January 17, 2025 • 53 mins
Unlock the secrets behind the Affordable Care Act's ripple effect on businesses and employees across various industries. Are you curious why many companies have turned to reclassifying employees as independent contractors? You'll gain insights into the strategic maneuvers companies employ to sidestep the financial burden of providing comprehensive benefits, and how this shift impacts the work environment and operational dynamics. We dissect the nuances of employee versus independent contractor status using clear examples, like the operations of a widget company, to paint a vivid picture of this workplace evolution.
Navigate the intricate maze of employment classifications with us, as we shed light on the IRS's criteria to differentiate between employees and independent contractors. The journey through the IRS's 20-factor test is both enlightening and essential for understanding the grey areas in professions such as restaurant waitstaff and virtual assistants. We confront the ongoing debate between employers and regulatory bodies with real-life examples, illustrating the delicate balance of worker classification and the implications of these decisions on both sides of the employment spectrum.
The conversation extends to the complexities of contracting and payment structures, emphasizing the importance of clear, well-drafted contracts to define relationships and avoid unintended legal consequences. Discover the vital role of business entity reporting requirements to FinCEN, the intricacies of S-Corporation tax implications, and the nuances of pass-through taxation. With practical advice and a nod to the importance of mentorship and personal growth, our episode wraps up with a call to action: consult with financial experts and engage with our community for guidance and Continuing Education credits.
Get your step by step guide to private practice. Because you are too important to lose to not knowing the rules, going broke, burning out, and giving up. #counselorsdontquit.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
the federal government.
They'd stolen some of my moneyto give it to whoever was the
president that week, and some toMedicare and some to FICA
Social Security.
I got what that was about, okay, and the rest I got to take
home and buy groceries with.
I got what that was about, ok,and the risk I got to take home
(00:29):
and buy groceries with.
That's a W-2 employee, anduntil and until they came, what
was what is?
I can't think of it.
Right on the tip of my tongue.
The Affordable Care Act blewthings up.
Y'all remember the AffordableCare Act.
One of the provisions in theAffordable Care Act required
(00:54):
employers who have X number ofemployees required that they had
to provide group insurance.
Group insurance is veryexpensive to the employer.
It's real hard to take money Ifyou're a regular employee and
you're making a bunch of moneyand they take $12 a month or $36
a month for health insuranceand match that with 36, big
group, all's well.
(01:17):
What happened, however, wasthere were a lot of employers
okay, who either had too manyemployees.
I'm remembering a very goodfriend of mine is the general
manager of a very largerestaurant and he had, I think
he told me, over 30 employeesand the restaurant doesn't make
(01:39):
money and they don't pay thewait staff.
Okay, they do.
They pay a small amount,basically covers the taxes, but
he couldn't afford to pay healthinsurance.
So what so many employers did,including restaurants,
restaurants and big constructioncompanies shifted their
(02:00):
employees over to independentcontractors.
Their employees over toindependent contractors because
an employee, under federal law,has certain rights to things
like insurance.
The Affordable Health Care Actallowed them or gave them the
right to insurance, fringebenefits, days off, 401ks,
(02:23):
retirement benefits.
There are all kinds of benefitsthat employees kind of are
entitled to if there are enoughemployees, if the employer does
this for himself and it's prettyeasy.
If you're a constructioncompany, okay, and you've got
400 workers out on threedifferent jobs, three or four
(02:45):
different big jobs, it's prettyeasy to deal with the idea that
they're going to get Labor Dayoff, that they're going to get
Christmas and New Year's Day off.
That's not a huge deal.
But the idea of things likehealth insurance and retirement
benefits overwhelmed largeemployers with small paychecks.
Overwhelmed large employerswith small paychecks because an
(03:10):
awful lot of constructionworkers are minimum wage or very
low wage.
Waitstaff in restaurants, if Iremember correctly, used to I
don't know what it is now, but afew years ago they got $2 or
$2.50 an hour.
What they actually make theirliving on is tips.
That's a discussion for anotherday.
So when these employers at thetime of the Affordable Health
(03:33):
Care Act realized the expense,they started shifting their
employees to what they calledindependent contractors.
Now, an independent contractoris not technically an employee.
An independent contractor issomeone who works for herself,
doing a job for herself for herown income, not within the
(03:55):
direct control of the employer.
And the way to look at thisokay, you're making widgets.
Okay, you've got a widgetcompany, but you can't sell your
widgets because you're too busymaking widgets and monitoring
the employees who are making thewidgets and painting them and
putting them in boxes to ship.
So what you do is you make acontract with some guy in
(04:18):
Louisiana and some some womanthat lives up in Oklahoma City
and you're going to provide herwith the widgets and she's going
to sell them You've heard she'sreally good at selling stuff
and you're going to pay her.
There are many ways to do this.
I'm going to sell her thewidgets for 50 cents each and
(04:39):
she's going to market them for adollar.
And it's up to her how she doesit.
It's up to her.
Who she does it with I don'tcare, it doesn't matter.
She orders a bunch of widgetsand I send her widgets and she
sells them to her.
Okay, do you see that in thatcircumstance I'm going to use
the term employer kind ofloosely here but the widget
(05:00):
maker, the widget seller, is notan employee and not under the
control of, on the other hand,the guys that are in my factory
painting widgets, who punch thetime clock, they're under my
control.
I tell them you got to come inat eight o'clock, you got to
work for eight hours.
Here's your standard.
I set a quota you have to paintat least 50 of them a day or
(05:22):
I'm going to have to fire you.
So a lot of the issue that weperceive in that difference is
the idea of control over theemployee, and that's kind of how
the IRS looks at it is how muchcontrol does the employer have
over the employee or theindependent contractor?
(05:42):
It gets real fuzzy sometimes inthe middle because the IRS
there are a couple of thingsBenefits.
I don't have to pay thesaleswoman up in Oklahoma City.
I don't have to provide herhealth insurance.
I don't have to provide aretirement benefit.
I don't have to deal anythingwith her days off or any of
(06:03):
those kinds of things.
I don't have to pay for hercontinuing education.
She's on her own and I justsend her widgets.
My worker in the plant, I haveto send him occasionally for
painting training, widgetpainting training, and I have to
pay for that.
Because I shouldn't have myemployees.
I have to buy my employeesuniforms.
(06:24):
Can you see how there arebasically, if you go to extremes
two kinds of employee-employerrelationship?
The IRS doesn't make as muchmoney from independent
contractors and the IRS doesn'thave as much control over the
incomes and the reporting ofincome of independent
(06:45):
contractors.
The IRS can hold the employervery accountable for things like
taxes and benefits and thereare a lot of rules.
There are a lot of rules thatgo on and are imposed.
So the IRS prefers W-2employees over independent
contractors.
They like it better because theIRS has more people they can
(07:09):
grab money from and punish andyell at.
So in the aftermath of theAffordable Care Act they started
all this conversation.
Those people are notindependent.
They're not independentcontractors and my friend who
operates a large restaurant cameface to face with that.
(07:30):
Because waitstaff, do you seewaitstaff kind of fall in kind
of a gray area and they'repretty much on their own in
deciding.
How much control does therestaurant owner have over the
cook?
Almost absolute control overthe cook.
(07:51):
The waitstaff a little bitdifferent.
What if they don't come in?
What if they only want to comein?
What if you're in a collegetown and you've got a bunch of
waitstaff who shift theirschedules from week to week to
amend their classes?
So you can see that whathappened and why you even asked
me this question is because itgot to be there.
(08:13):
The IRS and employers realizethere's this huge continuum from
independent employees toemployees under control of the
employer.
Does that make sense to you?
And that's kind of what this is.
So the IRS was forced and Iwill bring this up, if I can
(08:36):
bring this up, dr Walker.
Yeah you should be able to share.
You can, you can or I can, butI'm going to pull it up.
Okay, Can I do share screen?
I got to remember to do thatfirst.
Speaker 2 (08:47):
Yeah, you should be able to share.
You can, you can or I can, butI'm going to pull it up.
Okay, can I do share screen?
I got to remember to do thatfirst.
Speaker 1 (08:50):
Yeah, you should be able to share screen, share
screen, boom, and I think thatthis is what I want to look at.
Nope, nope, it's the other one.
Okay, let me, let me stop.
I'm going to come back to thatin a few minutes.
Ok, what I was looking foranother document.
Speaker 2 (09:08):
Is it the one you sent me?
Speaker 1 (09:14):
It is the one I sent you there.
It is IRS rules.
I found it and the thing is Idon't know how to.
Well, let me just do this there.
Now you can see the whole thing.
Talk about boring?
Okay, this is really really.
No, I went back to the wrongone.
How did that flip?
Speaker 2 (09:34):
I think we were seeing the right one.
Speaker 1 (09:35):
There it is.
There's what I'm looking for.
Okay, can you see that?
Can you see the IRS 20-factortest?
You stopped sharing, I stoppedsharing, I stopped sharing all
this technology.
For heaven's sake, forgive me,I'm really really old it doesn't
to everybody there you go,ladies and gentlemen, there you
(09:57):
can see it I gotta tell youemail me.
Speaker 2 (09:59):
I will send this to you email, dr walker she has it
now.
Speaker 1 (10:01):
I will send this to you Email, dr Walker.
She has it now.
She can send it to you and Idon't want to get too much into
detail.
I could get bogged down andread this whole thing to you,
and I've got more things I wantto do.
I trust you all to read this,but you can see that there are
factors that the IRS came upwith to try to discriminate.
Even the factors they help,they're not decisive.
(10:24):
I just got through with a legalargument.
We haven't gotten a decisionfrom the board yet.
A counselor client of mine hasan off-site virtual assistant
person who works for her, andTexas Workforce Commission
wanted her to be a W-2.
To be a W-2.
(10:49):
The admin assistant andcounselor insists she's
independent.
So we went down this list withthem.
Okay, how much do you have tolearn?
How much do I have?
Does the employer have to teachthe employee about you know
whatever job, how much trainingis required, whatever job, how
much training is required?
And you look at some of theseand the control of assistance,
(11:13):
one of the ones that I reallylike because it's kind of
distinct is it an ongoing,continuous relationship or is it
something that comes and goesSeasonally.
Okay.
My widgets can only be made inApril and May, so there's a
seasonal time when I need thelady in Oklahoma City.
(11:34):
It's not a continuousrelationship, it's an episodic
relationship.
Schedule when do they have tocome in?
Nine to five.
Is this a 9 to 5?
Remember who was it?
Dolly Parton.
9 to 5?
Sequence Okay.
Does the employer say startwith blank widgets and then
(11:59):
paint the inside and then paintthe top and then add that red
stripe around?
Do you see how much detail andso I'm going to stop that share.
Speaker 2 (12:10):
So what's on my mind right now, though, is because,
when the question comes aboutfor supervisors and supervisees,
when the supervisor is thinkingabout hiring that supervisee,
and I look at that test, I meansupervisees don't meet all those
criteria.
Speaker 1 (12:27):
No one meets all of the criteria and, as I said a
minute ago, most of the criteriaare not very discreet, they're
kind of measures of sort of whatI mean, how do you count
training?
Well, one thing is that whenyou are agreeing to an
employer-employee relationshipwith an LPC, a licensed
(12:51):
professional counselor, did youtrain that counselor or did she
get her training before she evercame into your office?
Do you see?
And a factor of independence, afactor of independence, does
your, does your I'm trying todoes the LPC coming to work for
you?
Does she decide?
(13:17):
There are so many contracts I'vewritten for for counselors who
want to go to work in a largerpractice but they have a couple
of kids so they only want towork on Tuesdays and Thursdays
when the kid's in daycare.
They don't want to work onMonday.
They want to be mothers onMonday.
Raise your hand, any of you hadthat feeling.
They want to be at home takingcare of the kids Monday,
wednesday, friday or Tuesday,thursday, whatever.
So I'm going to say that almostinevitably 99.83, and I
(13:43):
measured it 99.83% of the time aprofessional relationship that
involves a counselor or group ofcounselors contracting to get
work done by a professional, alicensed professional counselor,
a social worker, a psychologist.
When you do that professionalcounselor, a social worker, a
(14:07):
psychologist when you do that,that will inevitably allow for
the independent notion.
Okay, so that if you're planningto I'm trying to avoid using
words like employee because it'sa little confusing but if
you're planning to organize andhave other people provide
services for which you're goingto accept a certain amount of
(14:30):
money, okay, that almostinevitably you have your choice.
You can make them W-2 employees, you can make them independent
contractors.
It is absolutely the choice.
It's a negotiating issue.
How does the incoming LPC feelthat?
(14:51):
Would she rather be independent?
Would she rather be a Wemployee, get certain benefits
and doesn't have to fool?
Of the questions you asked, inan independent contractor
relationship, the independentcontractor is more autonomous,
takes care of her own taxes,pays her own licensing fees,
(15:14):
although that is a contractualquestion, by the way.
Do you see?
So when you have a professionalrelationship between
professionals and I'm sayingprofessional you all are your
question revolves a lot aroundpre-professional, the associate
Right, that's not allowed topractice independently yet must
(15:35):
have a supervisor.
Yes, she may be an independentcontractor.
She may practice.
There was a period I have tosay this, folks there was a
period I have to say this, folksthere was a period of a couple
of years, a few years ago, for ayear or two or three, the LPC
board said that and at that timeI think they were still LPC
(15:57):
interns.
Remember LPCI, lpc interns?
I think it was that long agothat the LPC board said that
associates cannot be independent.
That lasted about a year and ahalf.
It's not constitutional.
Okay, there's no way that youcan support the right of a board
to tell a trained professionalwhere she can work and how she
(16:21):
can work.
Do you see that?
So they hold the rule back and,yes, associates may now be
independent contractors.
Your bind with associates issupervision.
And the question I getregularly I get this all the
time okay, is that the associatemust be supervised.
(16:42):
And the question hanging inseveral of your mind no, the
supervisor does not have to workin the same practice in which
she practices.
That's an absolutely separatecontract.
If I'm going to be an LPCassociate, I need to have a
supervisor, and there needs tobe.
And I will tell you, I'm alawyer.
(17:02):
Okay, don't ever do thiswithout a written agreement.
Okay there should be a writtenagreement between the supervisor
and supervisee and associate'semployment condition, employment
situation.
Speaker 2 (17:29):
Those are orthogonal so I'm going to throw something
at you real quick.
So if the supervisor has asupervisor contract right, that
dictates supervision.
Speaker 1 (17:41):
Yeah, you're going to bring all your serious cases.
I get to pick which ones.
You see you ask me all thequestions.
If you've got a clientcommitting suicide, call me
right away.
Speaker 2 (17:50):
Yes, and then I decide to hire that person, so
then I'm going to have aseparate employment contract
with that supervisee.
Speaker 1 (17:59):
Yes, okay, for all of you who haven't been paying
attention, all of you who havechecked your email and looked at
your text messages and you'retalking to your husband in the
background, this is a placewhere you want to listen up.
Okay, this is a place where youwant to listen up.
You absolutely must have awritten contract with anybody
(18:21):
you employ, especially if youwant them to be an independent
contractor.
Told you a minute ago about thecounselor I'm working with in
the Dallas area and the IRSactually not the IRS Texas
Workforce Commission said thather admin assistant was not an
independent contractor, thething that would have nailed
(18:42):
this down and we would have beenout of it instantly.
They didn't have a writtenagreement of any kind.
Get a written agreement, itdoesn't.
Now, if you want, ok, I'm goingto do a little bit of a sell
job here.
I have independent contractorcontracts in template form that
you and I can fill out togetherand you will have one with your
(19:04):
contractor's name and your nameand all the mystical, magical
language that I don't want toget into, but I could tell you
there are seven or eight thingsthat have to be in there that
kind of showed on the list.
I talked about a minute ago.
So absolutely have a contractand if you want to do it right,
get a lawyer to help you with.
(19:24):
But it has to be in writing,signed by both of you, stored
away, and when Texas WorkforceCommission comes banging on your
door, you just wave thecontract in their face and 98
percent of the battle is over.
So have a written contract.
Ok, do you see that?
The distinction is really, it'sa continuum, it's not a
(19:50):
dichotomy.
You're either this or you'rethat.
There are some things that arevery clearly.
When you hire someone to answerthe phone in your office and to
take messages and to scheduleyour appointments, that's
absolutely.
That is a W-2 employee.
There's no way around it.
Okay, when you have a licensedprofessional who comes to you
(20:14):
and she already has six or sevenclients and her own license and
her own history and backgroundvery clearly, she can be
independent.
Y'all just kind of workingtogether.
There are lots of places, whenyou think about it, lots of
places that are kind of inbetween.
There are times there arewebsite companies that sell
(20:37):
virtual assistant services toanswer your phone and make your
appointments and deal with youremails and things like that.
To answer your phone and makeyour appointments and deal with
your emails and things like that, and they're kind of in between
.
And that's what we got involvedin in this TWC case I'm telling
you about is we said there arelots of companies that provide
that service, a lot of it.
(20:57):
One of it stick this in yourcontract that the independent
contractor is free okay,absolutely free to take on other
clients to work somewhere else.
Yes, you can come work Tuesdaysand Thursdays at our office and
see 10 patients a day or see 10patients altogether.
And yes, you're free to work atthe hospital the other days of
(21:20):
the week.
You're free to work for someother provider on the far side
of town those other days of theweek.
Okay, you can take otheremployment.
Speaker 2 (21:30):
That's really helpful .
That's because I've been one ofthe ones who've been just kind
of saying a blanket statementyour own supervisees who work in
your practice must be W-2.
But what I hear you say is yougot to have a contract and look
to see if it meets the 20factors and find it accordingly
and call you.
Speaker 1 (21:51):
Yeah, call me if you have questions.
But remember, it's almostautomatic.
If you are a professional, aprovider of professional
services, and you are going toengage another person who comes
to you educated, licensed,skilled, and she's going to
provide services and you'regoing to share the income from
(22:12):
the services that she provides,that's inevitably defensible as
an independent contractorcontract.
However, I want to go back andsay you still need a piece of
paper.
However, I want to go back andsay you still need a piece of
paper, you still need a contract, because the contract has
mystical language that you allwon't think of.
The only reason I know thatmagic language is there Because
(22:34):
I took the time to go to lawschool.
You all don't want to do that.
Raise your hand if you'd loveto go to law school.
It was a lot of fun, real hard,very fun, um Good well, thank
you for that, that's that bingo.
I love that, mona lisa.
Thank you, yes, okay, anyquestions?
(22:56):
Do any of you have any specificquestions?
Yes, go ahead, mindy, eitherunmute yourself there, you go.
Speaker 3 (23:03):
How are you doing?
Speaker 1 (23:05):
I'm well, how are?
Speaker 2 (23:06):
oh mindy, yes, we know each other.
Speaker 1 (23:10):
Hi Mandy, I'll give you a plug.
Speaker 3 (23:12):
Dr Flynn has been great to work with in the past.
He's helped me a lot indifferent types of situations.
You're kind.
Speaker 1 (23:18):
Mandy Anyway.
Speaker 3 (23:19):
I do have a question about for the contract.
Can a contract for a 1099require?
Can I require contractors toschedule a minimum of, let's say
, 10 clients a week on average,something like that, so that
we're not just getting peoplewho are just coming in.
Oh, I think I just want to workfour hours this week and then
(23:40):
eight hours next week.
Can we require anything likethat if we want them to be an
independent contractor?
Speaker 1 (23:47):
Yes, yes, it's a little.
You have to draft your languagea little bit carefully.
Okay, Clearly, if you set thehours and you say you must come
in for at least four hours everyday, do you see how that's kind
of pushing against being a W-2employer as opposed to a fellow
(24:08):
contractor for services?
But if you have a company, okay, and a corporate sense of
yourself, even if it's soleproprietor, okay, I'm not
talking about a formal, but ifyou have that, then the two of
you can negotiate.
The same thing would go.
I've got the lady in Oklahomawho's selling widgets and I can
(24:29):
make a deal with her and I cansay I can only work with you.
It's not cost effective for meto send you four widgets a month
.
I have to be able to send youat least 150 a month or I can't
make it work.
Do you see how that's a profitloss, that's an income sort of
thing that I say the shippingcosts, the production costs, the
packaging.
(24:50):
The only way I can make thiswork between us is that you have
to sell 150 a month.
She's still independent.
She still decides for herselfwhen she's going to sell, how
she's going to sell, who she'sgoing to sell to.
I'm just saying my businessneeds you to do this much work
in order to cover the fixedcosts, the underlying cost of
doing business with you.
(25:11):
So, yes, you can Be careful howyou draft the language.
Okay, that again, and I'm goingto.
You know I'm throwing outthat's a lawyer thing.
Lawyers watch language.
Lawyers are very picky aboutlanguage.
The way I like to set up thesecontracts, there are two ways to
(25:31):
do it.
Either one works.
One is more cumbersome but alittle bit safer in some
indirect ways.
The other one is a lot easierand most independent contractor
contracts agree that theincoming, the contractor, will
keep 60%, 50%, 75%, whateveryour deal is, of the amount that
(25:57):
is collected and the way thatthe language flows.
Okay, do you see?
It's not specific, but the waythe language flows is that the
practice is going to pay thecontractor 60% of what comes in.
The problem with that is thatsounds like kickback.
(26:20):
That can be made to look likekickbacks contracts, Medicare,
Medicaid.
You have to be extremelycareful with that because it is
as if you're paying them forbringing clients to your
business.
You see, if I'm an x-ray lab,okay, and I've got physicians
(26:44):
and I want them to refer to meand I tell the physician that
I'll give you 60% or 40% of thefee when you send patients to me
.
Do you see how that's payingthe physician?
The physician's decision is notbased on the medical needs of
the patient but on the profitmotive.
And, by the same token, whenyou flip that and you're paying
(27:10):
a contractor 60% in order tocome see clients, do you see?
And it's a gray area, it's aslippery slope, it's hard.
Almost all the contracts I havewritten and that I see written,
almost all of them, do it thatway.
The language flows that waythat the practice is going to
(27:31):
give them 60% and keep 40% orsome percentage and keep a
different percentage.
A safer way to do that, a saferway to do that, is for the
practice to pay X number ofdollars.
I'm going to pay you $40 foreach hour of service Still fishy
(27:51):
.
You see how it still kind ofsmells a little bit like it
might be a kickback.
Trust me, the feds don't careabout us, but if you do federal
work, then you have to be verycareful about that.
There's a way.
I've done it.
I've done it several times.
It's really interesting andit's fun to draft.
But that is where you organizewhat I call a medical services
(28:16):
organization, an MSO, and whatyou're doing is for 30% of what
Mendy brings in.
I'm going to keep, but whatMendy's paying me for is the
Wi-Fi, the office space,somebody to answer the phone and
make appointments for her,paper supplies and a
(28:39):
refrigerator full of soft drinks.
Okay, do you see?
So that's a different thing.
I'm not giving her kickbacksfor seeing clients.
I am keeping a certain amountof money in exchange for.
So when you write the contracts, there needs to be a clear
sense for what is it that thepractice is providing?
(29:01):
And there's always got to be.
And there's a list I'm going toprovide cold drinks, I'm going
to provide a coffee machine, I'mgoing to provide Wi-Fi, I'm
going to provide an office spacesuitable, and do you see how?
That's a different system.
It's not a kickback, it's abusiness deal where I'm going to
rent you space and provide aplace for you to work.
Speaker 3 (29:22):
Is it okay if I ask you a follow-up question about
that?
Of course, of course.
Speaker 1 (29:25):
I think it applies.
Speaker 3 (29:27):
I think there's a lot of people here that this
applies to.
So is it okay to have anincentivized pay structure
within the contract.
Speaker 1 (29:35):
The only problem with that is, Mandy, is that when
you do that, the drafting onthose is very complicated for me
and I like my job easy.
Don't make my job difficult.
Speaker 3 (29:45):
Yeah, I'm sure you're happy to get some more money.
Speaker 1 (29:49):
I have seen them drafted way overly complex, but
it's very simple and I had thisthought when you asked your
first question.
You can set it up incentivizedfor 10 hours.
You get X amount If you have 20hours or more.
And you have to be carefulbecause it can't be 10 hours, it
has to be between zero and 10,.
(30:10):
To be careful because it can'tbe 10 hours, it has to be
between zero and 10, between 11and 20,.
A different pay scale, adifferent kind of distribution.
You can pay bonuses.
Yes, you can pay bonuses Ifyou're an independent contractor
.
I would be very careful if theydon't do this.
Don't say, if the contractorbrings in two thousand dollars,
(30:34):
that you know that really soundsbad, but if she works 56 hours
instead of 40 hours, then shegets a bonus.
You give her a Christmas bonusof an extra thousand dollars so
that you can incentivize.
My answer would be very carefulhow you do that.
Be very careful how you draftthat.
Now I want to do two.
I want to interrupt myself andI want to do the two things and
(30:56):
then I'm going to get you to thequestions that Dr Walker sent
me.
Did you have another one, mandy?
No, I just said thank you somuch.
I appreciate all okay, I want toget into the two things.
The first one is the boir, thebeneficial owner interest report
(31:18):
.
This applies to any corporateentity, any entity.
I'm going to say for us, thesimple answer is if you are a
sole proprietor, okay.
If you're just a person workingin an office, you pay your rent
, you have a secretary, okay,you're not a corporate structure
(31:39):
, you're just a sole proprietor.
This doesn't apply.
This only applies if you havesome kind of entity and the
language kind of says if it'sregistered with the state, if
you have a limited liabilitycompany, if you have a PLLC, a
professional limited, acorporate structure, some people
still actually, this doesn'tmake sense, but some people have
(32:01):
professional associations.
So if you have any kind ofentity that's registered with
the state, then there, oh God,this rule, it's to stop money
laundering.
You report it to the FinancialCrimes Enforcement Network of
(32:22):
the Department of Justice, don'tyou just love that?
You're going to have arelationship now and provide
information to the Federal Crime, investment and Financial
Crimes Network.
It spins in, it spins in andyou can do this yourself.
I kind of don't recommend it.
You're filling out a federalform and I've done several dozen
(32:46):
.
I've done a couple dozen ofthese, okay, and I still get in
the middle of it and I have tostep very carefully because I
get confused at which numbergoes where.
So be careful.
It's going to take you half anhour to 45 minutes.
It will take me 15.
That's a little bit of adifference.
You can get any lawyer Some ofyour accountants will do it but
(33:09):
it's a report to FinCEN, theFinancial Crimes Enforcement
Network.
Okay.
It provides them with theinformation regarding who are
the owners of the company thateither control the company or
receive benefits in the form ofmoney, basically profits, and
most of your companies those ofyou who have PLLCs or
(33:33):
corporations or LLCs or whateveryou have most of you only have
one owner.
Sometimes you'll have two ofyou sharing with and that would
mean that you have twobeneficial owners and what
FinCEN wants and you can go.
I think it's FinCENgov.
I really do.
It's something around somethinglike FinCENgov.
(33:55):
I've got an automatic, I justclick it, so I don't have any
idea what the actual address is,but you go on their site, you
register yourself as a reporterand then you register yourself
as a beneficial owner of yourcorporation.
The way I do it kind of makessense.
(34:17):
I go in, I have anidentification number.
I'm registered with FinCEN todo this, so I just put in my
registration number, boom, andthen I put in your name address.
Unfortunately, ladies andgentlemen, your name address,
your, your business's employerID number, your birth date and a
(34:38):
photograph a JPEG or a PDF ofyour driver's license you have
to send me, you have to sendFinCEN a valid state photo ID
with a photograph you can send.
Well, I've had one exceptionMost of the people send me their
driver's license.
I had one person, kind of aninteresting story, but he sent
(35:02):
me his passport, which is apicture ID with his name and his
birth date on it.
Name and address and birth date.
I'd have to have thatphotograph you could use for any
of you who happen to have one.
You could use your license tocarry a handgun.
That's a valid one.
A military ID would suffice, butit has to be a photo ID.
(35:22):
So I get your name, the name ofyour company, your employer ID
number associated with yourcorporate entity, and then your
personal address.
It has to be your well, theaddress of your business is fine
, an address where they can getyou, okay, and then your birth
date and a photo ID and that hasto be sent to the financial
(35:43):
crimes.
You have to have this done.
If your business was inexistence, if you were
registered with the Secretary ofState prior to January 1st of
2024, then you have untilDecember 31st of 2024 to
complete your business, yourbeneficial owner interest report
(36:05):
, okay, so you need to kind oftake a look at that, give it a
shot.
If you can't get to it, call me, email me.
We can work this thing out.
Speaker 2 (36:15):
If you put the link in the chat if you want to.
Speaker 1 (36:19):
We have.
Oh, excellent, Dr Walker, thisthis is why you are the leader
of this group.
Ok, this wants to go where Iwas going.
What was I going to say?
Oh, if your business, if youformed your business after
january 1st of 2024, you have 90days.
(36:39):
Okay, you have 90 days to fileyour boir.
Now, this is kind of like thegood faith estimate.
I don't know what's going tohappen.
Truth is, I have never seen alegal action or a board
complaint that had anything todo with the good faith estimate.
Do you remember the big blow up?
(37:01):
And probably many of you, mostof you?
You should be Okay, it's thelaw.
You need to be doing the goodfaith estimate, but I have to
say nothing has ever happened.
It was all that big and thennothing happened.
There are lawsuits.
It's my opinion, my legalopinion is that it's
unconstitutional.
There was a lawsuit in Georgia,but it was a very narrow class
(37:26):
action lawsuit and for thatclass the federal court ruled it
unconstitutional.
But it's limited to that smallclass.
It's going to take a couple ofyears before this gets high
enough that we will begin to seethat it probably can't be done.
In the meantime, I would adviseavoid the $500 a day.
(37:47):
Fine, because the fine is $500a day when you don't have your
beneficial owner interest reportfiled timely.
Okay.
Speaker 2 (37:57):
Don't be afraid of it .
We have a hand raised.
Carrie Simon, do you want tounmute?
Speaker 3 (38:05):
Yes, does this apply for nonprofits as well?
Speaker 1 (38:09):
Interesting.
Oh, what an interestingquestion.
If you are a 501c of any kind,you all know that the 501
corporation there's 501, a, b, c, d, e, f and I think G, maybe
just F.
Okay, these are all specifiedorganizations and you apply to
(38:30):
the IRS and the application islike 30 pages long and very
detailed.
I've done it.
But if the IRS considers youamong the 501 organizations,
then you do not have to filethat would be a 501c3 as the
nonprofit, what we think of as aordinary nonprofit.
(38:50):
If, however, you are notapproved by the IRS, there are a
lot of nonprofit organizationsin Texas that are just organized
as a nonprofit corporation.
That does not qualify under theFinCEN rules.
Qualify under the FinCEN rulesI'm working for, in fact.
(39:12):
Yeah, I've already filed it fora nonprofit.
It's registered with theSecretary of State as a
nonprofit corporation, but wehad to file a beneficial owner
interest report because it's notunder the IRS substance of a
501.
So now I'm going to make thissmaller, close this.
(39:41):
Oh, the other one, the other onethat I wanted to get to, and
I'm sorry, let me.
The other one is theattestation.
Somebody put a question up hereabout the attestation.
This is a little piece ofpolitically correct government
intrusion and an attack on tothe HIPAA, to all the HIPAA
(40:04):
rules.
Those have just got so huge.
That's just crazy stuff.
It's necessary, but when thefederal government starts
getting involved it just startsgrowing like a mushroom.
And this is one of theoffshoots of it.
Coming as of December 17th,when you provide the record and
(40:27):
there are a limited number ofcases the one you're going to
run into most often that is themost frequent time that you get
a crazy request is a subpoena Ifit has anything to do with
litigation.
If you're providing the recordto a lawyer as a result of a
subpoena, if a lawyer says theywant your record because there's
(40:48):
litigation, you will, beginningDecember 17th, you will have to
get an attestation, all theattestation does.
It's a simple, one-page deal.
Dr Walker, if you can givepeople my email address, I am
(41:10):
going to draft between now andthe 1st of December.
Wish me luck.
I'm going to draft anattestation form.
It's a brief, one-page form.
You basically provide the nameof who wants the record, what
they're going to use it for, whothe record covers your
patient's name, your name as areceiver.
(41:31):
It is the recipient of therecord that has to sign the
attestation.
In its simplest explanation, itjust simply says I promise that
this record will not be used,is not requested, for the
purpose of a criminalprosecution based on someone's
(41:56):
access to reproductive rights,which is a code word, which is a
code word, especially in Texas.
For the idea that I'm not goingto use this record to try to
convict either the physician orthe mother or anybody else
involved.
I'm not going to use it to tryto convict them of a criminal
offense involving reproductiverights, and we all know kind of
(42:19):
what that's about.
You can see how it's absolutelypolitically motivated.
Kind of what that's about.
You can see how it's absolutelypolitically motivated.
This is the 21st century.
They want a law abouteverything because they're
afraid it might happen.
I don't know what's going tohappen about the attestation.
What I will tell you iseveryone's going to be very
nervous and upset and feelburdened by it.
We won't know until next summeror even this time next year
(42:43):
exactly what the import orimplications.
Narrow, narrow set ofcircumstances that require the
attestation form and the mainthing that you're going to run
into there two of them actually.
The main thing is when you geta subpoena or a request that's
based in litigation, any kind oflawsuit, okay.
The other time is when acoroner, when there's a
(43:07):
coroner's inquest, and I've gotto say I've been a lawyer now
for a little over 16 years andthat's happened twice Twice in
16 years I have had mentalhealth professionals who got a
request for records from acoroner, a medical examiner,
okay, and it really is kind ofweird.
It's kind of strange when thathappens.
(43:28):
If you get a weird recordrequest like that from a coroner
or you get one based on a will,call me.
Those are fun to think about.
Lots of ins and outs Now movingright along as quickly as
possible.
Oh, I don't want to do it thatway.
I want to do a share screen andI think I'm going to get it
(43:49):
right this time.
Yes, yes, okay, can you all seethat?
Speaker 2 (43:58):
These are the questions right from the
Facebook page.
So all I did was I copied andpasted what you posted in our
Texas Counselors Creating BadassBusinesses page.
Speaker 1 (44:05):
And I want to give a big round of applause for those
of you who posted.
I'm a presenter.
I present a lot.
I love it when I get questionsin advance.
I love to know what kinds ofthings, because that helps me
understand what I should betalking about.
If you're hiring your firstemployee, what are your decision
points?
It's really a negotiation, okay, you and the person that's
(44:29):
going to work with you.
How do you want this thing towork?
Do they want to be independentLegally?
Well, legally, you are moreresponsible for a W-2 employee,
so that if you have a counselorworking in your office and she's
a W-2 employee and she getssued for malpractice which, by
(44:50):
the way, don't ever be concernedabout malpractice lawsuits you
don't have much exposure.
Your real exposure is tolicensing board complaints,
because those things get crazyand unpleasant.
Lawsuits will be unpleasant.
You won't like it, but I havenever seen a successful
malpractice lawsuit against amental health professional, with
(45:12):
the exception two exceptionsokay having sex with clients,
and the second one is cheatingthe government out of money.
Those are the two things youdon't want to do.
So as long as you don't havesex with clients and don't cheat
the government, you don't haveto worry about malpractice
lawsuits.
So in hiring, your decisionpoints really are negotiable.
(45:34):
How can you both each of youmutually make this work best?
How much independence Do theywant benefits?
How much are they willing toaccept in terms of control?
W-2 employees get paid lessbecause you have to pay half of
their taxes.
That's part of it.
Talk to your accountant.
This is an accounting question.
But if they're an independentcontractor and it comes up later
(45:57):
, they are responsible for their.
It's like a separate business.
They're responsible for theirsocial security.
What's called unemployment witha business?
The unemployment tax, excuse me, self-employment tax.
That's what the self-employmenttax, which, if you're an
employee.
They take out withholding butthey also take out Medicare,
(46:20):
medicaid and those things.
So the employer in a W-2situation pays half of that.
If you're an independentcontractor you have to pay the
whole thing, but if you're a W-2employee the employer is also
legally liable for anything thatan employee does in the scope
of her employment.
(46:40):
So if you have a W-2 employeewho gets sued, then as the
employer you're part of thatlawsuit.
So that's kind of one of thedecision points you might want
to weigh Steps to hire.
Basically, use your goodjudgment.
I would, you know, be reallycareful.
Call previous people.
(47:03):
I just heard a story today thiswas so interesting to me A
colleague of mine that I have inhold in very high regard, very
bright woman psychologist, whohad a who hired an office
manager who after two months sherealized that the office
manager she had hired is aseriously impaired, borderline
(47:25):
personality, okay and the thingsshe was starting.
She had access to the wholekeys to the kingdom and the
psychologist discovered thatthis employee was looking at the
reports before the psychologistsent the report out to the
court and she worked with thecourt.
Before the psychologist sentthe report out to the court and
she worked with the court beforethe employer sent it out.
(47:47):
The borderline employee editedthe reports.
She changed them.
Yes, she added and subtractedstuff.
Yes, kate, I can see.
Oh, that's bad.
So what I want to say is yourreal step is just be sure you
know this person.
I would be very careful.
If you don't know them, callsome of the people who do know
(48:11):
them.
Check the references, say Ihave made that.
I'm just going to simply sayI've made that mistake in the
past because I didn't check.
I remember one guy told me hesaid oh yeah, I'm his brother.
I couldn't, I don't rememberthe name, but he told me that he
and I had a lot of respect forthe brother.
So I went in and hired him todo the job.
(48:31):
It was a roofing job.
I hired him to do it and Ifound out later.
I actually ran into the brotherthat I liked and held in high
regard and I said dah, dah, dah,da and I hired him and he just
shook his head.
He said I wouldn't haverecommended my brother, I
wouldn't have recommended him.
I didn't check his references.
(48:54):
Okay, so that's probably when Iwould say your decision point
what do you want to provide?
Okay, what do you want toprovide to this person?
What do they want back from you?
I've talked about the controlissues.
Yes, you can provide.
In fact I would highly encourage, as an employer, write it down.
When you haven't, andparticularly what's going to
(49:16):
happen, and I've run into thisso many times when you need to
get rid of them, when you needto push them to the side, you
say this is not working.
You're a borderline personalityand you're dangerous.
Don't say that that won't work.
But if you keep track and keepa writing document that she
didn't show up for work document, that she threw a remote
(49:37):
control across the room at oneof the clients, when you
document, write that down onthat date.
Employee did this On that date.
I asked the employee to be surethat she was making notes.
You all know that I dealt witha case one time where they found
out that an independentcontractor employee had not done
(49:58):
any case notes with any of theclients for over a year notes
with any of the clients for overa year they didn't inspect.
There's another thing.
I learned this in the army.
I'm very old, I was in the army.
People will do what you inspect, not what you expect.
So if you've got independentcontractors, part of the
contract has to say that youhave access to their clinical
(50:19):
files and then you have to takethat access and make sure
they're doing work.
Yes, associates can now.
There was a time when theycouldn't.
The law has changed.
Associates may be 1099s and thesupervision contract is an
absolutely separate legalrelationship.
Good question about filing taxesWith a 1099, you're going to
(50:44):
love this.
You know, at the beginning,remember when you had jobs that
you were hired to do.
You worked for an employer andin January or February they gave
you that big form with all thedifferent, with the numbers of
how much they paid you and howmuch they withheld for taxes,
and you use that to do yourtaxes.
Okay, that's a W.
Oh Lord, I think that's calleda W-4.
(51:06):
No, that's a W-2.
I'm not an accountant.
I apologize, be aware I'm notan accountant.
That's a W-2.
But if you have an independentcontractor, you give them a form
1099.
Now my advice to you is don'tdo this yourself.
If you're not using anaccountant for your employee
(51:27):
stuff, or at least a bookkeeperfor this, you're probably going
to get right up to your neckbefore you realize how far you
are into it.
Report a lot more if it's a W-2.
Your obligation to reportincome taxes withheld.
Withholding all of that, youhave a lot more responsibility.
(51:51):
If it's a 1099, you just givethem a 1099 form in January,
february that says here's howmuch I paid you in 2024.
And then the employee, thecontractor, is responsible for
paying their own federalemployment, their Medicare and
filing their own taxes.
(52:12):
Okay, the S-Corp and BOIR areabsolutely separate.
Oh, we're getting down to theend.
An S-Corp doesn't exist.
Ok, if you, if you're, ifyou're an accountant, ok, has
you listed as an S-Corp?
That's an IRS.
It's a chapter in the IRS I'mgoing to surprise you here.
(52:35):
It's some chapter S of the IRScode and it allows income to be
passed through directly to theowner of the business in a small
, closely held business.
Think about this Microsoft,okay, has to.
They get all their income andthey've made a profit.
They have to pay taxes on thatprofit and then, after they pay
(52:58):
taxes.
They divide the profit up amongthe shareholders and then the
shareholders have to pay taxesagain.
So if you've got a one-personPLLC and you've made a profit,
does the PLLC have to pay taxeson the income?
And that's what subchapter S isabout.
(53:18):
It says no pass-through.
It's called pass-through and sothe corporate entity is not
required if it is a sub-Scorporation.
But there are other ways to doit.
Do not immediately become asub-chapter S because most of
you she's early.
Most of you, where is mythinking?
(53:42):
Most of you, where's mythinking?
Subchapter S most of you aredisregarded entities.
Okay, don't feel hurt by that.
The IRS disregards the entityand taxes you for your income
because it's a small, closelyheld, and being a sub S
corporation comes with certainobligations that you don't want
(54:04):
to be involved in.
Jumping very quickly.
Okay, any of you have questions?
Send me emails.
Dr Walker is going to give youmy address.
Send me questions.
I'm happy to answer questions.
I've learned so much from yourquestions, so don't feel like
you're imposing.
Yes, you are imposing, but it'sworth my time because I learned
from it.
Speaker 2 (54:24):
I learned so much from this.
This was wonderful.
Speaker 1 (54:28):
Well, I'm glad Every time I teach this, I learn more
stuff.
Notice of intent, forfeit right.
Probably you have a limitedliability company and you didn't
file your no tax due, yourfranchise tax report, okay.
And when you don't file yourfranchise tax report, then they
(54:49):
send you a notice.
The Secretary of State says weare about to take your business
away from you.
If you want to solve theproblem, okay, file your no tax
due franchise report.
Although I haven't heard all thedetails, but I think as of 2024
, llcs, pllcs, are not requiredany longer to file the franchise
(55:11):
tax report.
It just created too muchtrouble.
Be careful about that.
Talk to your accountant.
I haven't investigated itthoroughly and I'm not an
accountant.
Okay, so be careful.
But I'm pretty sure that theyhave softened the requirements
and very few of you in thefuture will get a notice of
intent to forfeit the right.
(55:32):
If you get a notice, all youhave to do is file some papers
and they put you back on theirgood list.
It's not as bad as going to theprincipal.
It's just the teacher shaking afinger and saying if you do
that one more time, I'm going totell your mother.
Okay, and you and I both knowthat you're not afraid of your
mother anyway.
Okay, that's all.
(55:52):
We have made it one minute past.
Speaker 2 (55:55):
Oh, you were awesome.
This was so much wonderfulinformation.
I feel validated, I feelcorrected, I feel like I can get
more information out.
That's accurate.
And I will absolutely, dr Flynn, give people your email so they
can reach out to you.
I know you're going to getcalls about that contract.
I know you're going to getcalls about that attestation
(56:16):
letter, so I'm going to get thatdone.
Speaker 1 (56:19):
Yeah, I'm going to get that done and make that
available.
It's just something we've gotto do.
Thank you, dr Walker.
Would you tell Kenda Dalrymplethat, no matter what she thinks
of me, I think she is anabsolute gem, absolutely.
Speaker 3 (56:34):
Kenda.
Speaker 1 (56:34):
Dalrymple Okay, I've learned this Kenda defended me
against about a board complaintabout 25 years ago.
Okay, and it was one of thescariest I had three board
complaints all at one time.
Long story, not a big deal.
She got all of them dismissed,cost me a ton of money, explains
(56:54):
why I'm in law school.
My wife at that time saidyou're not doing that anymore.
You're going to go to lawschool and get the check, not
pay it.
And Kenda became my mentor andtruly, the more I learned about
the law, the more I have been alawyer, the more I appreciate
how smart Kenda is and what avery good lawyer she is.
So you can tell her that,whatever it is, she's better
(57:16):
than I am.
Speaker 2 (57:18):
I will.
I will tell her.
Thank you again so much.
I'm Dr Kate Walker.
This is Texas CounselorsCreating Badass Businesses.
And Kate Walker Training Lookfor your CE.
Give us about three weeks toget that done.
We're training a new personwho's gonna help us push those
CEs out quickly.
And don't forget, check thechat right now.
Click the link to the form.
(57:39):
Once I hit end, then myfinger's heading there, I'm
about to hit end and once ithits end, all of those links go
away and if you have it openthen you can access that and
fill it out at your leisure.
So thank you guys so much.
I will see you next month atour next presentation.
Have a wonderful evening.
the federal government.
They'd stolen some of my moneyto give it to whoever was the
president that week, and some toMedicare and some to FICA
Social Security.
I got what that was about, okay, and the rest I got to take
home and buy groceries with.
I got what that was about, ok,and the risk I got to take home
(00:29):
and buy groceries with.
That's a W-2 employee, anduntil and until they came, what
was what is?
I can't think of it.
Right on the tip of my tongue.
The Affordable Care Act blewthings up.
Y'all remember the AffordableCare Act.
One of the provisions in theAffordable Care Act required
(00:54):
employers who have X number ofemployees required that they had
to provide group insurance.
Group insurance is veryexpensive to the employer.
It's real hard to take money Ifyou're a regular employee and
you're making a bunch of moneyand they take $12 a month or $36
a month for health insuranceand match that with 36, big
group, all's well.
(01:17):
What happened, however, wasthere were a lot of employers
okay, who either had too manyemployees.
I'm remembering a very goodfriend of mine is the general
manager of a very largerestaurant and he had, I think
he told me, over 30 employeesand the restaurant doesn't make
(01:39):
money and they don't pay thewait staff.
Okay, they do.
They pay a small amount,basically covers the taxes, but
he couldn't afford to pay healthinsurance.
So what so many employers did,including restaurants,
restaurants and big constructioncompanies shifted their
(02:00):
employees over to independentcontractors.
Their employees over toindependent contractors because
an employee, under federal law,has certain rights to things
like insurance.
The Affordable Health Care Actallowed them or gave them the
right to insurance, fringebenefits, days off, 401ks,
(02:23):
retirement benefits.
There are all kinds of benefitsthat employees kind of are
entitled to if there are enoughemployees, if the employer does
this for himself and it's prettyeasy.
If you're a constructioncompany, okay, and you've got
400 workers out on threedifferent jobs, three or four
(02:45):
different big jobs, it's prettyeasy to deal with the idea that
they're going to get Labor Dayoff, that they're going to get
Christmas and New Year's Day off.
That's not a huge deal.
But the idea of things likehealth insurance and retirement
benefits overwhelmed largeemployers with small paychecks.
Overwhelmed large employerswith small paychecks because an
(03:10):
awful lot of constructionworkers are minimum wage or very
low wage.
Waitstaff in restaurants, if Iremember correctly, used to I
don't know what it is now, but afew years ago they got $2 or
$2.50 an hour.
What they actually make theirliving on is tips.
That's a discussion for anotherday.
So when these employers at thetime of the Affordable Health
(03:33):
Care Act realized the expense,they started shifting their
employees to what they calledindependent contractors.
Now, an independent contractoris not technically an employee.
An independent contractor issomeone who works for herself,
doing a job for herself for herown income, not within the
(03:55):
direct control of the employer.
And the way to look at thisokay, you're making widgets.
Okay, you've got a widgetcompany, but you can't sell your
widgets because you're too busymaking widgets and monitoring
the employees who are making thewidgets and painting them and
putting them in boxes to ship.
So what you do is you make acontract with some guy in
(04:18):
Louisiana and some some womanthat lives up in Oklahoma City
and you're going to provide herwith the widgets and she's going
to sell them You've heard she'sreally good at selling stuff
and you're going to pay her.
There are many ways to do this.
I'm going to sell her thewidgets for 50 cents each and
(04:39):
she's going to market them for adollar.
And it's up to her how she doesit.
It's up to her.
Who she does it with I don'tcare, it doesn't matter.
She orders a bunch of widgetsand I send her widgets and she
sells them to her.
Okay, do you see that in thatcircumstance I'm going to use
the term employer kind ofloosely here but the widget
(05:00):
maker, the widget seller, is notan employee and not under the
control of, on the other hand,the guys that are in my factory
painting widgets, who punch thetime clock, they're under my
control.
I tell them you got to come inat eight o'clock, you got to
work for eight hours.
Here's your standard.
I set a quota you have to paintat least 50 of them a day or
(05:22):
I'm going to have to fire you.
So a lot of the issue that weperceive in that difference is
the idea of control over theemployee, and that's kind of how
the IRS looks at it is how muchcontrol does the employer have
over the employee or theindependent contractor?
(05:42):
It gets real fuzzy sometimes inthe middle because the IRS
there are a couple of thingsBenefits.
I don't have to pay thesaleswoman up in Oklahoma City.
I don't have to provide herhealth insurance.
I don't have to provide aretirement benefit.
I don't have to deal anythingwith her days off or any of
(06:03):
those kinds of things.
I don't have to pay for hercontinuing education.
She's on her own and I justsend her widgets.
My worker in the plant, I haveto send him occasionally for
painting training, widgetpainting training, and I have to
pay for that.
Because I shouldn't have myemployees.
I have to buy my employeesuniforms.
(06:24):
Can you see how there arebasically, if you go to extremes
two kinds of employee-employerrelationship?
The IRS doesn't make as muchmoney from independent
contractors and the IRS doesn'thave as much control over the
incomes and the reporting ofincome of independent
(06:45):
contractors.
The IRS can hold the employervery accountable for things like
taxes and benefits and thereare a lot of rules.
There are a lot of rules thatgo on and are imposed.
So the IRS prefers W-2employees over independent
contractors.
They like it better because theIRS has more people they can
(07:09):
grab money from and punish andyell at.
So in the aftermath of theAffordable Care Act they started
all this conversation.
Those people are notindependent.
They're not independentcontractors and my friend who
operates a large restaurant cameface to face with that.
(07:30):
Because waitstaff, do you seewaitstaff kind of fall in kind
of a gray area and they'repretty much on their own in
deciding.
How much control does therestaurant owner have over the
cook?
Almost absolute control overthe cook.
(07:51):
The waitstaff a little bitdifferent.
What if they don't come in?
What if they only want to comein?
What if you're in a collegetown and you've got a bunch of
waitstaff who shift theirschedules from week to week to
amend their classes?
So you can see that whathappened and why you even asked
me this question is because itgot to be there.
(08:13):
The IRS and employers realizethere's this huge continuum from
independent employees toemployees under control of the
employer.
Does that make sense to you?
And that's kind of what this is.
So the IRS was forced and Iwill bring this up, if I can
(08:36):
bring this up, dr Walker.
Yeah you should be able to share.
You can, you can or I can, butI'm going to pull it up.
Okay, Can I do share screen?
I got to remember to do thatfirst.
Speaker 2 (08:47):
Yeah, you should be able to share.
You can, you can or I can, butI'm going to pull it up.
Okay, can I do share screen?
I got to remember to do thatfirst.
Speaker 1 (08:50):
Yeah, you should be able to share screen, share
screen, boom, and I think thatthis is what I want to look at.
Nope, nope, it's the other one.
Okay, let me, let me stop.
I'm going to come back to thatin a few minutes.
Ok, what I was looking foranother document.
Speaker 2 (09:08):
Is it the one you sent me?
Speaker 1 (09:14):
It is the one I sent you there.
It is IRS rules.
I found it and the thing is Idon't know how to.
Well, let me just do this there.
Now you can see the whole thing.
Talk about boring?
Okay, this is really really.
No, I went back to the wrongone.
How did that flip?
Speaker 2 (09:34):
I think we were seeing the right one.
Speaker 1 (09:35):
There it is.
There's what I'm looking for.
Okay, can you see that?
Can you see the IRS 20-factortest?
You stopped sharing, I stoppedsharing, I stopped sharing all
this technology.
For heaven's sake, forgive me,I'm really really old it doesn't
to everybody there you go,ladies and gentlemen, there you
(09:57):
can see it I gotta tell youemail me.
Speaker 2 (09:59):
I will send this to you email, dr walker she has it
now.
Speaker 1 (10:01):
I will send this to you Email, dr Walker.
She has it now.
She can send it to you and Idon't want to get too much into
detail.
I could get bogged down andread this whole thing to you,
and I've got more things I wantto do.
I trust you all to read this,but you can see that there are
factors that the IRS came upwith to try to discriminate.
Even the factors they help,they're not decisive.
(10:24):
I just got through with a legalargument.
We haven't gotten a decisionfrom the board yet.
A counselor client of mine hasan off-site virtual assistant
person who works for her, andTexas Workforce Commission
wanted her to be a W-2.
To be a W-2.
(10:49):
The admin assistant andcounselor insists she's
independent.
So we went down this list withthem.
Okay, how much do you have tolearn?
How much do I have?
Does the employer have to teachthe employee about you know
whatever job, how much trainingis required, whatever job, how
much training is required?
And you look at some of theseand the control of assistance,
(11:13):
one of the ones that I reallylike because it's kind of
distinct is it an ongoing,continuous relationship or is it
something that comes and goesSeasonally.
Okay.
My widgets can only be made inApril and May, so there's a
seasonal time when I need thelady in Oklahoma City.
(11:34):
It's not a continuousrelationship, it's an episodic
relationship.
Schedule when do they have tocome in?
Nine to five.
Is this a 9 to 5?
Remember who was it?
Dolly Parton.
9 to 5?
Sequence Okay.
Does the employer say startwith blank widgets and then
(11:59):
paint the inside and then paintthe top and then add that red
stripe around?
Do you see how much detail andso I'm going to stop that share.
Speaker 2 (12:10):
So what's on my mind right now, though, is because,
when the question comes aboutfor supervisors and supervisees,
when the supervisor is thinkingabout hiring that supervisee,
and I look at that test, I meansupervisees don't meet all those
criteria.
Speaker 1 (12:27):
No one meets all of the criteria and, as I said a
minute ago, most of the criteriaare not very discreet, they're
kind of measures of sort of whatI mean, how do you count
training?
Well, one thing is that whenyou are agreeing to an
employer-employee relationshipwith an LPC, a licensed
(12:51):
professional counselor, did youtrain that counselor or did she
get her training before she evercame into your office?
Do you see?
And a factor of independence, afactor of independence, does
your, does your I'm trying todoes the LPC coming to work for
you?
Does she decide?
(13:17):
There are so many contracts I'vewritten for for counselors who
want to go to work in a largerpractice but they have a couple
of kids so they only want towork on Tuesdays and Thursdays
when the kid's in daycare.
They don't want to work onMonday.
They want to be mothers onMonday.
Raise your hand, any of you hadthat feeling.
They want to be at home takingcare of the kids Monday,
wednesday, friday or Tuesday,thursday, whatever.
So I'm going to say that almostinevitably 99.83, and I
(13:43):
measured it 99.83% of the time aprofessional relationship that
involves a counselor or group ofcounselors contracting to get
work done by a professional, alicensed professional counselor,
a social worker, a psychologist.
When you do that professionalcounselor, a social worker, a
(14:07):
psychologist when you do that,that will inevitably allow for
the independent notion.
Okay, so that if you're planningto I'm trying to avoid using
words like employee because it'sa little confusing but if
you're planning to organize andhave other people provide
services for which you're goingto accept a certain amount of
(14:30):
money, okay, that almostinevitably you have your choice.
You can make them W-2 employees, you can make them independent
contractors.
It is absolutely the choice.
It's a negotiating issue.
How does the incoming LPC feelthat?
(14:51):
Would she rather be independent?
Would she rather be a Wemployee, get certain benefits
and doesn't have to fool?
Of the questions you asked, inan independent contractor
relationship, the independentcontractor is more autonomous,
takes care of her own taxes,pays her own licensing fees,
(15:14):
although that is a contractualquestion, by the way.
Do you see?
So when you have a professionalrelationship between
professionals and I'm sayingprofessional you all are your
question revolves a lot aroundpre-professional, the associate
Right, that's not allowed topractice independently yet must
(15:35):
have a supervisor.
Yes, she may be an independentcontractor.
She may practice.
There was a period I have tosay this, folks there was a
period I have to say this, folksthere was a period of a couple
of years, a few years ago, for ayear or two or three, the LPC
board said that and at that timeI think they were still LPC
(15:57):
interns.
Remember LPCI, lpc interns?
I think it was that long agothat the LPC board said that
associates cannot be independent.
That lasted about a year and ahalf.
It's not constitutional.
Okay, there's no way that youcan support the right of a board
to tell a trained professionalwhere she can work and how she
(16:21):
can work.
Do you see that?
So they hold the rule back and,yes, associates may now be
independent contractors.
Your bind with associates issupervision.
And the question I getregularly I get this all the
time okay, is that the associatemust be supervised.
(16:42):
And the question hanging inseveral of your mind no, the
supervisor does not have to workin the same practice in which
she practices.
That's an absolutely separatecontract.
If I'm going to be an LPCassociate, I need to have a
supervisor, and there needs tobe.
And I will tell you, I'm alawyer.
(17:02):
Okay, don't ever do thiswithout a written agreement.
Okay there should be a writtenagreement between the supervisor
and supervisee and associate'semployment condition, employment
situation.
Speaker 2 (17:29):
Those are orthogonal so I'm going to throw something
at you real quick.
So if the supervisor has asupervisor contract right, that
dictates supervision.
Speaker 1 (17:41):
Yeah, you're going to bring all your serious cases.
I get to pick which ones.
You see you ask me all thequestions.
If you've got a clientcommitting suicide, call me
right away.
Speaker 2 (17:50):
Yes, and then I decide to hire that person, so
then I'm going to have aseparate employment contract
with that supervisee.
Speaker 1 (17:59):
Yes, okay, for all of you who haven't been paying
attention, all of you who havechecked your email and looked at
your text messages and you'retalking to your husband in the
background, this is a placewhere you want to listen up.
Okay, this is a place where youwant to listen up.
You absolutely must have awritten contract with anybody
(18:21):
you employ, especially if youwant them to be an independent
contractor.
Told you a minute ago about thecounselor I'm working with in
the Dallas area and the IRSactually not the IRS Texas
Workforce Commission said thather admin assistant was not an
independent contractor, thething that would have nailed
(18:42):
this down and we would have beenout of it instantly.
They didn't have a writtenagreement of any kind.
Get a written agreement, itdoesn't.
Now, if you want, ok, I'm goingto do a little bit of a sell
job here.
I have independent contractorcontracts in template form that
you and I can fill out togetherand you will have one with your
(19:04):
contractor's name and your nameand all the mystical, magical
language that I don't want toget into, but I could tell you
there are seven or eight thingsthat have to be in there that
kind of showed on the list.
I talked about a minute ago.
So absolutely have a contractand if you want to do it right,
get a lawyer to help you with.
(19:24):
But it has to be in writing,signed by both of you, stored
away, and when Texas WorkforceCommission comes banging on your
door, you just wave thecontract in their face and 98
percent of the battle is over.
So have a written contract.
Ok, do you see that?
The distinction is really, it'sa continuum, it's not a
(19:50):
dichotomy.
You're either this or you'rethat.
There are some things that arevery clearly.
When you hire someone to answerthe phone in your office and to
take messages and to scheduleyour appointments, that's
absolutely.
That is a W-2 employee.
There's no way around it.
Okay, when you have a licensedprofessional who comes to you
(20:14):
and she already has six or sevenclients and her own license and
her own history and backgroundvery clearly, she can be
independent.
Y'all just kind of workingtogether.
There are lots of places, whenyou think about it, lots of
places that are kind of inbetween.
There are times there arewebsite companies that sell
(20:37):
virtual assistant services toanswer your phone and make your
appointments and deal with youremails and things like that.
To answer your phone and makeyour appointments and deal with
your emails and things like that, and they're kind of in between
.
And that's what we got involvedin in this TWC case I'm telling
you about is we said there arelots of companies that provide
that service, a lot of it.
(20:57):
One of it stick this in yourcontract that the independent
contractor is free okay,absolutely free to take on other
clients to work somewhere else.
Yes, you can come work Tuesdaysand Thursdays at our office and
see 10 patients a day or see 10patients altogether.
And yes, you're free to work atthe hospital the other days of
(21:20):
the week.
You're free to work for someother provider on the far side
of town those other days of theweek.
Okay, you can take otheremployment.
Speaker 2 (21:30):
That's really helpful .
That's because I've been one ofthe ones who've been just kind
of saying a blanket statementyour own supervisees who work in
your practice must be W-2.
But what I hear you say is yougot to have a contract and look
to see if it meets the 20factors and find it accordingly
and call you.
Speaker 1 (21:51):
Yeah, call me if you have questions.
But remember, it's almostautomatic.
If you are a professional, aprovider of professional
services, and you are going toengage another person who comes
to you educated, licensed,skilled, and she's going to
provide services and you'regoing to share the income from
(22:12):
the services that she provides,that's inevitably defensible as
an independent contractorcontract.
However, I want to go back andsay you still need a piece of
paper.
However, I want to go back andsay you still need a piece of
paper, you still need a contract, because the contract has
mystical language that you allwon't think of.
The only reason I know thatmagic language is there Because
(22:34):
I took the time to go to lawschool.
You all don't want to do that.
Raise your hand if you'd loveto go to law school.
It was a lot of fun, real hard,very fun, um Good well, thank
you for that, that's that bingo.
I love that, mona lisa.
Thank you, yes, okay, anyquestions?
(22:56):
Do any of you have any specificquestions?
Yes, go ahead, mindy, eitherunmute yourself there, you go.
Speaker 3 (23:03):
How are you doing?
Speaker 1 (23:05):
I'm well, how are?
Speaker 2 (23:06):
oh mindy, yes, we know each other.
Speaker 1 (23:10):
Hi Mandy, I'll give you a plug.
Speaker 3 (23:12):
Dr Flynn has been great to work with in the past.
He's helped me a lot indifferent types of situations.
You're kind.
Speaker 1 (23:18):
Mandy Anyway.
Speaker 3 (23:19):
I do have a question about for the contract.
Can a contract for a 1099require?
Can I require contractors toschedule a minimum of, let's say
, 10 clients a week on average,something like that, so that
we're not just getting peoplewho are just coming in.
Oh, I think I just want to workfour hours this week and then
(23:40):
eight hours next week.
Can we require anything likethat if we want them to be an
independent contractor?
Speaker 1 (23:47):
Yes, yes, it's a little.
You have to draft your languagea little bit carefully.
Okay, Clearly, if you set thehours and you say you must come
in for at least four hours everyday, do you see how that's kind
of pushing against being a W-2employer as opposed to a fellow
(24:08):
contractor for services?
But if you have a company, okay, and a corporate sense of
yourself, even if it's soleproprietor, okay, I'm not
talking about a formal, but ifyou have that, then the two of
you can negotiate.
The same thing would go.
I've got the lady in Oklahomawho's selling widgets and I can
(24:29):
make a deal with her and I cansay I can only work with you.
It's not cost effective for meto send you four widgets a month
.
I have to be able to send youat least 150 a month or I can't
make it work.
Do you see how that's a profitloss, that's an income sort of
thing that I say the shippingcosts, the production costs, the
packaging.
(24:50):
The only way I can make thiswork between us is that you have
to sell 150 a month.
She's still independent.
She still decides for herselfwhen she's going to sell, how
she's going to sell, who she'sgoing to sell to.
I'm just saying my businessneeds you to do this much work
in order to cover the fixedcosts, the underlying cost of
doing business with you.
(25:11):
So, yes, you can Be careful howyou draft the language.
Okay, that again, and I'm goingto.
You know I'm throwing outthat's a lawyer thing.
Lawyers watch language.
Lawyers are very picky aboutlanguage.
The way I like to set up thesecontracts, there are two ways to
(25:31):
do it.
Either one works.
One is more cumbersome but alittle bit safer in some
indirect ways.
The other one is a lot easierand most independent contractor
contracts agree that theincoming, the contractor, will
keep 60%, 50%, 75%, whateveryour deal is, of the amount that
(25:57):
is collected and the way thatthe language flows.
Okay, do you see?
It's not specific, but the waythe language flows is that the
practice is going to pay thecontractor 60% of what comes in.
The problem with that is thatsounds like kickback.
(26:20):
That can be made to look likekickbacks contracts, Medicare,
Medicaid.
You have to be extremelycareful with that because it is
as if you're paying them forbringing clients to your
business.
You see, if I'm an x-ray lab,okay, and I've got physicians
(26:44):
and I want them to refer to meand I tell the physician that
I'll give you 60% or 40% of thefee when you send patients to me
.
Do you see how that's payingthe physician?
The physician's decision is notbased on the medical needs of
the patient but on the profitmotive.
And, by the same token, whenyou flip that and you're paying
(27:10):
a contractor 60% in order tocome see clients, do you see?
And it's a gray area, it's aslippery slope, it's hard.
Almost all the contracts I havewritten and that I see written,
almost all of them, do it thatway.
The language flows that waythat the practice is going to
(27:31):
give them 60% and keep 40% orsome percentage and keep a
different percentage.
A safer way to do that, a saferway to do that, is for the
practice to pay X number ofdollars.
I'm going to pay you $40 foreach hour of service Still fishy
(27:51):
.
You see how it still kind ofsmells a little bit like it
might be a kickback.
Trust me, the feds don't careabout us, but if you do federal
work, then you have to be verycareful about that.
There's a way.
I've done it.
I've done it several times.
It's really interesting andit's fun to draft.
But that is where you organizewhat I call a medical services
(28:16):
organization, an MSO, and whatyou're doing is for 30% of what
Mendy brings in.
I'm going to keep, but whatMendy's paying me for is the
Wi-Fi, the office space,somebody to answer the phone and
make appointments for her,paper supplies and a
(28:39):
refrigerator full of soft drinks.
Okay, do you see?
So that's a different thing.
I'm not giving her kickbacksfor seeing clients.
I am keeping a certain amountof money in exchange for.
So when you write the contracts, there needs to be a clear
sense for what is it that thepractice is providing?
(29:01):
And there's always got to be.
And there's a list I'm going toprovide cold drinks, I'm going
to provide a coffee machine, I'mgoing to provide Wi-Fi, I'm
going to provide an office spacesuitable, and do you see how?
That's a different system.
It's not a kickback, it's abusiness deal where I'm going to
rent you space and provide aplace for you to work.
Speaker 3 (29:22):
Is it okay if I ask you a follow-up question about
that?
Of course, of course.
Speaker 1 (29:25):
I think it applies.
Speaker 3 (29:27):
I think there's a lot of people here that this
applies to.
So is it okay to have anincentivized pay structure
within the contract.
Speaker 1 (29:35):
The only problem with that is, Mandy, is that when
you do that, the drafting onthose is very complicated for me
and I like my job easy.
Don't make my job difficult.
Speaker 3 (29:45):
Yeah, I'm sure you're happy to get some more money.
Speaker 1 (29:49):
I have seen them drafted way overly complex, but
it's very simple and I had thisthought when you asked your
first question.
You can set it up incentivizedfor 10 hours.
You get X amount If you have 20hours or more.
And you have to be carefulbecause it can't be 10 hours, it
has to be between zero and 10,.
(30:10):
To be careful because it can'tbe 10 hours, it has to be
between zero and 10, between 11and 20,.
A different pay scale, adifferent kind of distribution.
You can pay bonuses.
Yes, you can pay bonuses Ifyou're an independent contractor
.
I would be very careful if theydon't do this.
Don't say, if the contractorbrings in two thousand dollars,
(30:34):
that you know that really soundsbad, but if she works 56 hours
instead of 40 hours, then shegets a bonus.
You give her a Christmas bonusof an extra thousand dollars so
that you can incentivize.
My answer would be very carefulhow you do that.
Be very careful how you draftthat.
Now I want to do two.
I want to interrupt myself andI want to do the two things and
(30:56):
then I'm going to get you to thequestions that Dr Walker sent
me.
Did you have another one, mandy?
No, I just said thank you somuch.
I appreciate all okay, I want toget into the two things.
The first one is the boir, thebeneficial owner interest report
(31:18):
.
This applies to any corporateentity, any entity.
I'm going to say for us, thesimple answer is if you are a
sole proprietor, okay.
If you're just a person workingin an office, you pay your rent
, you have a secretary, okay,you're not a corporate structure
(31:39):
, you're just a sole proprietor.
This doesn't apply.
This only applies if you havesome kind of entity and the
language kind of says if it'sregistered with the state, if
you have a limited liabilitycompany, if you have a PLLC, a
professional limited, acorporate structure, some people
still actually, this doesn'tmake sense, but some people have
(32:01):
professional associations.
So if you have any kind ofentity that's registered with
the state, then there, oh God,this rule, it's to stop money
laundering.
You report it to the FinancialCrimes Enforcement Network of
(32:22):
the Department of Justice, don'tyou just love that?
You're going to have arelationship now and provide
information to the Federal Crime, investment and Financial
Crimes Network.
It spins in, it spins in andyou can do this yourself.
I kind of don't recommend it.
You're filling out a federalform and I've done several dozen
(32:46):
.
I've done a couple dozen ofthese, okay, and I still get in
the middle of it and I have tostep very carefully because I
get confused at which numbergoes where.
So be careful.
It's going to take you half anhour to 45 minutes.
It will take me 15.
That's a little bit of adifference.
You can get any lawyer Some ofyour accountants will do it but
(33:09):
it's a report to FinCEN, theFinancial Crimes Enforcement
Network.
Okay.
It provides them with theinformation regarding who are
the owners of the company thateither control the company or
receive benefits in the form ofmoney, basically profits, and
most of your companies those ofyou who have PLLCs or
(33:33):
corporations or LLCs or whateveryou have most of you only have
one owner.
Sometimes you'll have two ofyou sharing with and that would
mean that you have twobeneficial owners and what
FinCEN wants and you can go.
I think it's FinCENgov.
I really do.
It's something around somethinglike FinCENgov.
(33:55):
I've got an automatic, I justclick it, so I don't have any
idea what the actual address is,but you go on their site, you
register yourself as a reporterand then you register yourself
as a beneficial owner of yourcorporation.
The way I do it kind of makessense.
(34:17):
I go in, I have anidentification number.
I'm registered with FinCEN todo this, so I just put in my
registration number, boom, andthen I put in your name address.
Unfortunately, ladies andgentlemen, your name address,
your, your business's employerID number, your birth date and a
(34:38):
photograph a JPEG or a PDF ofyour driver's license you have
to send me, you have to sendFinCEN a valid state photo ID
with a photograph you can send.
Well, I've had one exceptionMost of the people send me their
driver's license.
I had one person, kind of aninteresting story, but he sent
(35:02):
me his passport, which is apicture ID with his name and his
birth date on it.
Name and address and birth date.
I'd have to have thatphotograph you could use for any
of you who happen to have one.
You could use your license tocarry a handgun.
That's a valid one.
A military ID would suffice, butit has to be a photo ID.
(35:22):
So I get your name, the name ofyour company, your employer ID
number associated with yourcorporate entity, and then your
personal address.
It has to be your well, theaddress of your business is fine
, an address where they can getyou, okay, and then your birth
date and a photo ID and that hasto be sent to the financial
(35:43):
crimes.
You have to have this done.
If your business was inexistence, if you were
registered with the Secretary ofState prior to January 1st of
2024, then you have untilDecember 31st of 2024 to
complete your business, yourbeneficial owner interest report
(36:05):
, okay, so you need to kind oftake a look at that, give it a
shot.
If you can't get to it, call me, email me.
We can work this thing out.
Speaker 2 (36:15):
If you put the link in the chat if you want to.
Speaker 1 (36:19):
We have.
Oh, excellent, Dr Walker, thisthis is why you are the leader
of this group.
Ok, this wants to go where Iwas going.
What was I going to say?
Oh, if your business, if youformed your business after
january 1st of 2024, you have 90days.
(36:39):
Okay, you have 90 days to fileyour boir.
Now, this is kind of like thegood faith estimate.
I don't know what's going tohappen.
Truth is, I have never seen alegal action or a board
complaint that had anything todo with the good faith estimate.
Do you remember the big blow up?
(37:01):
And probably many of you, mostof you?
You should be Okay, it's thelaw.
You need to be doing the goodfaith estimate, but I have to
say nothing has ever happened.
It was all that big and thennothing happened.
There are lawsuits.
It's my opinion, my legalopinion is that it's
unconstitutional.
There was a lawsuit in Georgia,but it was a very narrow class
(37:26):
action lawsuit and for thatclass the federal court ruled it
unconstitutional.
But it's limited to that smallclass.
It's going to take a couple ofyears before this gets high
enough that we will begin to seethat it probably can't be done.
In the meantime, I would adviseavoid the $500 a day.
(37:47):
Fine, because the fine is $500a day when you don't have your
beneficial owner interest reportfiled timely.
Okay.
Speaker 2 (37:57):
Don't be afraid of it .
We have a hand raised.
Carrie Simon, do you want tounmute?
Speaker 3 (38:05):
Yes, does this apply for nonprofits as well?
Speaker 1 (38:09):
Interesting.
Oh, what an interestingquestion.
If you are a 501c of any kind,you all know that the 501
corporation there's 501, a, b, c, d, e, f and I think G, maybe
just F.
Okay, these are all specifiedorganizations and you apply to
(38:30):
the IRS and the application islike 30 pages long and very
detailed.
I've done it.
But if the IRS considers youamong the 501 organizations,
then you do not have to filethat would be a 501c3 as the
nonprofit, what we think of as aordinary nonprofit.
(38:50):
If, however, you are notapproved by the IRS, there are a
lot of nonprofit organizationsin Texas that are just organized
as a nonprofit corporation.
That does not qualify under theFinCEN rules.
Qualify under the FinCEN rulesI'm working for, in fact.
(39:12):
Yeah, I've already filed it fora nonprofit.
It's registered with theSecretary of State as a
nonprofit corporation, but wehad to file a beneficial owner
interest report because it's notunder the IRS substance of a
501.
So now I'm going to make thissmaller, close this.
(39:41):
Oh, the other one, the other onethat I wanted to get to, and
I'm sorry, let me.
The other one is theattestation.
Somebody put a question up hereabout the attestation.
This is a little piece ofpolitically correct government
intrusion and an attack on tothe HIPAA, to all the HIPAA
(40:04):
rules.
Those have just got so huge.
That's just crazy stuff.
It's necessary, but when thefederal government starts
getting involved it just startsgrowing like a mushroom.
And this is one of theoffshoots of it.
Coming as of December 17th,when you provide the record and
(40:27):
there are a limited number ofcases the one you're going to
run into most often that is themost frequent time that you get
a crazy request is a subpoena Ifit has anything to do with
litigation.
If you're providing the recordto a lawyer as a result of a
subpoena, if a lawyer says theywant your record because there's
(40:48):
litigation, you will, beginningDecember 17th, you will have to
get an attestation, all theattestation does.
It's a simple, one-page deal.
Dr Walker, if you can givepeople my email address, I am
(41:10):
going to draft between now andthe 1st of December.
Wish me luck.
I'm going to draft anattestation form.
It's a brief, one-page form.
You basically provide the nameof who wants the record, what
they're going to use it for, whothe record covers your
patient's name, your name as areceiver.
(41:31):
It is the recipient of therecord that has to sign the
attestation.
In its simplest explanation, itjust simply says I promise that
this record will not be used,is not requested, for the
purpose of a criminalprosecution based on someone's
(41:56):
access to reproductive rights,which is a code word, which is a
code word, especially in Texas.
For the idea that I'm not goingto use this record to try to
convict either the physician orthe mother or anybody else
involved.
I'm not going to use it to tryto convict them of a criminal
offense involving reproductiverights, and we all know kind of
(42:19):
what that's about.
You can see how it's absolutelypolitically motivated.
Kind of what that's about.
You can see how it's absolutelypolitically motivated.
This is the 21st century.
They want a law abouteverything because they're
afraid it might happen.
I don't know what's going tohappen about the attestation.
What I will tell you iseveryone's going to be very
nervous and upset and feelburdened by it.
We won't know until next summeror even this time next year
(42:43):
exactly what the import orimplications.
Narrow, narrow set ofcircumstances that require the
attestation form and the mainthing that you're going to run
into there two of them actually.
The main thing is when you geta subpoena or a request that's
based in litigation, any kind oflawsuit, okay.
The other time is when acoroner, when there's a
(43:07):
coroner's inquest, and I've gotto say I've been a lawyer now
for a little over 16 years andthat's happened twice Twice in
16 years I have had mentalhealth professionals who got a
request for records from acoroner, a medical examiner,
okay, and it really is kind ofweird.
It's kind of strange when thathappens.
(43:28):
If you get a weird recordrequest like that from a coroner
or you get one based on a will,call me.
Those are fun to think about.
Lots of ins and outs Now movingright along as quickly as
possible.
Oh, I don't want to do it thatway.
I want to do a share screen andI think I'm going to get it
(43:49):
right this time.
Yes, yes, okay, can you all seethat?
Speaker 2 (43:58):
These are the questions right from the
Facebook page.
So all I did was I copied andpasted what you posted in our
Texas Counselors Creating BadassBusinesses page.
Speaker 1 (44:05):
And I want to give a big round of applause for those
of you who posted.
I'm a presenter.
I present a lot.
I love it when I get questionsin advance.
I love to know what kinds ofthings, because that helps me
understand what I should betalking about.
If you're hiring your firstemployee, what are your decision
points?
It's really a negotiation, okay, you and the person that's
(44:29):
going to work with you.
How do you want this thing towork?
Do they want to be independentLegally?
Well, legally, you are moreresponsible for a W-2 employee,
so that if you have a counselorworking in your office and she's
a W-2 employee and she getssued for malpractice which, by
(44:50):
the way, don't ever be concernedabout malpractice lawsuits you
don't have much exposure.
Your real exposure is tolicensing board complaints,
because those things get crazyand unpleasant.
Lawsuits will be unpleasant.
You won't like it, but I havenever seen a successful
malpractice lawsuit against amental health professional, with
(45:12):
the exception two exceptionsokay having sex with clients,
and the second one is cheatingthe government out of money.
Those are the two things youdon't want to do.
So as long as you don't havesex with clients and don't cheat
the government, you don't haveto worry about malpractice
lawsuits.
So in hiring, your decisionpoints really are negotiable.
(45:34):
How can you both each of youmutually make this work best?
How much independence Do theywant benefits?
How much are they willing toaccept in terms of control?
W-2 employees get paid lessbecause you have to pay half of
their taxes.
That's part of it.
Talk to your accountant.
This is an accounting question.
But if they're an independentcontractor and it comes up later
(45:57):
, they are responsible for their.
It's like a separate business.
They're responsible for theirsocial security.
What's called unemployment witha business?
The unemployment tax, excuse me, self-employment tax.
That's what the self-employmenttax, which, if you're an
employee.
They take out withholding butthey also take out Medicare,
(46:20):
medicaid and those things.
So the employer in a W-2situation pays half of that.
If you're an independentcontractor you have to pay the
whole thing, but if you're a W-2employee the employer is also
legally liable for anything thatan employee does in the scope
of her employment.
(46:40):
So if you have a W-2 employeewho gets sued, then as the
employer you're part of thatlawsuit.
So that's kind of one of thedecision points you might want
to weigh Steps to hire.
Basically, use your goodjudgment.
I would, you know, be reallycareful.
Call previous people.
(47:03):
I just heard a story today thiswas so interesting to me A
colleague of mine that I have inhold in very high regard, very
bright woman psychologist, whohad a who hired an office
manager who after two months sherealized that the office
manager she had hired is aseriously impaired, borderline
(47:25):
personality, okay and the thingsshe was starting.
She had access to the wholekeys to the kingdom and the
psychologist discovered thatthis employee was looking at the
reports before the psychologistsent the report out to the
court and she worked with thecourt.
Before the psychologist sentthe report out to the court and
she worked with the court beforethe employer sent it out.
(47:47):
The borderline employee editedthe reports.
She changed them.
Yes, she added and subtractedstuff.
Yes, kate, I can see.
Oh, that's bad.
So what I want to say is yourreal step is just be sure you
know this person.
I would be very careful.
If you don't know them, callsome of the people who do know
(48:11):
them.
Check the references, say Ihave made that.
I'm just going to simply sayI've made that mistake in the
past because I didn't check.
I remember one guy told me hesaid oh yeah, I'm his brother.
I couldn't, I don't rememberthe name, but he told me that he
and I had a lot of respect forthe brother.
So I went in and hired him todo the job.
(48:31):
It was a roofing job.
I hired him to do it and Ifound out later.
I actually ran into the brotherthat I liked and held in high
regard and I said dah, dah, dah,da and I hired him and he just
shook his head.
He said I wouldn't haverecommended my brother, I
wouldn't have recommended him.
I didn't check his references.
(48:54):
Okay, so that's probably when Iwould say your decision point
what do you want to provide?
Okay, what do you want toprovide to this person?
What do they want back from you?
I've talked about the controlissues.
Yes, you can provide.
In fact I would highly encourage, as an employer, write it down.
When you haven't, andparticularly what's going to
(49:16):
happen, and I've run into thisso many times when you need to
get rid of them, when you needto push them to the side, you
say this is not working.
You're a borderline personalityand you're dangerous.
Don't say that that won't work.
But if you keep track and keepa writing document that she
didn't show up for work document, that she threw a remote
(49:37):
control across the room at oneof the clients, when you
document, write that down onthat date.
Employee did this On that date.
I asked the employee to be surethat she was making notes.
You all know that I dealt witha case one time where they found
out that an independentcontractor employee had not done
(49:58):
any case notes with any of theclients for over a year notes
with any of the clients for overa year they didn't inspect.
There's another thing.
I learned this in the army.
I'm very old, I was in the army.
People will do what you inspect, not what you expect.
So if you've got independentcontractors, part of the
contract has to say that youhave access to their clinical
(50:19):
files and then you have to takethat access and make sure
they're doing work.
Yes, associates can now.
There was a time when theycouldn't.
The law has changed.
Associates may be 1099s and thesupervision contract is an
absolutely separate legalrelationship.
Good question about filing taxesWith a 1099, you're going to
(50:44):
love this.
You know, at the beginning,remember when you had jobs that
you were hired to do.
You worked for an employer andin January or February they gave
you that big form with all thedifferent, with the numbers of
how much they paid you and howmuch they withheld for taxes,
and you use that to do yourtaxes.
Okay, that's a W.
Oh Lord, I think that's calleda W-4.
(51:06):
No, that's a W-2.
I'm not an accountant.
I apologize, be aware I'm notan accountant.
That's a W-2.
But if you have an independentcontractor, you give them a form
1099.
Now my advice to you is don'tdo this yourself.
If you're not using anaccountant for your employee
(51:27):
stuff, or at least a bookkeeperfor this, you're probably going
to get right up to your neckbefore you realize how far you
are into it.
Report a lot more if it's a W-2.
Your obligation to reportincome taxes withheld.
Withholding all of that, youhave a lot more responsibility.
(51:51):
If it's a 1099, you just givethem a 1099 form in January,
february that says here's howmuch I paid you in 2024.
And then the employee, thecontractor, is responsible for
paying their own federalemployment, their Medicare and
filing their own taxes.
(52:12):
Okay, the S-Corp and BOIR areabsolutely separate.
Oh, we're getting down to theend.
An S-Corp doesn't exist.
Ok, if you, if you're, ifyou're an accountant, ok, has
you listed as an S-Corp?
That's an IRS.
It's a chapter in the IRS I'mgoing to surprise you here.
(52:35):
It's some chapter S of the IRScode and it allows income to be
passed through directly to theowner of the business in a small
, closely held business.
Think about this Microsoft,okay, has to.
They get all their income andthey've made a profit.
They have to pay taxes on thatprofit and then, after they pay
(52:58):
taxes.
They divide the profit up amongthe shareholders and then the
shareholders have to pay taxesagain.
So if you've got a one-personPLLC and you've made a profit,
does the PLLC have to pay taxeson the income?
And that's what subchapter S isabout.
(53:18):
It says no pass-through.
It's called pass-through and sothe corporate entity is not
required if it is a sub-Scorporation.
But there are other ways to doit.
Do not immediately become asub-chapter S because most of
you she's early.
Most of you, where is mythinking?
(53:42):
Most of you, where's mythinking?
Subchapter S most of you aredisregarded entities.
Okay, don't feel hurt by that.
The IRS disregards the entityand taxes you for your income
because it's a small, closelyheld, and being a sub S
corporation comes with certainobligations that you don't want
(54:04):
to be involved in.
Jumping very quickly.
Okay, any of you have questions?
Send me emails.
Dr Walker is going to give youmy address.
Send me questions.
I'm happy to answer questions.
I've learned so much from yourquestions, so don't feel like
you're imposing.
Yes, you are imposing, but it'sworth my time because I learned
from it.
Speaker 2 (54:24):
I learned so much from this.
This was wonderful.
Speaker 1 (54:28):
Well, I'm glad Every time I teach this, I learn more
stuff.
Notice of intent, forfeit right.
Probably you have a limitedliability company and you didn't
file your no tax due, yourfranchise tax report, okay.
And when you don't file yourfranchise tax report, then they
(54:49):
send you a notice.
The Secretary of State says weare about to take your business
away from you.
If you want to solve theproblem, okay, file your no tax
due franchise report.
Although I haven't heard all thedetails, but I think as of 2024
, llcs, pllcs, are not requiredany longer to file the franchise
(55:11):
tax report.
It just created too muchtrouble.
Be careful about that.
Talk to your accountant.
I haven't investigated itthoroughly and I'm not an
accountant.
Okay, so be careful.
But I'm pretty sure that theyhave softened the requirements
and very few of you in thefuture will get a notice of
intent to forfeit the right.
(55:32):
If you get a notice, all youhave to do is file some papers
and they put you back on theirgood list.
It's not as bad as going to theprincipal.
It's just the teacher shaking afinger and saying if you do
that one more time, I'm going totell your mother.
Okay, and you and I both knowthat you're not afraid of your
mother anyway.
Okay, that's all.
(55:52):
We have made it one minute past.
Speaker 2 (55:55):
Oh, you were awesome.
This was so much wonderfulinformation.
I feel validated, I feelcorrected, I feel like I can get
more information out.
That's accurate.
And I will absolutely, dr Flynn, give people your email so they
can reach out to you.
I know you're going to getcalls about that contract.
I know you're going to getcalls about that attestation
(56:16):
letter, so I'm going to get thatdone.
Speaker 1 (56:19):
Yeah, I'm going to get that done and make that
available.
It's just something we've gotto do.
Thank you, dr Walker.
Would you tell Kenda Dalrymplethat, no matter what she thinks
of me, I think she is anabsolute gem, absolutely.
Speaker 3 (56:34):
Kenda.
Speaker 1 (56:34):
Dalrymple Okay, I've learned this Kenda defended me
against about a board complaintabout 25 years ago.
Okay, and it was one of thescariest I had three board
complaints all at one time.
Long story, not a big deal.
She got all of them dismissed,cost me a ton of money, explains
(56:54):
why I'm in law school.
My wife at that time saidyou're not doing that anymore.
You're going to go to lawschool and get the check, not
pay it.
And Kenda became my mentor andtruly, the more I learned about
the law, the more I have been alawyer, the more I appreciate
how smart Kenda is and what avery good lawyer she is.
So you can tell her that,whatever it is, she's better
(57:16):
than I am.
Speaker 2 (57:18):
I will.
I will tell her.
Thank you again so much.
I'm Dr Kate Walker.
This is Texas CounselorsCreating Badass Businesses.
And Kate Walker Training Lookfor your CE.
Give us about three weeks toget that done.
We're training a new personwho's gonna help us push those
CEs out quickly.
And don't forget, check thechat right now.
Click the link to the form.
(57:39):
Once I hit end, then myfinger's heading there, I'm
about to hit end and once ithits end, all of those links go
away and if you have it openthen you can access that and
fill it out at your leisure.
So thank you guys so much.
I will see you next month atour next presentation.
Have a wonderful evening.
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