Employees?

[Todd S.]

I am getting to the point where I have 7-10 properties in various stages at any given time. I have a project manager, but was wondering if it makes sense to essentially start my own in house construction/remodeling crew and then only sub out specialty trades (HVAC, etc. )? Would this make sense or is paying them all as subs a better set up?

[Aaron McGinnis]

Employees are -

Great. They are captive workers who go where you want and do what you want when you need them to do it. You have access to them on-command and they are generally cheaper than a sub.

THEY SUCK. The paperwork, tax reporting, and inevitable legal issues are a total nightmare. You can't just fire them, or tell them to come back Wednesday because you don't have anything for them to do the next 3 days. Time reporting is a pain and/or expensive, and keeping them motivated and tooled is a lot of effort. (Don't expect a serious or legal employee to be bringing their own tools to the job)

Did I mention workers comp, general liability, and health insurance are all a pain to deal with? How about the unemployment insurance claim when you fire that lazy slacker who never did anything. Better hope your paperwork is in order, because even if you're in a free-to-work state the UI claim can still bite you. 

You're also in go-to-jail territory over withholdings for things like UI, and the various other withholdings. And expect the requisite whining when you start taking taxes out of somebody's paycheck. 

In conclusion... this is a big decision and you should speak with a CPA and/or Lawyer before you do it so you understand all the issues surrounding it.