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Switching ICs to Employees for Pet Sitters and Dog Walkers

Most Common Problems When Switching ICs to Employees

Switching from independent contractors (ICs) to employees can be a challenging process to execute no matter what industry you are in. It is especially tough for the pet sitting and dog walking industry because they are often small businesses, they have limited funds, and little advisement or support from experts.

Luckily for you, that is where I come in. In an earlier blog, I told you about the major shifts in our industry. One of them is businesses switching the classification of workers from ICs to employees in droves. Many are afraid to do it. They don’t know what will happen or how to do it. Stick around until the end and I will help get you through that.

What If All My Staff Leaves?

switching ICs to employees for pet sitters and dog walkers

The first thing many people are terrified about is that their staff will all leave them. Many think that if they tell their staff they are going to be getting taxes taken out and that they will now be able to dictate when people work that the staff will leave them. Perhaps they are true ICs already, running their own business, have many other clients of their own, and don’t want to give that up!

All of this is a valid concern. If your staff leaves, you are left with many clients and no one to help service them. You are only one person. There are certain ways to make sure that this transition happens perfectly and specific things you should not do.

 

What If My Clients Are Unhappy With The Shift?

The only problem that would come up with the clients is if their pet sitter changed. (See above) If your sitter decided to terminate the contract with you and the clients had to get new staff members, that is just about the only reason I see clients getting upset with your decision to switch from independent contractors to employees. In reality, they would have to find another company anyways, so time to step up the “why trust us” game.

 

What If I Have To Raise Rates?

switching from Independent contractors to employees for pet sitters and dog walkers

Ah! This is probably the biggest concern percolating in your head! Most likely, you will have to raise rates. There are countless people I have advised that had to do just this. Basically, they were paying too much (I will discuss below) and charging too little so naturally, they needed to shift their client base and raise their rates.

The numbers don’t lie and a lot of people start out with my pricing structure and strategy class. This class helps you understand what you need to charge and how to have a strategy that ties into your goals. There is a good chance you might have to raise your rates.

That is, unless you want to be a non-profit.  🙂

What If I Have To Lower Pay?

This sounds so scary and it is! What do you do if you already know you would like to pay more and now the numbers are showing you that in order to achieve your goals you need to pay even LESS.

Ahhh that is scary and almost incomprehensible.
I know.
But trust me, it can be done.

I helped one gal switch from ICs to employees. Her clients went down. Her staff went down. Her prices went up and her profit was higher than ever before. In the end, we need to remember that this is not a popularity contest.

What If I Have To Wait For VRSP?

The Voluntary Reclassification Settlement Program is through the US federal government. If you submit a form and pay a small fine they will grant you employee status and not look at your prior years.

Did you know that audits can happen up to two or three years later?!?! So even if you were to switch from ICs to employees today… it doesn’t mean in a year from now you couldn’t get a knock at your door asking to explain your ICs from 2 years ago!

Crazy huh?

We All Need To Be Leaders

With all these problems, it is easy to stick our head in the sand and play ostrich. But guess what? If we want to be the best leader of our life and business – we have to face this fact. Pretending it doesn’t exist isn’t going to get us anywhere and many, many, many states are cracking down and making it impossible to have ICs.

The benefits of having employees are that you can train them, you have more control, you won’t be scared of an audit, and YOU, the business owner, are protected because you are able to have all types of insurance. (Non-owned, worker’s compensation, general liability, etc)

As an established business, switching to employees is possible but you must have a plan.  You must know the steps you need to take and what it is going to cost you. You want to think about the big picture and know why you are doing it so it will help you get through the tough times. This is something that is tougher to accomplish the larger your company gets so if you are thinking about doing it, I would highly suggest that you do it sooner rather than later.

 

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pet sitting independent contractors

The Problems With Pet Sitting Independent Contractors

I have to admit that I am not a huge fan of hiring pet sitting independent contractors for your business. Personally, I think investing in employees is a much better decision.  If you have IC’s or are thinking about hiring IC’s, we’re going to draw some attention to some of the challenges there are with hiring pet sitting independent contractors.

The Problems With Hiring Pet Sitting Independent Contractorspet sitting independent contractors

Lack Of Control

To be quite honest, I have yet to meet a business owner who is not a control freak (myself included!). This is easily one of the biggest downfalls of hiring IC’s because you really can’t control what they do.

Seems weird right?

But it’s true.

With IC’s, training is only allowed by the client themselves, not by you or a manager. Yes you can offer suggestions, but you can’t train them on the important aspects of HOW to do pet sits. This could be detrimental in developing your company’s brand, because 10 different IC’s may do pet sits 10 different ways and they should! They are all representing their own business.

Check out this quote from the IRS website that gives a great summation as to what limits IC’s have:

“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.” – IRS.gov

Strict Rules & Regulations

Many times I’ve seen businesses go through more headache and hassle with different government agencies by having IC’s! This goes hand in hand with my previous point that you as the business owner cannot control or manage what the IC does. This makes it very easy for you to inadvertently overstep your bounds, creating a potential problem. I have heard of a lot of business owners emailing instructions to their IC in writing, which is a big no-no!

I’ve found that business owners that have IC’s are frequently “on the defense” so to speak. They’re having to constantly look over their shoulder and avoid putting any communication with the IC in writing to cover themselves. I’ve actually spoken to business owners that have gotten a knock on their door for something they’ve done a year ago.

To me, no matter what benefits IC’s bring, it’s not worth the fear of getting in trouble. None of us, myself included, are legal experts or auditors, making it very easy for us to slip up and get ourselves in trouble or audited.

Insurance Complications

When you have employees, they are covered under your pet sitting insurance policy – plain and simple. This is not the case with IC’s. Sure, an insurance agency will allow them to be covered under your master policy, but then who is absorbing the cost? You are. Therefore, they would be classified as employees!

There is insurance for liability, if you are negligent on the job… but there is also workman’s compensation for if a worker is hurt on a job. Independent Contractors, by definition should have these insurance policies. Most do not.

In your client’s eyes, your IC’s represent your company. It’s really not a good look when a representative of your company is suing your client for an injury. Plus, there is the possibility they could go after you as well. Overall, it’s just a giant headache, and one that can be totally avoided by hiring employees rather than IC’s

While there are still pet sitting business owners that use IC’s, it’s not something I would recommend in today’s business world. If you’re looking to make “the switch,” from ICs to employees be sure to follow these crucial 6 steps and check out my Employee Quickstart Program.

Episode 29: What Type of Pet Sitter is Best for Rover Type Websites?

In this Episode Bella talks with Walt Galvin, an independent contractor working for Rover.  They discuss how sites like Rover can be a viable option for some pet sitters and walkers who are just starting out or want to keep it simple.

Walt Gavin, independent contractor with Rover.

Walt Galvin, independent contractor with Rover.

Some of the advantages include:

  • Not having to handle payments from clients
  • Saving  time and money but not having to handle marketing
  • Not having to deal with all kinds of administrative headaches and paperwork.
  • Ability to set your own work schedule

For Walt it has turned into a substantial retirement income and he points out that it is also a good option for those who don’t have the desire to hire other sitters and walkers as staff.  Walt also recommends that you pay close attention to the service agreements, particularly in regards to what insurance covers and you may need to purchase additional insurance to cover yourself.

Many of these online websites do not provide adequate coverage for the pet sitters. Only the clients.

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Episode 27:The Great Debate: DogVacay, Rover, Wag, and Zingy versus Professional Small Business Owners –

In this episode of “Bella In Your Business”, Bella speaks with Britt Alwerud from Handlr.  They discuss  DogVacay, Rover, Wag, and Zingy versus Professional Small Business Owners.

In this episode they discuss:

  • Why do you think so many small business owners are intimidated by the large powerhouses that have entered the market in the last few years?
  • How have the changed the industry? Are they really “disrupting” the industry?
  • What are the pros and cons of the huge companies versus the more personal professional businesses?
  • Are customers flocking to on-demand apps? Are they demanding an on-demand experience?
  • Are small business owners going to get screwed or what can they do to protect themselves?
  • If someone is a Rover or DogVacay user, but they want to become a legitimate small business with people working for them, could they use Handlr? What are their first steps for becoming a legit business?

Britt Alwerud

Britt Alwerud lives in Los Angeles, CA with her menagerie of furbabies – two Goldens, Daisy and Taj, two cats, Tiger and Monkey, two horses named Gracie and Moo, and a chameleon named Larry. Britt owns DogZenergy in San Diego, CA. Now she’s the full-time Founder and CEO of Handlr. Handlr is the ultimate business app for busy pet sitters who are looking to automate and grow their business. Learn more about Handlr by clicking here or email her at britt@myhandlr.com. You can also find Britt on Instagram @doggonetechgirl or follow Handlr on Twitter @myhandlr for weekly business tips.

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Katrina Kadyszewski

Episode 20: Interview with a Small Business State Auditor

Katrina KadyszewskiIn this episode of “Bella In Your Business”, Bella talks with Katrina Kadyszewski, a former state auditor with the State of Connecticut.  

Katrina has over 16 years experience working in a variety of financial positions. She started in the brokerage industry with a Series 7, 63 and 65 and life and health license, and then transitioned to audit work for the CT Department of Revenue Services before leaving to support small businesses in their efforts to get organized for expansion.

Katrina spent 3 of her almost 8 years with the CT Dept. of Revenue Services in the Business & Employment Tax Audit Unit, focused primarily on payroll tax issues. The last 5 years she worked as a Corporation Tax auditor, traveling across the US auditing largely Fortune 500 companies.

Bella and Katrina first discuss a big controversy in the pet sitting industry which is misclassification of employees as either independent contractors or employees.  Katrina outlines some key indicators that auditors look for in making that determination:

  • Is there an actual contract between you and the contractor?
  • Are your payments to them regular in nature?
  • How much control do you have over them with regards to work hours, uniform, training, etc.?
  • Do they offer the same services to other companies through their own business?
  • Are you providing them all the tools, training and supplies they need?
  • Basically, consider how loose is the relationship?

They also discuss why they think business owners are so apprehensive about audits, what documents a business owner should have at their disposal if they are being audited, and whether business owners should take their lawyer and accountant to the  audit. Katrina also gives some insight into what triggers an audit.

Some resources they discuss are the IRS’s  20-factor test to help you determine employee or independent contractor, and amnesty programs that exist to help encourage to make the right switch.

Have you ever been audited? Want to hear about pet sitters who have been audited? I have interviewed a handful and reported about it all here.

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Why You Can’t Afford Not To Have Employees, From the Insurance Company’s Mouth

Every day you are using Independent Contractors in your business, you are taking a risk.

There. I said it and I really mean it. I know, I know, you are sick and tired of hearing this debate. But this is different.  Why? Dennis Stowers, insurance agent for pet sitters, from Mourer-Foster explained all the below to me, and approved this article. So this isn’t just me typing away. Are you ready?

Read more

Why You Can't Afford Not To Have Employees, From the Insurance Company's Mouth

Every day you are using Independent Contractors in your business, you are taking a risk.

There. I said it and I really mean it. I know, I know, you are sick and tired of hearing this debate. But this is different.  Why? Dennis Stowers, insurance agent for pet sitters, from Mourer-Foster explained all the below to me, and approved this article. So this isn’t just me typing away. Are you ready?

Read more