Doing 600K Independent Verse 600K at Wirehouse
If anyone has gone independent doing around 600K in a major city such as NY, Boston, DC LA, SF, Chicago I was curious as to what you really make.
<SPAN aria-haspopup=true id=1.sc =ev role=menuitem =-1 goog-spell-original=“Obvioussly”>Obviously at a <SPAN aria-haspopup=true id=2.sc =ew role=menuitem =-1>wirehouse you do 600K you make roughly 240K, but they pay for everything including part of your health insurance.
So, if I went independent, have an assistant, have a small office, pay benefits, what am I really making, and is it worth.
I would prefer comments from people who actually are doing the above or did research on this.
I am indy and can tell you I know many that are grossing 600K. The net depends on your lifestyle. If you have a fancy location and huge tenant improvements and startup costs or too much staff you can easily get south of 50%. If you are the opposite, work at home, employ your spouse, you can net well north of 75-80%.
I know one rep who lives out in a beautiful old home on 10 acres 25 minutes from me. He runs a 600K operation with one staff out of his house. He has 5 acres of some of the best pinot in the world, and has many of his clients to his home for meetings. I know another 600K rep who has two full time staff, an ordinary office outfitted with all the latest technology and really nicely upgraded, he is close to 70% net. Near me, is a close friend who has the best office I have ever seen. He has too much staff, too much overhead, too many plasmas, too many offices. His goal is to build his own unit, and he thought that building the pristine office in our city of 150K during these economic times, would show the community how successful he was. He has built it and no one is coming, in fact they aren't thrilled with all the trappings...His net isn't close to 50% but you can see why. So the question of net comes back to it depends. You know yourself, figure out where you might see yourself, and do the math. Let's not forget the incredible tax advantages...There are many factors…
How much would you pay your asst? What would be your office rent/mortgage? How is your business set-up(fee vs comm and prospecting vs working by referrals)? How much would come with you? Insurance(how many people are you insuring family, self and how good do you want it)? It is easier on a monthly scale also.. so at 600k you are doing 50k/month(the following assumes you can repeat this) $50k@90% $45K-$3K(mortgage on nice office, obviously this can vary) $42K-$5k(asst salary and benefits total package worth $60K) $37K-$3k(assorted broker dealer charges, e&o, tickets, associations, research etc) $34k-$1.5k(mailing, supplies, phones, internet, tv(optional)) $32.5k Of course there will be upfront cost: Computers, desks, decorations in the office, initial marketing Also there will be Tax implications(but you get to deduct more items).. The one caveat to this is, that now in addition to advisor you are a business owner, no longer just production, but payroll, bills, taxes etc.... But it is yours from now on...Wolverine, I would suggest zero-basing your budget. Start with your revenue, and then just go expense-by-expense. RIA or affiliate with B/D? What would be the payout, after ticket charges? MAKE SURE you get the bottom line from someone at the same B/D. What are the haircuts, tech charges, program fees, etc? How much staff? What would you pay them? Don’t forget benefits you might give them and payroll taxes. What type of office would you use? If it’s class-A, move-in condition, you will spend less on build-out. How much rent, CAM charges, utilities? What would you need for furniture? Start looking on office furniture websites (look at the wholesale, over-stock type places). A couple of laptops and some monitors. Printer, fax, etc. What would you do for postage? Supplies should just be few hundred a month at most (depending on what you mail, print, etc.). Could be less. Tech stuff - internet, CRM system, quotes and whatever else you think you need (i.e. Morningstar).
I would be careful about grabbing margins off a forum like this. In my years on this forum, I have heard people doing as low as 30-40%, and as high as 85%. It’s all over the place. At 600K in production, your margin SHOULD be really high. You are doing good production, but not so high that you need to load up on staff. If you do it right, you should be no lower than 70%, and most likely quite a bit higher. If you are primarily fee-based, you should strongly consider going RIA. Your overhead would be much lower (or your “payout” higher, however you want to look at it).
But again, zero-base it for your own situation. There is another thread several months back about indy expenses, and that would be helpful to look at. You just have to search for it, I can’t remember where it was.
Many of the Indy shops in my area would pay you 70-75% at 600K in production.
90% base payout, then deduct 15-20% for your share of the office expenses.
Depending on the production mix, haircuts could be as much as 10%.
If I were to go Indy, I would look for an existing office to decrease management issues and have all of the infrastructure details taken care of.
From what I have seen, going into an Indy office is much cheaper than starting your own office. It also becomes much easier to focus on building your business without having to deal with payroll, taxes, office expenses etc.
This is a great option. However, in my area, with the exception of a few monster indy firms (not the types that would let you join them), almost all the indies are solo/no asst (maybe 1/2 time asst) and not really interested in adding someone. We are very suburban (and not near any major city), so not a lot of firms other than wirehouses and insurance agents.
As an RIA: The ongoing technology costs should be $1000-3000 a month with everything but a bloomberg terminal. Your monthly cost of a bookkeeper, and other consultants (e.g. compliance) should be something less than $1000/month. E&O is a couple hundred bucks. What you pay your staff is what you pay them. You pay for health insurance and any other benefits. Then there’s rent. And that’s really about it. Anything else is gravy. So, I think you’re looking at $50k plus a year if you can run it from your den.
The key issue in the RIA model vs. the Indy broker model is that once you’ve covered your costs, it’s pretty much a 100% payout.
I met with an indy firm the other day that tried to recruit our little team and they’re on a 50% payout (firm does cover their rent and some other costs). Still, that’s crazy. It’s also not independence if you’re having to negotiate over office space. That’s what brokers in wirehouses are most likely to have a fight over with management.
In addition to having too much commission business, most brokers can’t go RIA because of capital. The big issue with an RIA is that you have to use your own capital. If you can’t build out an office and run it for a year on your own, without any cash coming in then you can’t do it. Your first ACATs won’t hit for at least a month when you get started and some accounts will take 6mos to a year to come over.
If you can run a home office and have your wife (or husband [ya, right]) answer the phones and pull over all your clients, then you’re set and should go that way.
Why are you asking here?
All of the Indy producers on this board do between 200-300k per year
They are pikers in your world
Would have been fired from your firm
DD - "All of the indy…blah, blah, blah"
and you’ve seen ALL the commission runs? Anyone who touts #'s is a fool. Anyone who acts like they are big stuff probably isn’t. You can call me a piker too if you want, but I left all this hostility behind. But you should really get off your high horse and not make blanket statements. I fired my firm because they were the piker, get it?
But go ahead and call me a piker too! I am laughing all day.
Some of the comments on this post may be helpful and remind someone of the expenses to consider before leaping. The expenses are high if you do it right; I left with the mindset of comparable payout without the non sense and needing a teet to comfort me. Credibility with large prospects and COI’s is great. It’s different for every single indy depending on your business model.
[quote=LogansRun]DD - "All of the indy…blah, blah, blah"
and you’ve seen ALL the commission runs? Anyone who touts #'s is a fool. Anyone who acts like they are big stuff probably isn’t. You can call me a piker too if you want, but I left all this hostility behind. But you should really get off your high horse and not make blanket statements. I fired my firm because they were the piker, get it?
But go ahead and call me a piker too! I am laughing all day.
Some of the comments on this post may be helpful and remind someone of the expenses to consider before leaping. The expenses are high if you do it right; I left with the mindset of comparable payout without the non sense and needing a teet to comfort me. Credibility with large prospects and COI’s is great. It’s different for every single indy depending on your business model.
[/quote]
300k producer got his lil feelings hurt
Make more calls if you are sensative
Nice one! Let me get on those cold calls!
DONT LET THE d*** HIJACK THE THREAD. IGNORE HIM
“Piker” has got to be a relative term.
If viewed on income - there’s simply no comparison between wires and independence. At lower levels of production, some comparisons are possible, but at $600k - very different worlds.
Why?
You need to view this as a business and generation of earnings as opposed to revenue. And, as I’m always explaining to my wife, size doesn’t matter.
Assuming that all other things are equal - the issue is, fundamentally, take home income - your earnings. The wires have brainwashed everyone into thinking that revenue (production) is what’s important, but as a business owner (whether indy or at a wire), what matters to you is your earnings. The issue is not how much revenue you generated, but how much cash you take home - how much you earn (If you don’t believe me, ask your wife / girlfriend / favorite stripper.)
If you produce $500k at a wire, your payout will be, let’s say 33%? So that means $165k / year income.
If you produce $300k as an RIA and your overhead is $135k a year (dedicated CSA, nice office), then that’s the same amount of income.
If you produce $300k as an Indy broker and your payout is 70%, then you take home $210k.
So, because of how much the wires screw brokers at lower levels of production with reduced payouts and ticket charges, the guy generating $200k as an independent probably is less of a “piker” than the guy generating $400k at a wire.
In fact, if you really want to apply a true standard to “pikerdom”, let’s do it by reversing the numbers.
Assuming that your average wirehouse
broker who’s producing let’s say $550k is not a “piker”, the payout’s
going to be ~37% depending upon product mix. So he makes $204 k a year.
The indy broker’s got to produce only $291 at a 70% payout to make the
same amount of money. The RIA’s got to produce $339k (under the above
assumptions above) to make the same amount.
So, an Indy who’s producing $291
from the comfort of his home office is a “piker” and the guy who earns the median production at a wire, who shares an assistant with two other brokers, who puts on
a suit and drags himself down to an ML office with a view of a parking
lot isn’t a “piker”? By what standard? The approval and love of Bank of America/Merrill Lynch? $550k producers don’t get much love from Mother Merrill. They just don’t get run out.
So, you have to produce A LOT less as an RIA or broker to be a “piker” in my view, if “piker” is determined by income. (And, to me, it is. I don’t want Mother Merrill’s love. The new stepfather looks at me creepy.)
We haven’t even talked about bigger producers or growth of business where it’s a real no brainer. At $600k, the numbers really, really show up:
Wirehouse: $600k @ 42% payout (?): $252k income
RIA: $600k - $225k overhead (note - overhead’s higher, he’s grown since producing $339k, now he’s got couple of assistants, great office, bloomberg terminal): $375k income
Indy broker: $600k @ 72% payout (?): $420k income
$420 vs. $252. That’s a material lifestyle difference.
And we haven’t even talked about taxation of income. Big difference.
Or the liquidity to sell your practice and retire.
Am I missing something here?
That line is quality..... I agree, though some will argue that rankings(in terms of revenue produced is what matters). But I think that is based on a upfront check to go to a new wire.. Also don't discount the fact that some people who are huge producers couldn't handle the business aspects of running a practice..I have been told by at least 2 $750K+ producers, they just want to leave and the end of the day and not have to worry about the "behind the scenes" items...And if that is true then you can't fault those people for staying.“Piker” has got to be a relative term.
If viewed on income - there’s simply no comparison between wires and independence. At lower levels of production, some comparisons are possible, but at $600k - very different worlds.
Why?
You need to view this as a business and generation of earnings as opposed to revenue. And, as I’m always explaining to my wife, size doesn’t matter.
Assuming that all other things are equal - the issue is, fundamentally, take home income - your earnings. The wires have brainwashed everyone into thinking that revenue (production) is what’s important, but as a business owner (whether indy or at a wire), what matters to you is your earnings. The issue is not how much revenue you generated, but how much cash you take home - how much you earn (If you don’t believe me, ask your wife / girlfriend / favorite stripper.)
If you produce $500k at a wire, your payout will be, let’s say 33%? So that means $165k / year income.
If you produce $300k as an RIA and your overhead is $135k a year (dedicated CSA, nice office), then that’s the same amount of income.
If you produce $300k as an Indy broker and your payout is 70%, then you take home $210k.
So, because of how much the wires screw brokers at lower levels of production with reduced payouts and ticket charges, the guy generating $200k as an independent probably is less of a “piker” than the guy generating $400k at a wire.
In fact, if you really want to apply a true standard to “pikerdom”, let’s do it by reversing the numbers.
Assuming that your average wirehouse broker who’s producing let’s say $550k is not a “piker”, the payout’s going to be ~37% depending upon product mix. So he makes $204 k a year. The indy broker’s got to produce only $291 at a 70% payout to make the same amount of money. The RIA’s got to produce $339k (under the above assumptions above) to make the same amount.
So, an Indy who’s producing $291 from the comfort of his home office is a “piker” and the guy who earns the median production at a wire, who shares an assistant with two other brokers, who puts on a suit and drags himself down to an ML office with a view of a parking lot isn’t a “piker”? By what standard? The approval and love of Bank of America/Merrill Lynch? $550k producers don’t get much love from Mother Merrill. They just don’t get run out.
So, you have to produce A LOT less as an RIA or broker to be a “piker” in my view, if “piker” is determined by income. (And, to me, it is. I don’t want Mother Merrill’s love. The new stepfather looks at me creepy.)
We haven’t even talked about bigger producers or growth of business where it’s a real no brainer. At $600k, the numbers really, really show up:
Wirehouse: $600k @ 42% payout (?): $252k income
RIA: $600k - $225k overhead (note - overhead’s higher, he’s grown since producing $339k, now he’s got couple of assistants, great office, bloomberg terminal): $375k income
Indy broker: $600k @ 72% payout (?): $420k income
$420 vs. $252. That’s a material lifestyle difference.
And we haven’t even talked about taxation of income. Big difference.
Or the liquidity to sell your practice and retire.
Am I missing something here?
I agree with you both. I recently spoke with a younger partner in a 4 person team at MSSB that are looking to go indy. They have NO interest in running their business and want to affiliate with an indy firm that will take care of everything for them (i.e. Hightower). They produce around 3.5mm as a team.
San Fran, you mention that the margins on RIA's are lower than indy brokers. I always thought it was the other way around. Why the large overhead for an RIA?This all sounds great…but do have the UBS name?
What’s that worth? huh?
I know that will shut you guys up.
[quote=B24]I agree with you both. I recently spoke with a younger partner in a 4 person team at MSSB that are looking to go indy. They have NO interest in running their business and want to affiliate with an indy firm that will take care of everything for them (i.e. Hightower). They produce around 3.5mm as a team.
San Fran, you mention that the margins on RIA's are lower than indy brokers. I always thought it was the other way around. Why the large overhead for an RIA?[/quote]I think San Fran is referring to scale. Indy B/D's usually have a lot of advisors and so spread the cost of technology around.
But depending on how you structure your business, it can be more, or less than an indy.
I’m an ex-wire, now independent, at about 600k. Here’s my experience.
All in the b/d costs are about 75%to 85% (This includes a 90% payout for fee business, 85% for transactional, technology, e&o insurance, yada, yada and yada. Some are more, some less, but they're all competitive at say $500k) Local overhead for me is fixed at $125k. This includes a $50k asst, 1000 s/f class A office, health insurance for me and 1/2 for my asst and sundry other fixed costs. On top of that I spent about $25k last year on seminars and marketing. $600k Gross less 75% to 85% payout after b/d charges less $125k to $150k overhead You net should = $300k to $385k, or a 50% to 65% net payout. Of course you can do it cheaper out of an executive office suite w/no assistant, etc, but I doubt as a $600k wirehouse producer you'd find that satisfactory. You might also do better straight RIA or paying more ala carte for services. But you might not. You'd need to do the DD on your own specific practice. As others have pointed out by sharing the local overhead component with another advisor, or joining an existing indy shop, you canincrease your total payout by about 10%.Left a wire a couple of years ago, now doing 300 at a small firm, my net last year was about 65% the firm paid for all fixed expenses, tech is so much better, don’t need an assistant. Ticket charges etc, I took home over $190 last year, about the same as a wire doing 600. Less stress and overall better enviroment.
Shania…you’re funny, UBS=U Been Screwed
[quote=Northfield]I’m an ex-wire, now independent, at about 600k. Here’s my experience.
All in the b/d costs are about 75%to 85% (This includes a 90% payout for fee business, 85% for transactional, technology, e&o insurance, yada, yada and yada. Some are more, some less, but they're all competitive at say $500k) Local overhead for me is fixed at $125k. This includes a $50k asst, 1000 s/f class A office, health insurance for me and 1/2 for my asst and sundry other fixed costs. On top of that I spent about $25k last year on seminars and marketing. $600k Gross less 75% to 85% payout after b/d charges less $125k to $150k overhead You net should = $300k to $385k, or a 50% to 65% net payout. Of course you can do it cheaper out of an executive office suite w/no assistant, etc, but I doubt as a $600k wirehouse producer you'd find that satisfactory. You might also do better straight RIA or paying more ala carte for services. But you might not. You'd need to do the DD on your own specific practice. As others have pointed out by sharing the local overhead component with another advisor, or joining an existing indy shop, you canincrease your total payout by about 10%. [/quote] Mind elaborating on the fixed costs? It seems after asst salary, you would have$75K left over($6250/month) assuming your health insurance cost is no more than $750/month... How premium is your office space? just curious...a wirehouse FA doing 600K would probably take home about 270K. Also, they get profit sharing and some paid benefits, so not all apples-to-apples. You are probably more comparable to a 450-500K wirehouse FA.Left a wire a couple of years ago, now doing 300 at a small firm, my net last year was about 65% the firm paid for all fixed expenses, tech is so much better, don’t need an assistant. Ticket charges etc, I took home over $190 last year, about the same as a wire doing 600. Less stress and overall better enviroment.
Shania…you’re funny, UBS=U Been Screwed
That is me...But I am in a large suburban area(300K+ people in in 3 surrounding zipcodes) and all wires are represented. I have no asst, run a primarily fee practice(with some EIAs and REITs mixed in).. My b/d gives me 90% payout... I have no asst... small office(executive suite 300sqft) in a nice building... My overhead is around $35K/year including tickets. For those of you who have an asst what does it cost you(not including cost for me to get a bigger office)? I don't really want to offer benefits, just straight salary.. 1099 style... ?This is a great option. However, in my area, with the exception of a few monster indy firms (not the types that would let you join them), almost all the indies are solo/no asst (maybe 1/2 time asst) and not really interested in adding someone. We are very suburban (and not near any major city), so not a lot of firms other than wirehouses and insurance agents.
My asst is $14/hour, no benefits. Find one with a spouse who gets family health insurance. She doesn’t care about the insurance, and it saves me $500-1000/month. She has 10 years experience, but I also live in a relatively low rent/low income part of the country.
[quote=chief123]I think that is based on a upfront check to go to a new wire.[/quote]
That’s correct - an important consideration is the check in the overall calculation of comp. That having been said, you have to assume some loss of production with each move.
[quote=B24]Also, they get profit sharing and some paid benefits, so not all apples-to-apples.[/quote]
The benefits at a wire are mainly health insurance and equity comp. 401(k) match counts if you don’t jump ship too. It really depends on several factors unique to the producer and the firm what their value entails.
I never made any money on my options and the restricted shares weren’t worth a great deal.
[quote=B24]
San Fran, you mention that the margins on RIA's are lower than indy brokers. I always thought it was the other way around. Why the large overhead for an RIA?[/quote]I think it generally is the case, but most RIAs I know are solo and most indy brokers seem to be in a situation where the brokerage pays most of their overhead. I biased my assumptions against the RIA, but there isn't any particular reason why an RIA couldn't run extremely cheaply.
[quote=Shania Twain]This all sounds great…but do have the UBS name?
What’s that worth? huh?
I know that will shut you guys up.
[/quote]
Wow. No fanatic like a convert Shania.
UBS is a good name and it tends to have nicely decorated branches and good technology. They support production, unlike SB or MS, which pretty much got to be anti-business. I know most of the wires pretty well and IMHO it’s the best of the big firms. (For what that’s worth)
[quote=Moraen]
I think San Fran is referring to scale. Indy B/D’s usually have a lot of advisors and so spread the cost of technology around.
But depending on how you structure your business, it can be more, or less than an indy.
[/quote]
Exactly, but the tech isn’t what costs so much - it’s real estate.
[quote=Northfield]
As others have pointed out by sharing the local overhead component with another advisor, or joining an existing indy shop, you canincrease your total payout by about 10%. [/quote]10% seems slim. Why not more?
Do you give her a 1099? or do you pay her taxes(well the employer part?)My asst is $14/hour, no benefits. Find one with a spouse who gets family health insurance. She doesn’t care about the insurance, and it saves me $500-1000/month. She has 10 years experience, but I also live in a relatively low rent/low income part of the country.
[quote=san fran broker] [quote=Northfield]
As others have pointed out by sharing the local overhead component with another advisor, or joining an existing indy shop, you canincrease your total payout by about 10%. [/quote]10% seems slim. Why not more?
[/quote] yeah but 10% over a 40% payout is a nice % increase. Probably more like 10-15% on top of the 40%.
That is me...But I am in a large suburban area(300K+ people in in 3 surrounding zipcodes) and all wires are represented. I have no asst, run a primarily fee practice(with some EIAs and REITs mixed in).. My b/d gives me 90% payout... I have no asst... small office(executive suite 300sqft) in a nice building... My overhead is around $35K/year including tickets. For those of you who have an asst what does it cost you(not including cost for me to get a bigger office)? I don't really want to offer benefits, just straight salary.. 1099 style... ?[/quote] How can you get away wtih 1099'ing an assistant? I can't think of any way to do it, unless she comes and goes as she pleases. I don't think the IRS would allow it, under almost any circumstance, unless it was an outsourcing agency, remote assistant, shared assistant (with another employer) or something like that. In my situation, my assistant work about 30 hours (part time), and gets no benefits (yes, Jones will let you do this). She does get 401K match/profit sharing due to working 1000 hours per year. I find that the best type of person to hire is someone older (like 50-55+), who is just looking to get out of the house and get some spending money. Either that or a young Mom with kids in school looking for mother's hours (if it works for your business). This could get you someone good (college educated, intelligent, some work experience), without costing too much. A lot of my friends (female) are startign to go back to work now that all their kids are in school full-time. Most have college degrees and worked for 10+ years before having kids. They are way over-qualified for an assistant job, but would take it because they need the flexibility that comes with it. They are all secondary incomes to their husbands, and don't need benefits. But a 25-50 year-old that wants full-time is likely looking for bene's.[quote=B24]This is a great option. However, in my area, with the exception of a few monster indy firms (not the types that would let you join them), almost all the indies are solo/no asst (maybe 1/2 time asst) and not really interested in adding someone. We are very suburban (and not near any major city), so not a lot of firms other than wirehouses and insurance agents.
A lot of people are contract workers and get 1099s instead of w-2s, trying to compare a EDJ employee to what we can do is a little insane…
I know some older people who work at private golfcourses and other family run establishments that show up for 30 hours a week and get paid cash.. Not that that is what I want to do, but I don't want to take on the cost of adding an assistant(bigger office, more furniture, phones, supplies) and then also pay for health insurance and taxes... looking for someone to show up during trading hours or later (9-3pm) get $12/hour for 30 hours of non labor intensive work and then go home(better then the homedepot,starbucks or walmart, library, these older women are settling for now..Chief, I hear what you’re saying and I think it will work…until you get audited. With state unemployment funds hurting, don’t be surprised if your auditor tries to reclassify your lawn boy as a W-2 employee. The W-2 route costs you maybe 10% in payroll taxes, so my advice is, pay 'em $11/hr instead of $12 and do it right. Tax forms are fairly easy once you get set up. You could train your assistant to take care of the forms and just sign checks.
Thanks I didn’t realize it was that small…(not sure why, when you put it in terms of dollar/hr amounts it seems miniscule)…
Yeah, most payroll taxes are simply withheld from the employee's check. In my state, only social security/medicare (7.65%), state unemployment (varies by state, but not a big deal in my state...at least not yet), and federal unemployment (0.8%) are the only things that actually come out of my pocket.Thanks I didn’t realize it was that small…(not sure why, when you put it in terms of dollar/hr amounts it seems miniscule)…
[quote=chief123]A lot of people are contract workers and get 1099s instead of w-2s, trying to compare a EDJ employee to what we can do is a little insane…
I know some older people who work at private golfcourses and other family run establishments that show up for 30 hours a week and get paid cash.. Not that that is what I want to do, but I don't want to take on the cost of adding an assistant(bigger office, more furniture, phones, supplies) and then also pay for health insurance and taxes... looking for someone to show up during trading hours or later (9-3pm) get $12/hour for 30 hours of non labor intensive work and then go home(better then the homedepot,starbucks or walmart, library, these older women are settling for now..[/quote] Chief, I am not comparing an Indy setup to Jones. I was a corporate controller for 12 years before coming to Jones. I dealt with 1099/W2 issues all the time. This has nothing to do with me comparing to Jones. I simply don't see how the IRS would allow an admin to be classified as a 1099 employee (again, unless they were employed through a 3rd party agency that was employing them as a W2 employee). There are specific criteria for 1099 vs. W2 employees. You might want to brush up on your tax law before you call ME insane.Actually, you can 1099 an assistant depending on the hours they work and whether or not they work at the office all of the time.
For instance, you could use three part-time assistants and 1099 them.
De minimus; on-call Look, what I'm saying is that yes, there are some peculiar ways around it. And if you have minimal need for hours. But for the extra buck or two an hour (in taxes), it's not worth trying to skirt around the system (for a relatively full-time person - say 25+ hours). I can tell you from experience, the DOL and IRS will DESTROY you financially if you are caught/found to be in violation of the law. Some of the things they have the ability do seem very unfair (i.e. extrapolation), but can cost you plenty of money. I have experienced it in my previous career. Fortunately, the dollars were irrelevant to our sized business, but could be devestating to a small business. And don't let a "creative" CPA dupe you into thinking you can get around it. Piling up tax deductions is one thing. Skirting around labor law is another. I wouldn't try it unless your plan is "bullet-proof".Actually, you can 1099 an assistant depending on the hours they work and whether or not they work at the office all of the time.
For instance, you could use three part-time assistants and 1099 them.
B24 - You are certainly right. I have those assistants and I still pay them as W-2 employees. Not only is it really not worth it to 1099 them, they have more ownership if they are employees. I can get part time people to do all kinds of things when you tell them they are employed as opposed to contractors.
I was just saying that it is possible is all.
I had a client (dentist) that had two other dentists come in for six weeks to run her office while she was on maternity leave. She got nailed in an unemployment audit, even though she (1) gave no direction to the other dentists and (2) the other dentists routinely covered leave for many dentists. Didn't matter. The auditor told us that if someone (1) works in your office (2) doing something in your line of business (3) even on a temporary part-time basis, they are a statutory employee. As I said before, a lot of this is driven by state unemployment funds being in bad shape right now. They are very aggressive in seeking out revenue. No way would I take a chance on giving an assistant a 1099. I even put my cleaning people on a W-2 (and yes, I've seen businesses nailed for that also).Actually, you can 1099 an assistant depending on the hours they work and whether or not they work at the office all of the time.
For instance, you could use three part-time assistants and 1099 them.
What exactly are the tax benefits of being indy or RIA? I can write most things off as a wirehouse advisor, and the other things I’d anticipate writing off as an Indy are things I currently don’t pay for. I’m not doubting there are tax advantages, I just can’t think of them.
The things you write off as a wirehouse advisor can only be written off subject to the 2% floor. So its not that there aer additional writeoffs, it’s that you have to meet the floor as a W2 employee before writing them off.
In addition to that, many indies get "creative" with what they write off. Also, many employ their spouses, and other family members, own their office space, etc. But yes, many of the things they write off you don't "pay for" (except through a lower payout).The writeoff’s are tremendous. As a W2 employee you have a limit on what you can write off in total. As a business owner you don’t. Most small business owners try to show as little income as possible.
I miss mlgone, he was a genius
Hey
I have our crack in house research. top that.
mer,aig and leh were all strong buys. we find value
PLUS, we downgraded FNM and fre and 3 and 1 5/8 .
we add REAL value. and PRESERVE capital
I can top that. We just started coverage of Apple with a BUY. Hey, better late than never!
Thanks B24, that makes sense.
do you get anything up front indy?
Shania, in a word, yes, although not nearly as much as you will get with a wire. It used to be that 5% upfront was pretty good, then it got completely silly a couple of years back. I think Jackson’s B/D was paying something around 40% of trailing 12. Those days, to my knowledge, are gone, but 5-10%, upfront, depending on your trailing 12 (more for bigger producers) is probably realistic. My disclaimer is that it’s been awhile since I shopped deals, so I may not be as close as I think. You don’t go indy for the check anyway (I’m sure you already knew that), but a nice check is just icing on the cake.
Do you give her a 1099? or do you pay her taxes(well the employer part?)[/quote] I pay her taxes. I don't know how you could argue with a straight face in tax court that an assistant is an independent contractor (the standard my tax law professor used for when it is ok to try to get away with something). She was making $12 a few months ago, but (1) right now I really need her, which she knows, and (2) somebody else was trying to take her. I asked her what she wanted to stay, and she said $14. I told her that worked for me. I'm sure she wishes she had said $15 or $16, as right now I would probably pay it.[quote=EDJ4now]My asst is $14/hour, no benefits. Find one with a spouse who gets family health insurance. She doesn’t care about the insurance, and it saves me $500-1000/month. She has 10 years experience, but I also live in a relatively low rent/low income part of the country.
I got a round number between 5 and 10% paid in cash, and the 10% loan. Mine is interest free for 6 months, then prime plus I think 1% payable over the next 18 months. The upfront money will buy some tech and furniture, but by the time you get an office setup you probably aren't going to put much if anything in your pocket. Still, it was all money I was expecting to have to pay out of my checking account, so I won't complain. I would have done everything exactly the same even if it wasn't there.[quote=Shania Twain] do you get anything up front indy?[/quote]
Change back your Avatar.
I got 10% trailing 12 upfront forgivable and 10% upfront paid back in the first 12 months at prime plus.
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