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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12521
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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Real Estate brokerage fim is opening an office in CA which

Resolved Question:

Real Estate brokerage fim is opening an office in CA which agents earn commission on a 1099 does the Broker have to cover the Workers componsation insurance for the agents or not as the agents are not employees and are paid on 1099 not payroll,

Also we are looking to take a broker to be broker of record the broker will be an officer but not a partner when we pay the broker do we need to take of wiholding tax as payroll or we can pay with a 1099 as the broker is not an employee which the company has direction and controll over the broker?
Submitted: 11 months ago.
Category: Finance
Expert:  Megan C replied 11 months ago.

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com

MyVirtualCPA :

How are you today?

MyVirtualCPA :

You do not have to put your brokers on worker's compensation insurance as they are not employees

MyVirtualCPA :

However, the broker of record could be classified as a statutory employee therefore your salary to this individual will need to have payroll taxes taken out of it.

MyVirtualCPA :

Do you have any further questions or information to add?

Customer:

This is in CA and the law may be diferent regarding real estater agents and witholding than other states

MyVirtualCPA :

I realize that, and have provided you with the correct information

MyVirtualCPA :

Is there anything else I can assist you with?

Customer:

The broker of record will be paid a certain amount just for the use of the license its not payroll its a fixed monthly amount

Customer:

Why should it be diferent from a service fee which i dont need to pay witholding to somone that I rent something or someone that privides me a service?

MyVirtualCPA :

Ok, in that case they can be paid as a 1099 contractor. I assumed they would have general office duties and responsibilities

Customer:

Please provide me the publication for these answers Thanks

MyVirtualCPA :

You can reference http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-%28Self-Employed%29-or-Employee%3F

MyVirtualCPA :

I do not have any CA publications at the moment. Thanks

MyVirtualCPA :

For CA the publication would be http://www.dir.ca.gov/dlse/faq_independentcontractor.htm

MyVirtualCPA :

Thanks

Customer:

I heard that California Labor and Workforce Development Agency considers a RE salesperson to be an employee for the purposes of WC insurance and that broker needs to cover workers comp please provide me some publication from Ca Dept of labor

MyVirtualCPA :

I will do some more research and get back with you

MyVirtualCPA :

Okay I did some further research and yes, the real estate agent who is 1099 contractor would still be employee for worker's compensation purposes. But, the main broker could still be 1099 instead of withheld employee

MyVirtualCPA :

http://www.dir.ca.gov/dwc/faqs.html

Customer:

The broker is not considered "statutory employee" under federal and CA law?

MyVirtualCPA :

You can refer to the IRS document provided for what constitutes contractor vs employee for the IRS purposes

MyVirtualCPA :

and the CA document you can refer to the CA links that I have provided

Customer:

But is the broker considered statutory employee If I just pay for use of their license?

MyVirtualCPA :

No, they are not if you are just paying for use of their license

MyVirtualCPA :

Is there anything else I can assist you with today?

MyVirtualCPA :

Have I provided you with excellent service?

Customer:

I think you have answered all my questions and you provided fast and excellent service Thanks,

MyVirtualCPA :

You may rate now

MyVirtualCPA :

I wanted to make sure you were satisfied

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12521
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 2 other Finance Specialists are ready to help you
Expert:  Megan C replied 11 months ago.
Thanks, Aron for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.

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