Gibson HomeBuilders

Today’s topic is Affordable Green Building Practices and Independent Contractors vs. Employees.

My guests today are Teresa Welch with Century 21 Realtors and Jean Gibson, Vice President of Gibson Home Builders, Inc. with a special segment by Kelly M. Davis, Esq.

Top 20 Green Building Suggestions

ENERGY
1.ORIENT BUILDING TO MAXIMIZE
NATURAL DAYLIGHTING
Description: Natural day lighting is usually available to the east, south, and west facades.
Benefits: Maximizing natural day lighting reduces the need for artificial light, thus reducing energy consumption and utility bills. Dwellings that have good natural day lighting are also more pleasant for the residents.

2.PLACE WINDOWS TO PROVIDE
GOOD NATURAL VENTILATION
Description: Natural ventilation systems take advantage of prevailing winds and thermal convection to ventilate living spaces.
Benefits: Placing windows to take advantage of natural ventilation reduces the need for air conditioning, saves money on energy bills, and can make homes without air conditioning more comfortable.

3.SELECT A LIGHT-COLORED
“COOL ROOF”
Description: Dark roofing materials absorb heat, making the house warmer in summer months, whereas light colored roofing reflects heat away from the building.
Benefits: Light colored roofing reduces heat buildup through the roof, thus increasing occupancy comfort and decreasing air conditioning bills. Light colored roofing can also last longer because it does not thermally expand and contract as much as darker colors
.
4.PROVIDE OVERHANGS ON
SOUTH-FACING WINDOWS
Description: Overhangs or screens on south-facing windows are one component of a natural cooling system.
Benefits: Shading south-facing windows reduces heat gain by screening the summer sun during the hottest periods of the day.

5.INSTALL WHOLE-HOUSE
FANS OR CEILING FANS
Description: Whole-house and ceiling fans improve interior comfort by circulating cold and warm air. They can be adjusted to either draw warm air upward during summer months or push it downward during the winter.
Benefits: Fans can reduce the need for air conditioning and heating by circulating air effectively, and on average uses one-tenth the electricity of an air conditioning unit.

6.ELIMINATE AIR CONDITIONING
Description: After the refrigerator, air conditioning is the second biggest consumer of electricity in an average household.
Benefits: Eliminating air conditioning will significantly reduce a household’s electricity bill.

7.PROVIDE COMBINED-HYDRONIC
HEATING
Description: Combined hydronic heating uses hot water stored in the water heater to operate radiators typically installed in baseboards.
Benefits: Combined-hydronic heating saves energy by using hot water already produced and stored in the water heater, and eliminating the need for a separate furnace.

8.INSTALL FLUORESCENT LIGHTS
WITH ELECTRONIC BALLASTS
Description: Interior fluorescent bulbs and fixtures produce light quantity and quality that is comparable to incandescent, while expending less energy. Electronic ballasts also improve efficiency and reduce flickering.
Benefits: Energy efficient lighting reduces energy consumption and lowers utility bills. One compact florescent bulb will pay itself back over ten times over the course of its life through reduced energy use.

9.INSTALL HIGH R-VALUE INSULATION
Description: Insulation provides a continuous thermal barrier to minimize heat flow through the walls, ceiling and floor. The higher the R-value, the greater the material’s ability to insulate.
Benefits: Installing higher R-value insulation improves comfort, decreases demand for air conditioning and heating, saves money, and makes the home quieter.

10.SELECT ENERGY STAR APPLIANCES
Description: Refrigerators and freezers are among the largest users of electricity in most homes. They can account for up to 25% of household energy use.
Energy Star appliances use 10-15% less energy and water than standard models.
Benefits: Energy Star refrigerators can save over 10% of the total annual electrical bill in a home. Check with the local utility company for rebate programs.

WATER

11.DESIGN WATER-EFFICIENT
LANDSCAPES
Description: Low-water landscape designs (such as
xeriscape) reduce water use by emphasizing native and/or drought tolerant plants, eliminating turf areas, and minimizing maintenance. Efficient irrigation systems, such as drip and micro irrigation, place the correct amount of water directly at the base of each plant, thus reducing water use and waste from over watering.
Benefits: Water efficient landscape and irrigation systems help plant growth and overall health by eliminating over watering or excessive drying. They also lower water bills and reduce impacts on water supply infrastructure.

12.INSTALL WATER-EFFICIENT TOILETS
AND FIXTURES
Description: New toilets use 1.6 gallons per flush compared with old toilets that require 5-7 gallons per flush. Flow reducers fit into the aerator at the tip of the faucet and reduce the rate of water flow through the faucet. Low-flow showerheads replace standard showerheads.
Benefits: Low-flow toilets can save up to 22,000 gallons of water per year for a family of four. Flow reducers can cut water usage of faucets and showers by as much as 40% with little noticeable effect.

13.USE PERMEABLE PAVING MATERIALS
Description: Permeable paving allows storm water to percolate into the soil.
Benefits: Permeable paving allows on-site percolation, thus reducing the volume of polluted water that flows into rivers or bays, while replenishing soil moisture and local aquifers. Additional benefits include reduction in irrigation requirements and a lower risk of flooding.

MATERIALS

14.USE 30% - 50% FLYASH IN CONCRETE
Description: Flyash is a byproduct of coal burning power plants and can be an inexpensive substitute for 15% - 40% of the Portland cement used in concrete.
Benefits: Flyash increases the strength and durability of the concrete. Using flyash also reduces the amount of cement needed, there by decreasing the overall environmental impacts of cement production (mining and energy consumption).

15.USE ENGINEERED WOOD FOR
HEADERS, JOISTS, AND SHEATHING
Description: Solid sawn lumber in sizes of 2X10 or greater typically comes from old growth forests.
Engineered lumber products, however, come from small- diameter and fast growing plantation trees. 2X10 and larger dimensional lumber is typically used for floor and ceiling joists and some seismic applications. Large size lumber can be replaced with engineered lumber (microlam, paralam, gluelam) in most applications unless required by seismic codes. Solid sawn 4X6s are often used for headers when smaller dimension lumber would suffice, such as double 2X6s, unless solid 4X6s are required by seismic codes.Wood I-Joists are an altern- ativeto 2X6s or 2X8s used for floor and roof joists.
Benefits: Reducing demand for large dimensional lumber decreases pressure to cut down old growth forests.
Engineered lumber uses wood fiber more efficiently that conventional lumber, resulting in stronger and higher quality homes.

16.USE RECYCLED-CONTENT
INSULATION, DRYWALL, AND CARPET
Description: Recycled-content insulation, drywall, and carpet are made from recycles paper, recycled plastic and glass bottles, recycled wool or recycled cotton.
They don’t differ in appearance or performance and the prices are comparable to conventional products.
Benefits: Recycled-content materials save resources and divert waste from landfills. Approximately 40 two-liter soda bottles are recycled into each square yard of recycled-content carpeting. Recycled-content insulation may contain up to 30% recycled glass.

INDOOR AIR QUALITY
17.USE LOW- OR NO-VOC PAINT
Description: No-VOC paint does not emit odors related to volatile organic compounds (VOCs). Organic chemicals are widely used as ingredients in household products like paint, adhesives, cleaning supplies, etc. No-
VOC paint is used exactly like conventional paint. No-
VOC paints are most suitable for indoor use.
Benefits: Use of low- or no-VOC paint can eliminate the eye, nose, and throat irritation, loss of coordination, and potentially damage to the liver and central nervous system caused by VOC’s. Outside, VOC’s can bond with other pollutants and create ground-level ozone.

18.USE FORMALDEHYDE-FREE OR FULLY
SEALED MATERIALS FOR CABINETS AND
COUNTERS
Description: Particleboard typically contains formaldehyde, which can off gas for 10-15 years. EPA ranks formaldehyde as a probable human carcinogen.
Exposure can cause eye, nose and throat irritation, skin rashes, headaches, nosebleeds and nausea.
Benefits: Elimination of formaldehyde-based materials reduces exposure to residents, particularly children, who are most susceptible. Sealing with a flat, latex- based primer or other suitable material can prevent the off gassing of formaldehyde.

19.VENT RANGEHOOD TOTHE OUTSIDE
Description: Steam, gases, smoke and other combustion by-products (such as unburned hydrocarbons) can result from cooking. Stovetop range hoods expel these by-products to the outside.
Benefits: Range hoods improve indoor air quality, prevent overheating and reduce moisture build-up.

20.INSTALL CARBON MONOXIDE
DETECTOR
Description: Carbon monoxide detectors monitor the level of this gas in individual dwelling units.
Benefits: Detector scan reduce harmful human health effects of carbon monoxide, a common indoor air pollutant created by the combustion of natural gas from stoves and heaters.

Affordable Green Building Practices

For many rural affordable housing developers, simply building affordable housing for low-income residents is not enough anymore. These organizations understand the nature of complex, overlapping social, economic, and environmental problems and are committed to responding to them in a holistic manner. For these groups, a green building framework provides the necessary comprehensive structure to respond to these problems and ultimately to build healthier, more efficient, and environmentally sustainable housing and communities.

Green building is defined as a process that creates buildings and supporting infrastructure that:

⌂ minimizes the use of resources,
⌂ reduces harmful effects on the environment, and
⌂ provides healthier environments for people.

An affordable green building definition builds off the existing definition by adding that green building practices should not create undue cost burden for low-income residents.

In April 2006, the Housing Assistance Council (HAC) brought together national green building organizations, local rural housing organizations with a history of green building, funding organizations, and other stakeholders in the sustainable housing development movement in a roundtable forum to explore the specifics of green affordable housing and the challenges in rural areas. Rural affordable green building is an area with little current research and one that is increasingly important given the current policy and programmatic attention to green affordable housing.

During the roundtable, representatives of rural affordable housing organizations identified their organizations’ green building activities, challenges, and responses to these challenges, while funders contributed dialogue on the characteristics of green resource delivery for rural groups. This discussion yielded a rich array of information on rural affordable green building.

Among the most common green techniques being used by rural roundtable participants were:

⌂ compact fluorescent lighting,
⌂ ENERGY STAR appliances,
⌂ low flow fixtures and dual flush toilets,
⌂ environmentally preferable products,
⌂ local sources for materials,
⌂ recycling construction materials and minimizing site waste,
⌂ homeowner awareness education, and
⌂ integrated design processes implemented using a charette.

Some of the most common green challenges for rural roundtable participants were:

⌂ compact development,
⌂ infill development and utilization of existing physical infrastructure,
⌂ use of public transportation and land use planning,
⌂ access to and affordability of certain green products and systems,
⌂ staff and contractor access and capacity,
⌂ access to and costs of third-party verifiers,
⌂ federal, state, and local government regulations,
⌂ qualifying for certain green affordable funding programs, and
⌂ homebuyer awareness.

Even with these challenges present, community groups at the roundtable were often incorporating as many feasible green facets as possible in their affordable housing projects. These organizations are committed to the individual, organizational, community, and global benefits of building green.

These findings provide a foundation for further exploration of the issues surrounding rural green affordable housing.

INTRODUCTION

What structured process has the potential to address rising energy costs, health impacts of buildings on people, finite natural resources, and interdisciplinary problems in a holistic manner? In two words, green building. A green building framework provides a comprehensive structure for understanding how building practices intersect and impact the globe, region, community, and individuals. Incorporating a green building framework can also provide the techniques needed to address and build more efficient, healthier buildings that have less impact on the environment.

While the goals of green building are easy to embrace – resource efficiency, habitat conservation, improved occupant health, high-quality building practices – the realities of constructing green units are often difficult, particularly for affordable housing developers. Challenges relating to affordable green building include slightly higher initial capital costs, capacity challenges, perceived risk, contracting constraints, and the lack of documented success. These issues can be exacerbated in rural communities where capacity and spatial realities may work against some basic principles of green development.

In April 2006, the Housing Assistance Council (HAC) brought together national green building organizations, local rural housing organizations with a history of green building, funding organizations, and other stakeholders in the sustainable housing development movement in a roundtable forum to further explore the specifics of green affordable housing and the challenges in rural areas. Rural affordable green building is an area with little current research and one that is increasingly important given the policy and programmatic attention to green affordable housing.

This exploratory report provides many examples of affordable green building in the rural context and more details of the challenges rural organizations may face incorporating green techniques in affordable housing projects. Further, experienced rural organizations provide examples of how these challenges can be overcome and the resources needed to make green building possible for rural affordable housing developers. Finally, the report addresses what rural organizations are doing that may already be green and what type of replicable activities they can undertake affordably to promote green building that benefits low-income residents. This report provides a foundation from which to further explore issues surrounding rural green affordable housing.

WHAT IS GREEN BUILDING?

Green building is defined as a process that creates buildings and supporting infrastructure that:

⌂ minimizes the use of resources,
⌂ reduces harmful effects on the environment, and
⌂ provides healthier environments for people.

An affordable green building definition builds off the existing definition by adding that green building practices should not create undue cost burden for low-income residents.

The modern green building movement, which incorporates integrated construction and design processes, began in the early 1990s. Since that time, green building has become an increasingly popular method of development for market rate and affordable developments due to a variety of factors including, but not limited to, increasing energy prices, resource constraints, health concerns for low- income residents, and increased awareness of the integrated nature of the built and natural environments. Thus, there is a great need to understand the impact of this development strategy and be able to document benefits, challenges, and results.

This section provides a green building overview, setting the context and understanding for the outside literature on affordable green building and the subsequent rural discussion. It explains the key features of using a green building framework, most notably the planning components utilized before and during the development process and building to environmentally conscious standards, as well as the economic and non-economic benefits.

Green Building Goals, Benefits, and Challenges

Green building practices have numerous direct and indirect benefits at all levels of geography, including global, regional, community, and individual. At the global level, green building practices help protect and conserve natural resources by reducing demand for and improving utilization of virgin materials (Global Green USA 2005). Reduced demand for energy through more energy efficient practices can help stem climate change (Global Green USA 2005).

At the regional and community levels, green-built housing can help increase local economic growth by
encouraging use of local and regional materials, which keeps money and tax dollars in the community (FHLBA 2005). In addition, utilization of a green framework can help protect and preserve open space, increase transportation options, reduce solid waste, minimize strain on local infrastructure, more properly manage storm water and reduce water pollution, improve air quality, and enhance community well-being by planning for growth (USGBC 2006).

For individuals, green housing can provide residents long-term cost savings through efficiencies incorporated in the design of the home. Besides decreased financial costs, green built houses offer a healthier and more comfortable indoor environment for residents.

Green building can be challenging for housing developers,due to the higher initial capital costs, contractor capacity and access, added complexity, local regulations, and lack of understanding and familiarity with green products, systems, and the development process. Although there are challenges, many local building codes throughout the United States already require certain green practices such as water efficiency standards, protection of environmentally sensitive lands, durable materials, and others. Thus, many developers may already be incorporating sustainable techniques and not be aware of it.

Integrated Design Process

Integrated design is often called a “whole building” or a “total systems” approach, and it is recommended that green building projects utilize this process first before beginning construction. Define integrated design “as a process that involves all members of a project team from the outset of the design process in order to provide a shared understanding of project goals, priorities, and constraints.” It is also intended to increase investment and ownership in the end product.

The early thinking involved with the integrated design process helps ensure a healthy, cost-effective, and environmentally and socially responsible home by allowing all stakeholders to communicate and set goals, while determining what green building elements are feasible.

A well run integrated design process has many benefits, including:

⌂ clarifying goals among all project players in the beginning,
⌂ considering all possibilities of greening from the start,
⌂ reducing chances of costly change orders,
⌂ achieving synergies acros⌂ reducing overall costs by identifying green savings in the beginning that can be used to pay for any additional incremental costs from greening.

Integrated design processes are often implemented using a charette model. A charette is defined by Global Green USA (2005) as a “focused and collaborative design process that harnesses the talents and energies of interested parties to create and build support for a feasible plan to produce change or innovation.” Charettes provide the necessary inclusive model to implement the integrated design process.

Shades of Green

Although green housing would ideally incorporate all aspects of the green building framework, it is often practically and financially feasible for developers to incorporate only certain green techniques because of time, costs, climate, topography, or other factors. Each building project, whether new construction or renovation, must identify those that are most appropriate and feasible for the particular circumstances, while keeping in the mind the overall goals of affordable housing.

Integrated design enables the project developer to identify the green facets appropriate for a specific project. Thus, it is important for developers to think of green building as a process that comes in different “shades of green.” Early planning can help developers decide what shade of green is feasible for their housing projects.
Life Cycle Costing

Life cycle costing is an important concept in green building since traditional costing methods do not usually capture the economic benefits of green housing. Life cycle costing systematically takes into account the long-term costs of building operation and maintenance to provide a more accurate picture of the total costs associated with green design decisions. Simply put, it measures the total cost of a structure, including initial construction costs and long-term operating and maintenance costs (FHLBA 2005).

Understanding the long-term economic savings from developing green affordable housing with a life cycle framework is essential. For instance, affordable multifamily projects are typically owned and managed by nonprofit developers for at least 15 years and often for much longer. Thus, the long-term economic benefits experienced with the life cycle approach are very important for the owner and resident, since costs and rents can be kept lower than those for conventional affordable multifamily projects (Global Green USA 2005).

There is a need for more life cycle costing analyses and other evaluation procedures in order to better understand how much money can be saved by residents in affordable green developments and how the rural context affects potential savings. It can be challengingfor researchers to quantify these savings dueto the many facets of green building and the new building systems that are introduced at an ever faster rate.

Building Standards

Green building standards are an important component of green development since they provide a technical resource and ensure a standardized terminology and formal certification system to rate residential buildings.

The rising popularity of constructing buildings through a green framework is reflected in the increasing number of projects being certified through the United States Green Building Council’s (USGBC)
Leadership in Energy and Environmental Design (LEED) system, a voluntary consensus-based national standard for designing and rating high performance buildings.5 Since 2000, over 2,000 projects have registered with USGBC, declaring their intent to seek LEED certification (USGBC 2005b). In addition, over 20,000 professionals are now LEED accredited. The LEED accredited professional program was designed to recognize individuals who have demonstrated the skills and expertise necessary to participate in the green building design process (USGBC 2005b).
Although many green building standards are available, LEED has emerged as the premier national standard (Kats 2003) and will be utilized for the purpose of this report.6 LEED standards are available for various development types, including commercial buildings, commercial interior projects, and others.
In September 2005, the USGBC released its LEED for Homes (LEED-H) pilot program. Although not specifically tailored to affordable housing, LEED-H is becoming the national standard for green affordable housing projects.7 As of 2006, it is being used and tested throughout the U.S. by selected housing developers, including affordable developers. It is anticipated that LEED for Homes building standards will be finalized in 2007 (USGBC 2005a). In addition, the USGBC is also beginning a pilot program for LEED for Neighborhood Development (LEED-ND), which will standardize smart land use planning principles.

For the most part, this report uses LEED-H terminology and credit subheadings. LEED-H has eight environmental categories which are further divided into “credits.” For each credit, the rating system identifies the intent, requirements, verification procedures, rationale, outside reference, and technologies or strategies to achieve the credit. One or more points are available within each credit, and points are achieved by meeting specified requirements (USGBC 2005a). The eight credits for the LEED-H program are:

⌂ Location and Linkages
⌂ Sustainable Sites
⌂ Water Efficiency
⌂ Indoor Environmental Quality
⌂ Materials and Resources
⌂ Energy and Atmosphere
⌂ Homeowner Awareness
⌂ Innovative Design

Projects are certified to meet LEED standards after a third-party review is completed. This verification process includes both on-site inspections to ensure that the LEED-H features have been installed correctly, and performance testing to ensure proper performance (USGBC 2005a). LEED-H providers are local and regional organizations that have been selected to provide technical, marketing, and verification support services to builders.

Affordable Green Building

Affordable green building is a more recent development of the general green building movement. Affordable green building combines housing and community development with a sustainable development framework. It provides a conscious framework for understanding how the built environment intersects with and affects the natural environment, affordability, and sustainability, all within a low-income viewpoint. The components of affordable green building address the many factors associated with development and its ramifications, particularly those affecting low-income persons.
“It is only recently that you could say green and affordable in the same sentence.”
Greening affordable housing presents an opportunity to reduce variable costs, such as utility and transportation expenses, which disproportionately affect low-income people. After the rent or mortgage payment, utility bills represent the largest housing related expenses; water, gas, heating oil, and electricity bills can strain a small budget. Green affordable housing can keep housing related expenses down for low-income people and promote greater housing stability due to the efficiencies incorporated into the home.

Many affordable housing providers already incorporate certain green elements in their housing developments. For instance, many community housing organizations have traditionally provided weatherization services that decrease low-income residents’ energy bills through better home insulation. Incorporating holistic green practices that address the full spectrum of development issues, though, is new to most community housing organizations and more rare.

Benefits

There are many benefits at the individual level from using green affordable housing practices. The most often cited advantage, which is especially salient for low-income residents, is the lower utility costs from using energy efficient products and properly insulated homes. For low-income residents this is especially important since these costs represent a proportionally higher share of their income. According to the Energy Information Administration, in 2005 the average price of residential heating oil rose almost 20 percent and the average price of residential natural gas rose more than 43 percent from 2004.

Besides lower utility rates, green building practices improve occupant health and comfort through the use of better ventilation systems and better construction materials, providing cleaner indoor air, and helping reduce the occurrence of asthma, respiratory diseases, and other ailments. This is significant for low-income and minority residents who are more prone to live in neighborhoods with higher rates of asthma and environmental health hazards.

According to the Federal Home Loan Bank of Atlanta, incorporating green building benefits community housing organizations that manage rental housing by promoting higher tenant satisfaction, reducing turnover, improving marketability, and lowering operating costs. All of these factors contribute to lower management costs for community organizations.

Kelly M. Davis & Associates
Attorneys and Counselors at Law
Guests: Kelly M. Davis, Esq.
Katie Manchaca, Esq.

Independent Contractors vs. Employees

My firm represents many local businesses and we thought we would talk a little bit today about a problem common to most businesses, whether you are in the construction industry or not, that’s whether to hire a person as an independent contractor or an employee. This can be a huge problem and the decision can have severe consequences.

You see this a lot in the construction industry. Everyone is called a subcontractor or an independent contractor but many times they don’t meet the legal definition for this.
It is critical that you, the employer, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.
Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services.

Definition: An independent contractor is hired to perform work for a business (or other entity), but is not employed by that business. The work is typically contracted for a specified amount of time or until a project is completed. The IRS considers someone to be an independent contractor if only the outcome of the work is controlled, as opposed to when, where or how the work is completed. An independent contractor is also responsible for paying his own taxes on the money earned.
It is a dilemma you will face at some point during the life of your small business. The company is growing nicely but there is only so much you can do. Adding to your human resources can result in additional revenue and less chaos in your business life. Should you hire a new employee or an independent contractor?
Hiring an independent contractor or new employee is an important business decision. To guide you to the best possible decision, consider the pros and cons of hiring an employee or an independent contractor:
Pros of Hiring An Independent Contractor
Reduced Overhead: The attraction of hiring an independent contractor is the reduced costs in: expenses, payroll, benefits, and other overhead. Lower overhead means less stress to bring in new business revenue to cover costs.
No Health Benefits: This one deserves separate mention. A burden on small business is the uncontrollable costs of employee health benefits.
Work On Demand: Hiring an independent offers flexibility to the changing work demands of your company. You have the ability to take added opportunities as they arise, and during slow periods, have greater cost control. Your contract workforce often comes fully trained and highly specialized.
Cons of Hiring An Independent Contractor
Lack of Control: Part of what makes a contractor independent is their ability to choose the control over the work performed. Contractors may have additional projects and may have less commitment than an employee.
No Fixed Rates: Your small business may find the perfect independent contractor to work with but the rates charged can vary by project and overall market demand. With an employee you can usually set the pay rate until the next review date.
Misclassification Penalty: If you make an error in classifying an employee as an independent contractor, you will be liable for employment tax, interest, and a penalty. Use caution and keep current with the legalities.
Pros of Hiring An Employee
Dedicated Loyalty: Making the commitment to hire an employee can result in having an individual with stronger loyalty than an independent. Added loyalty can result in more productivity. Your loyal staff will be ready to take on additional roles to help your company grow.
Multiple Roles: Staff in small organizations will often perform a variety of roles. This provides various learning opportunities for staff and a flexible, diverse workforce for the company.
Improved Work Flow: With a steady stream of business, having an employee can be much easier to coordinate projects. Trying to juggle multiple freelancers to meet project deadlines can be a challenge.
Cons of Hiring An Employee
Added Responsibility: The burden of your small business providing for your family becomes even greater as you have to make payroll for your staff and help them provide for their families.
Extra Overhead: Not only are there the costs of employee benefits and payroll to consider, do not forget that your tiny home business or small office will probably have to move to a bigger space, sign a lease, and purchase equipment.
Becoming A Manager: As your small business grows in staff, you become less involved in practicing your trade and more involved in people management issues. Your company will be exposed to worker-related lawsuits. Independents will often require less management due to more motivation from being self-employed.
Independent Contractor Determination Rules
Various tests exist for determining employee vs. independent contractor status. The once common "20 Common Law Factors Test" of the IRS, has been replaced by a new category test. This test examines the worker employer relation in three areas:
1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
For IRS help with classifying your workers, you can file Form SS-8, "Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding."
Consequences of Treating an Employee as an Independent Contractor
If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker.
What you can do
Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.
The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.
Next time we will be talking about some of the contractual changes and requirements for builders and remodelers in the State of Texas.

If you need to contact KMDA, call 972-434-8009 otherwise visit us on the web at www.kmdalegal.com.
See you soon!