere in the $20-25/hr range is what he might be able to offer you and still make it worth while to him to do it.
 

hugh6177

Member
Location
Charlevoix, MI
Thanks for all the responses. I appreciate the way you guys broke it down so it made sense... (Growler/Peterson, appreciate your being willing to "think outside the box" a bit :) Once again you've convinced me; this time that it just isn't practical to do electrical work,:cry: because to stay legal is impossible.:eek::eek:

:rant: In fact, I've shown this forum to my ex-boss; and he's decided to shut down his company because it's impossible to make money in our state! He also threatened to "put a hit" out on me if I told the other employees they should be paid for hours worked not directly on jobs (ie. paperwork/drive time/etc). ((Can anyone tell me what that means, I don't understand???))) I understand now why the first owner shut down; because only 3-4 of his crew of 40+ guys (peak years) had company vehicles, and he was an ethical man. Apparently the guilt just became to much for him to bear...:rant: over.... LOL

Sorry guys... I did seriously mean the "thanks" for the responses; some were informative, some were intersting, and some just plain entertaining. :) I'll be signing off now to concentrate on selling you all the finest quality used tools I can find; hopefully I can quench enough of my love for my trade by reading this forum and shooting the bull with you about the jobs your doing when you call to keep me from temptations. So if you call to ask about a threader, please bear with me if I ask exactly what your threading, what is the project, etc, etc; and then I tell you the story of the Govt job I did that required all rigid for EVERYTHING, and the General was a guy from LA who had his family Fedex him frozen raccoons to eat... Just nod to yourself, roll your eyes, and get me back on track. Stay safe and keep the wheels turning... someone's got to do it! :bye:
 
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donaldelectrician

Senior Member
Thanks for all the responses. I appreciate the way you guys broke it down so it made sense... (Growler/Peterson, appreciate your being willing to "think outside the box" a bit :) Once again you've convinced me; this time that it just isn't practical to do electrical work,:cry: because to stay legal is impossible.:eek::eek:

:rant: In fact, I've shown this forum to my ex-boss; and he's decided to shut down his company because it's impossible to make money in our state! He also threatened to "put a hit" out on me ...


You do not like the Lions Den ?


Good Luck !



Don
 

kwired

Electron manager
Location
NE Nebraska
Here, one of two conditions are required for the proposal -- you are an employee of the company (you are on thier payroll) or you are an independant contractor who has his own insurance.
That is going to be the case in most places. Do people get by with other arrangements, yes. Does those other arrangements sometimes blow up in their face when a legal challenge pops up, yes.

As a W-2 company employee you would need to be paid for every hour that you are on company business and this includes driving to and from jobs to work and bid them. You would need commercial insurance on the vehicle and would need to be paid mileage ( best for you at the highest rate allowed, tax deductable with no workman's comp. or unemployment holdout). You would need to be paid hourly so you would be covered by workman's comp.
I disagree. W-2 also covers salaried employees that are not paid by the hour. There may be laws covering what you get paid for if you are an hourly wage employee, but a salaried or commission pay person only needs to meet what is usually in some kind of contract for performance. The could have in any contract a set number of hours they need to be available for certain tasks but there may still be other tasks they need to accomplish and can do so whenever it works for them. A good example is school teachers - they are typically salary employees, they obviously need to be present for regular school hours and a few other obligations but if some of their required work to be done can't be finished during those times they have to finish it essentially "on their own time" so to speak.

Thanks for all the responses. I appreciate the way you guys broke it down so it made sense... (Growler/Peterson, appreciate your being willing to "think outside the box" a bit :) Once again you've convinced me; this time that it just isn't practical to do electrical work,:cry: because to stay legal is impossible.:eek::eek:

:rant: In fact, I've shown this forum to my ex-boss; and he's decided to shut down his company because it's impossible to make money in our state! He also threatened to "put a hit" out on me if I told the other employees they should be paid for hours worked not directly on jobs (ie. paperwork/drive time/etc). ((Can anyone tell me what that means, I don't understand???))) I understand now why the first owner shut down; because only 3-4 of his crew of 40+ guys (peak years) had company vehicles, and he was an ethical man. Apparently the guilt just became to much for him to bear...:rant: over.... LOL

Sorry guys... I did seriously mean the "thanks" for the responses; some were informative, some were intersting, and some just plain entertaining. :) I'll be signing off now to concentrate on selling you all the finest quality used tools I can find; hopefully I can quench enough of my love for my trade by reading this forum and shooting the bull with you about the jobs your doing when you call to keep me from temptations. So if you call to ask about a threader, please bear with me if I ask exactly what your threading, what is the project, etc, etc; and then I tell you the story of the Govt job I did that required all rigid for EVERYTHING, and the General was a guy from LA who had his family Fedex him frozen raccoons to eat... Just nod to yourself, roll your eyes, and get me back on track. Stay safe and keep the wheels turning... someone's got to do it! :bye:
Most of the issues brought up here are not specific to electrical contractors - there would be similar issues with any business that requires licensed people to perform certain tasks. There are ways around some of these obstacles, but in general you would be considered either an employee or a subcontractor and need to meet the licensing requirements depending on which position you are in, appears as though the license you currently hold would dictate you should be considered an employee, you could do almost everything else you suggested, provided the employer is on board with it.
 

growler

Senior Member
Location
Atlanta,GA
As a W-2 company employee you would need to be paid for every hour that you are on company business and this includes driving to and from jobs to work and bid them.

I disagree. W-2 also covers salaried employees that are not paid by the hour. There may be laws covering what you get paid for if you are an hourly wage employee, but a salaried or commission pay person only needs to meet what is usually in some kind of contract for performance. The could have in any contract a set number of hours they need to be available for certain tasks but there may still be other tasks they need to accomplish and can do so whenever it works for them. A good example is school teachers - they are typically salary employees, they obviously need to be present for regular school hours and a few other obligations but if some of their required work to be done can't be finished during those times they have to finish it essentially "on their own time" so to speak.

Yes W-2 can cover a salaried employee but would you are anyone you know put an employee on salary just because he promised to bring in 700 billable years a year.
Once on salary he has to be paid even if he doesn't even look at a job.

The reason I think he needs to be paid for all hours worked is so he would be covered by workman's comp insurance.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
Yes W-2 can cover a salaried employee but would you are anyone you know put an employee on salary just because he promised to bring in 700 billable years a year.
Once on salary he has to be paid even if he doesn't even look at a job.

The reason I think he needs to be paid for all hours worked is so he would be covered by workman's comp insurance.

I don't see anyway such a position is exempt, so he would need to be paid for all hours worked. Not saying all businesses actually do so, but that is the way it is supposed to work. With a few exceptions here and there.
 

kwired

Electron manager
Location
NE Nebraska
Yes W-2 can cover a salaried employee but would you are anyone you know put an employee on salary just because he promised to bring in 700 billable years a year.
Once on salary he has to be paid even if he doesn't even look at a job.

The reason I think he needs to be paid for all hours worked is so he would be covered by workman's comp insurance.

Yes a salary paid person gets paid even if they don't do anything - but that only will last so long if they don't make money for the employer, plus they typically are obligated to meet certain productivity requirements as part of their employment contract.

Workers compensation still covers salary or commission employees. AFAIK WC is based more so on total payroll amounts, not as much on hours, as well as type of work or industry involved. Construction related trades tend to have more injuries then office workers - so rates are typically higher for a construction worker then an office worker even if the office worker makes a lot more income.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
I would suggest one other thing. If you can work out a deal where you can work legally and both of you are comfortable with the financial and other arrangements, I don't see any reason why you should not go ahead and make some kind of deal with your former boss.

It is just a lot harder to make it worthwhile to both parties at the rate that you mentioned than it would appear at first glance. It just sounds like so much money that one would think that it just has to be worthwhile. It might be, but it might also not be.

My employer charges a certain rate for my services. I would be quite ecstatic to get half of what they charge as a wage.
 
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