1099 or W2 for onsite MHP property manager?

Question

Hi everyone!

I have a mobile home park in Idaho which will have an onsite property manager.  Does anyone know if this individual needs to be a W2 or can I hire on a 1099?  I have received mixed information regarding this!

Thanks so much!

Janine

Roger D Jones · Answer

Anytime... we have one accountant who focuses on our MHP and multifamily clients.  Any questions just ask.  I am no expert and just do what I am told.

Jeff Flynn · Answer

Janine, I have had a lot of trouble with mobile home park on-site managers. I highly recommend managing it remotely if possible. Otherwise I think 1099 is cleaner.

Janine Sharma · Answer

This has been so helpful! Thank you

Janine Sharma · Answer

Thank you so much!

Ashish Acharya · Answer

@Janine Sharma The decision to classify your onsite mobile home park property manager as a W-2 employee or a 1099 contractor depends on the degree of control you have over their work. If you control how they perform tasks, set their hours, or provide tools, they should likely be a W-2 employee, requiring you to withhold taxes and comply with payroll regulations. If they work independently, set their schedule, and use their resources, they might qualify as a 1099 contractor, but misclassification risks IRS penalties.

Wages for W-2 employees and payments to 1099 contractors are both deductible business expenses, but compliance is key.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Janine Sharma · Answer

Thank you! This is very helpful!

Roger D Jones · Answer

JanineI am next door to you in Washington and you can go either way. We have a few parks and we utilize both options. Much of it depends on what your needs in the park will be.  If your manager is just 'keeping an eye' on things, collecting/reminding on a few rents here and there and some light cleanup while being compensated in free or reduced space rent then classifying them as 1099 subcontractor is great.  Their dollar compensation is their free/reduced rent.If you have a lot of maintenance with landscaping or POHs then you hire them as an hourly employee.   For our larger park we have a 'Maintenance Manager' set up for up to 24 hours per week as needed with OT for after hours emergencies.  The IRS is very clear about the distinction between the two scenarios.  1099 subcontractors provide their own tools, set their own schedules are not directed by the hour.  Employees work for you and do as instructed with your oversight.  You can do it either way and reality is you will never be audited.  It is your park to run.But there is a cautionary side to this tale- you should pick one of these two options.   Far too many parks just 'give' a resident in the park free space rent to keep an eye on things and do light maintenance with no 1099 reporting.  If that person were to get hurt somehow and then expect you to pay the medical bills or become disgruntled in some way it is just a phone call to DOR, OSHA or L&I.  Your park name has now landed on someone's government desk and you will eventually be forced to answer a lot of uncomfortable questions.  We also own an accounting/payroll firm and have a lot of MHPs, residential communities and apartment complexes as clients and have seen this happen a few times. Lastly and then I will stop rambling... and this is just my opinion.  I think it is pretty rare that people getting free space rent actually work enough to earn it.  We have another park with a free space rent manager and as we have raised the rents he continues to live there for free.  Good guy, little forgetful, but I wish we hadn't inherited this arrangement and it is tough to retract it.  We are eventually going to have to address this.

1099 or W2 for onsite MHP property manager?

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