Help me craft a business-sharing contract with my boss.
October 30, 2008 11:28 AM   Subscribe

Please help me negotiate a business arrangement with my boss that has me doing some work as an employee and some work as an independent contractor.

There are a lot of business-contractish questions on AskMe but I don't see this one yet; sorry if it's been discussed before (this one isn't really the same).

I'm a massage therapist new to the area and I work part-time for a chiropractor who has an established practice. So for several months I've been working for him part-time as support staff, getting to know his business & billing & notes etc. At the same time I have been seeing clients independently in my home studio, but not too many yet. The idea when I started was for me to eventually see clients in the chiropractic office in addition to the office support work, while still developing my own practice outside his office.

My seeing clients at the office is win-win. He will have a (really excellent) massage therapist on site, I benefit from being part of an established practice. So how to set things up? He owns the professional building where the office is, so he could charge me a flat monthly rate for renting space to me. Or he could get a portion of each massage no matter how many I do per month. Or something else I'm not thinking of? What to do about the big difference in my hourly rate as support staff ($notmuch) or doing massage ($agoodbitmore). Pay me a flat rate somewhere in the middle regardless of what I'm doing at a given time? Does it make a difference whether the massage work is subject to withholding/payroll tax the way my employee pay is, or whether it's a cash transaction for which I'm responsible for my own taxes?

And what about clients who see me at my home but who I met through his practice? He has referred a few people to me but in a formal business arrangement should he get a portion of those hours as well?

I have always been either a corporate girl or a freelancer. This quasi-self-employed-but-not-really situation is new to me and I would appreciate any suggestions that more contract-savvy, business-savvy mefites have to offer.
posted by headnsouth to Work & Money (9 answers total)
I don't have much to offer, but it seems the model of a hair salon might be useful here. The biggest complication might be in keeping the support and massage hours separate.
posted by rhizome at 11:37 AM on October 30, 2008

--He should continue to pay you the going rate for support staff. that way you have steady reliable income.

--I think the flat monthly rate for office space is a great deal if you can see non-referred/your own clients there. I also think it's the most cleanly professional.

--I don't think you should try to munge the two, AT ALL. I think you only lose there and I'm not even sure it's a great deal for him. I also think that you should have set hours for support if that's possible, so there's no "oh but could you stop doing that bookkeeping right now and see this client" going on.

--My chiropractor has referred a ton of clients to my massage therapist, and vice versa. I know she's not paying him a cut because we've talked about how this kind of thing works. it's more of a mutual symbiosis - she's likely to see people in need of a chiropractor and he's likely to see people in need of massage. massage helps chiropractic patients (as i know you know) and if people are seeing her, she's always asking "so are you still seeing dr. dave?" which reminds them to go back.

Paying him per referral also starts to be a little to MLM to me. At what point do these clients stop being his and start being yours? What if someone stops going to chiropractic or goes to another chiropractor? See where it gets odd?

I don't know if any of this helps but there you go. I only know as much as this because I had a friend who was in massage school and setting up her own practice but she had no head for business and had asked for help.
posted by micawber at 11:39 AM on October 30, 2008

Response by poster: Keeping the support and massage hours separate won't be a problem. It'll be more of a MWF-support, TTh-massage kind of schedule.

The flat-rate monthly rent is worrisome because I'm not exactly flush with cash right now so paying rent would be hard, and there won't be many clients at first to make it worthwhile. I'm imagining a scenario where I'm paying $500/month rent and bringing in $500/month in massage and having to pay tax on the earnings! There isn't much incentive for him to refer to me if he collects rent from me regardless.

Once the practice grows it would be great but do these kinds of arrangements have a sliding scale? Like, $200/mo up to X massages, $400/mo for >X massages?
posted by headnsouth at 12:36 PM on October 30, 2008

There isn't much incentive for him to refer to me if he collects rent from me regardless.

Sure there is, since he doesn't get rent if you can't make the business work.

How about pricing it by days of the week? 1 day a week of office for $150/mo, 2 days for $250, 3 for $300, etc.

Also you might want to do some research (if you haven't already) on what the going rates are for massage room rent.
posted by rhizome at 1:06 PM on October 30, 2008

I'm imagining a scenario where I'm paying $500/month rent and bringing in $500/month in massage and having to pay tax on the earnings!

The $500/month in rent is a business expense so if that is all you are making you shouldn't have to pay tax on it.
posted by grouse at 1:35 PM on October 30, 2008

$500 revenue minus $500 rent is $0 earnings, therefore no tax

I'd be inclined to make it all self-employment. You can still have an agreement that he sends you his clients that's just as secure as if you were an employee. (After all, if he decides he doesn't want you massaging his clients anymore then it's over, employee or not). I also think there will probably be tax benefits to making it all self-employment income (you would be able to deduct more of your expenses) (disclaimer: I was a theatre arts major, and I'm not even in the same country as you)

Really, you need advice from a lawyer and tax advisor here. There may be significant tax benefits specific to your particular situation to one way or the other. I think I can promise you that what you pay for a consultation will more than pay for itself.
posted by winston at 2:35 PM on October 30, 2008

Response by poster: rhizome: How about pricing it by days of the week? 1 day a week of office for $150/mo, 2 days for $250, 3 for $300, etc.

winston: I'd be inclined to make it all self-employment.... There may be significant tax benefits specific to your particular situation to one way or the other.

Both good thoughts I hadn't considered, thank you.
posted by headnsouth at 3:08 PM on October 30, 2008

So by "support staff" you mean you're doing office admin work as opposed to massaging or doing "chiropractic assisting"?

This was touched on above, but I want to reiterate that if you have 2 different roles and these roles are designated by different days then keep both roles totally separated. The different roles need to clear to not only you and the chiro, but to other staff, and clients. Boundaries need to be firmly set and adhered to.

If the employee situation is working OK for you now, you could stick to that for the time being for the admin role and subcontract for the massage role.
I won't go into detail here about my thoughts on this as I am in Australia and the employment and taxation issues (also stuff like superannuation, health benefits, etc) I'm familiar with are not relevant to you.

It sounds like your goal is to build the massage practice side of things and ultimately move away from the admin role? Are you hoping to primarily build a practice out of your home or the chiro's clinic or both? Is your fee structure the same for both places? Spreading yourself over several places can be difficult when you're starting out and you're counting on the availability of your clients to fill your schedule.

Paying rent can be a struggle when you are trying to establish a practice. One idea is to pay him a percentage (say 30%) of each session up to an agreed cap per week or month. That way your rent is variable depending on your income, but won't go over a set amount and anything over the cap is a bonus for you. This type of arrangement is reliant on a very friendly and trusting relationship. The chiro sounds fairly supportive of you, so this sliding scale might work for you. He must have some ideas about how this situation could work has he given you any indication if he'd prefer you be an employee or a contractor? If he is supplying linen and consumables and paying for advertising and whatnot, his cut could perhaps be higher than if you're responsible for those expenses

Seeing his clients outside of the office might get a bit sticky. Personally I don't believe in "ownership" of clients and they can go where they please. Of course, you need to discuss this situation with the chiro so no conflict arises. Personally I don't think you are obligated to pay him anything if you see his clients outside of the office, but I also wouldn't suggest you actively encourage his clients to see you privately unless the chiro explicity agress that you may do so. If he expects you to pay him commission, I'd just not do it and I'd tell his clients it's policy to only see them at his office. You are both health professionals and as such there are ethical concerns about receiving commission on client referrals.
posted by goshling at 4:22 AM on October 31, 2008

Response by poster: OP here ---- well we're going to start out with a split-fee arrangement, where he takes a percentage of my hourly rate. After a while when I'm bringing in more steady business, we'll switch to a flat rent for the space. On the advice of a small-business accountant, I'm going to have the percentage I give to my boss considered "rent" for tax purposes. I feel good about the arrangement. Thanks for your help guys.
posted by headnsouth at 10:30 AM on November 15, 2008

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