samedi 24 mars 2018

Small business needs help with Subcontracting vs Employee vs Referral Network

Hi everybody!
I am the sole prop of a successful window cleaning business in California. I have an abundance of extra work. I have only one employee, myself. My wife helps with phone calls and admin part time. Currently when I have too much work to handle I hire other sole prop window cleaning owners to subcontract. I would like to hire employees, but after running the numbers I cannot afford to pay a decent wage and stay in business.

I have reviewed EDD's form DE 38, Employment Determination Guide, and my answers leaned towards subcontracting. The answers were as follows:
Questions 1-3: No, No, Yes
Questions 4-6: Yes, Yes, Yes
Questions 7-13: Yes, No, No, No, No, No, No

Before I send in a DE 1870, Determination of Employment Work Status, I would like to get some advice on if I can subcontract work lawfully under this arrangement.

Some of these facts may lend weight to approving subcontracting:
Clients are told up front when they schedule that we represent a network of great window cleaning companies, and which one will be dispatched.
Subcontractors carry their own insurance and are licensed.
Subcontractors wear their own companies t-shirt or uniform.
Payment is made directly to the subcontractor from the client.
A referral fee or percentage is then paid to me by the subcontractor at the end of the week or bi-monthly.

Essentially, I am acting as a referral service. Which brings up another question: Would it be better overall to setup a referral service type entity separately? Then that company refers work out to my company (myself), and other subcontractors or window cleaners within my "network"?

I've been watching Angies List, HomeAdvisor, and others set themselves up as a referral service. I'd like to do the same, only model the business to focus on what I know best: window cleaning. I have been hyper aware of the best window cleaners available in my part of California. I'd love to expand and find only the best window cleaners in the entire state and refer them to willing clients.

Any help is much appreciated! Thanks!


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