Need some input
What property managers or rehab folks that
Hire contractor or handy men for Labor only but they still go out and charge material at homedepot and I pay for the material
Over the phone (phone sale ) prodesk
How to make sure they are not over buying and then selling your material or
Doing a return for store credit
With out you knowing about it
This is high volume 7-10 projects daily any input would be greatly appreciated
There's no way to know for sure. Every once in awhile I do labor only with owner paying for materials but in that case I usually have owner buy the main products and I buy all the material to install it. An example is, homeowner buys a toilet and I will buy the wax ring and supply hose, show them the receipt and add that to me fee.
The best way is a standard estimate where a handyman bids out the whole project and you pay the fee you expect and its the handyman's responsibility to factor in the materials with a certain finish allowance and complete the job.
As far as I know, if you are buying the material, then the IRS considers them employees and you have to withhold taxes and all the other hassles of employees. In most cases you want the contractors to remain Independent Contractors.
Pick out the materials, but have the contractors pick it up and pay for it.
Phil Z., TOP END Properties | 203‑936‑7776 | http://www.rehabhousesinct.com
Can you show in the IRS code that if you buy materials that they are consider employees.
@Vince Padalino one of the things I do is set up my charge accounts so they must have an address as a PO number. That way every charge is tied to a specific address. if you need you can go the property and see if the new toilet was installed, or new fan/light, or even if the room was painted. You can estimate pretty closely how much paint it takes. You do not have to do this to every house, but do enough you feel comfortable.
If you are worrying about this you must have a reason. What are your reasons? You may also want to consider getting a new handyman if you do not trust him to steal from you. I only have one handyman allowed to charge on my account. Occasionally he charges a big box of screws and I know the job did not need that many, but he probably uses them on many jobs. I get concerned if I see a tool charge. He should have his own tools or sometimes I loan him mine for special apps.
As to buying supplies making someone an employee I have never heard that. Usually to be an employee you must direct their work, set their hours etc. Paying for the supplies is not one of the tests used by the employment division to determine employee of contract laborer.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!