Compensation for an Innkeeper

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06/04/2012

I am an independent recruiter.  I am meeting with a potential new client on Thursday.  She is looking to hire a new innkeeper.  I have I have 20 plus years of recruiting experience, but have never filled a position like this.

She mentioned that this person may be an independent contractor vs. an employee.  They pay a % of sales and may consider including living quarters, but she is not sure how to do that in the compensation package for tax purposes.  How would the innkeeper handle that for reporting purposes?

Any advice would be greatly appreciated!!

 

 

Kay Nein's picture
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02/13/2012

 As a bookkeeper, I have to address the independent contractor comment.  The IRS is very particular about this (they want all the payroll taxes they can get) and there is a long checklist of things to consider when trying to figure out if someone qualifies as an independent contractor IC).  

  1. They set their own hours
  2. You have no say in how they do their job, just the finished product (ie: can't tell the cabinet maker how to cut his wood, but can decide how the finished cabinets should look)
  3. They can bring in someone else to do the work for them - an IC with their own business can have employees that actually do the work.
  4. They offer their services to the general public and have other customers - if the IC's income only comes from you then they are not considered ICs.
  5. The IC has their own equipment (not as applicable here)
  6. The IC pays their own operating expenses - when they file their taxes they should have expenses to offset their income.  If they only have income but no expenses (the "employer" pays for all office supplies, cleaning supplies, fuel/mileage, phone, etc) that is an IRS flag.

Here's a great list of 20 areas to analyze when determining IC vs. Employee.  http://www.comptroller.ilstu.edu/downloads/20-factor-test-for-independent-contractors.pdf

Keep in mind also, that there is an IRS form that an IC can file which asks that their IC classification be reviewed.  This can be done by any IC who thinks they should have been an employee and had federal taxes taken from their pay.  This often happens once the IC tries to file their IRS 1040 SchC form and sees what they owe in self-employment taxes.  If they get re-classified, you're busted and you can be hit with huge taxes & penalties on the amounts that should have been paid. 

I know this is a potential client of yours, but you should educate them.  This is important to know in your business also.

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06/04/2012

I agree with you, that was a concern I had as well.  I am hoping to be able to educate them, but was hoping to have some alternate options to offer.  I appreciate your feedback.

OnTheShore's picture
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08/28/2011

Besides the IRS, you also have to worry about the state Worker's Compensation Board  -- if the Inn is employing the innkeeper, they will need to carry worker's compensation insurance for them; if the innkeeper is an independent contractor, then the Inn doesn't -- but (at least in Maine) you have to have the IC relationship reviewed and vetted by the WCB before the work begins.

Note that for both the IRS and the WCB, the default position is that if you are paying someone (individually, not paying a corporation, LLC, or other legal entity), they must be treated as employee unless you can demonstrate somehow that they are an Independent Contractor.

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Kay Nein's picture
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02/13/2012

 Good point, Harborfields!  In FL, the worker's comp company has to audit your payroll every year (I assume this is the case everywhere, but I only know FL).  You have to provide exemption certificates or Insurance Policies for ICs or you have to pay additional WC for the ICs.  This is something that I can't seem to get into some of my client's heads.  Rules are rules, but alot of people think they can trick the system.  

Joey Camb's picture
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04/02/2010

think you need to have a very long list of requirements ie

live in

on call hours ? ie if a guest needs something on an evening are they expected to come? come certain days etc?

Days off?

Duties ie do they have to do everything or is it more of a management scenario?

and so on the more "on" they are or potentially are then the more expensive it will be.

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05/30/2012

Not sure about innkeepers, as there may be an exemption of some sort, but the IRS has guidelines about who can be treated as an independent contractor vs. an employee.  One of the points is that if a person's hours are determined by the person they are working for, they are not an independent contractor.  I suggest consulting a tax accountant before providing recruitment services unaware. 

Madeleine's picture
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09/29/2011

Yes, the OP needs input from a tax acct first.

We have a couple if independent contractors who work for us- they come when they show up, they use their own equip, they do the job and leave. We don't even talk to them. That does not include housekeeping staff, but it would if they had their own housekeeping business and we hired that business to do the cleaning. (At least as far as I understand it.)

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05/30/2008

Our part-time housekeeper had her own house cleaning biz and showed up between her other jobs.  She was an independent contractor.  That was part of the problem...if you know what I mean!

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10/07/2008

 Good questions, is the innkeeper onsite 24/7? Living there vs away would be a huge difference in compensation package. Are they required to clean rooms - ie do all housekeeping and maintenance? Or are they there to check in guests, manage the business and cook breakfasts for guests?

It all depends.

Sorry, not the answer you wanted, but as you can imagine it is not as cut and dry as any other profession.

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06/04/2012

Thanks for your input.  I can imagine there are a lot of variables.

From what I gather....  The current Inn Keeper stays at the inn when there are guests.  She has a cell phone and has calls forwarded to her.

They do have a full time maintenance person on site, but I believe the innkeeper handles reservations, cleans the rooms, checks folks in, and serves breakfast.

I won't have all the details until my meeting on Thurs., but I was hoping to be somewhat knowledgeable.

 

Breakfast Diva's picture
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05/26/2009

If the position is not a live-in one, then you are at a real disadvantage. It means that you need to find someone who lives within a few miles from the b&b. Things change quickly from day to day and guests often need someone to be there for many different reasons. If the new hire lives more than 20 minutes away there could be big problems. Of course, if the owner lives near, and is able to be on-call, it's a different situation.

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05/22/2008

 Sorry I can't help you but this site sure has filled alot of positions, maybe  you can get some ideas here

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