Texas Counselors Creating Badass Businesses
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Kate Walker, Ph.D. LPC, LMFT from #counselorsdontquit Blog and Kate Walker Training You Tube Channel reveals all of her practice and practice side-hustle strategies, clinical techniques, and killer marketing tips and tricks so you can be ahead of the curve with your mental health practice. Discover how you can create a mental health practice that works for YOU so you can have the time and freedom to do what you love, whether it's traveling the world, or attending your nephew's volleyball game.
Since 2007, she's been co-supporting her family (along with her amazing husband) with her counseling practice achievebalance.org and counselor education company Kate Walker Training LLC. Dr. Kate openly shares wins, losses, and all the lessons in between with the Texas Counselors Creating Badass Businesses Community.
Author of My Next Steps: Create a Counseling Career You'll Love, researcher, speaker, and professor of counselor education, Kate helps you learn about positioning yourself as your community's expert resource, marketing, building HIPAA compliant scalable systems and outsourcing, content creation, podcasting, search engine optimization, niche development, social media strategies, how to get more clients, creating online courses, becoming a clinical supervisor, and productivity tips so that you create something amazing without burning yourself out.
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Texas Counselors Creating Badass Businesses
Exploring the Shift to 1099 Therapist Work: Insights from Dr. Michael Flynn
Unlock the secrets behind the Affordable Care Act's ripple effect on businesses and employees across various industries. Are you curious why many companies have turned to reclassifying employees as independent contractors? You'll gain insights into the strategic maneuvers companies employ to sidestep the financial burden of providing comprehensive benefits, and how this shift impacts the work environment and operational dynamics. We dissect the nuances of employee versus independent contractor status using clear examples, like the operations of a widget company, to paint a vivid picture of this workplace evolution.
Navigate the intricate maze of employment classifications with us, as we shed light on the IRS's criteria to differentiate between employees and independent contractors. The journey through the IRS's 20-factor test is both enlightening and essential for understanding the grey areas in professions such as restaurant waitstaff and virtual assistants. We confront the ongoing debate between employers and regulatory bodies with real-life examples, illustrating the delicate balance of worker classification and the implications of these decisions on both sides of the employment spectrum.
The conversation extends to the complexities of contracting and payment structures, emphasizing the importance of clear, well-drafted contracts to define relationships and avoid unintended legal consequences. Discover the vital role of business entity reporting requirements to FinCEN, the intricacies of S-Corporation tax implications, and the nuances of pass-through taxation. With practical advice and a nod to the importance of mentorship and personal growth, our episode wraps up with a call to action: consult with financial experts and engage with our community for guidance and Continuing Education credits.
Get your step by step guide to private practice. Because you are too important to lose to not knowing the rules, going broke, burning out, and giving up. #counselorsdontquit.
the federal government. They'd stolen some of my money to give it to whoever was the president that week, and some to Medicare and some to FICA Social Security. I got what that was about, okay, and the rest I got to take home and buy groceries with. I got what that was about, ok, and the risk I got to take home and buy groceries with. That's a W-2 employee, and until and until they came, what was what is? I can't think of it. Right on the tip of my tongue.
Speaker 1:The Affordable Care Act blew things up. Y'all remember the Affordable Care Act. One of the provisions in the Affordable Care Act required employers who have X number of employees required that they had to provide group insurance. Group insurance is very expensive to the employer. It's real hard to take money If you're a regular employee and you're making a bunch of money and they take $12 a month or $36 a month for health insurance and match that with 36, big group, all's well.
Speaker 1:What happened, however, was there were a lot of employers okay, who either had too many employees. I'm remembering a very good friend of mine is the general manager of a very large restaurant and he had, I think he told me, over 30 employees and the restaurant doesn't make money and they don't pay the wait staff. Okay, they do. They pay a small amount, basically covers the taxes, but he couldn't afford to pay health insurance. So what so many employers did, including restaurants, restaurants and big construction companies shifted their employees over to independent contractors. Their employees over to independent contractors because an employee, under federal law, has certain rights to things like insurance. The Affordable Health Care Act allowed them or gave them the right to insurance, fringe benefits, days off, 401ks, retirement benefits. There are all kinds of benefits that employees kind of are entitled to if there are enough employees, if the employer does this for himself and it's pretty easy. If you're a construction company, okay, and you've got 400 workers out on three different jobs, three or four different big jobs, it's pretty easy to deal with the idea that they're going to get Labor Day off, that they're going to get Christmas and New Year's Day off. That's not a huge deal. But the idea of things like health insurance and retirement benefits overwhelmed large employers with small paychecks. Overwhelmed large employers with small paychecks because an awful lot of construction workers are minimum wage or very low wage. Waitstaff in restaurants, if I remember correctly, used to I don't know what it is now, but a few years ago they got $2 or $2.50 an hour. What they actually make their living on is tips. That's a discussion for another day.
Speaker 1:So when these employers at the time of the Affordable Health Care Act realized the expense, they started shifting their employees to what they called independent contractors. Now, an independent contractor is not technically an employee. An independent contractor is someone who works for herself, doing a job for herself for her own income, not within the direct control of the employer. And the way to look at this okay, you're making widgets. Okay, you've got a widget company, but you can't sell your widgets because you're too busy making widgets and monitoring the employees who are making the widgets and painting them and putting them in boxes to ship.
Speaker 1:So what you do is you make a contract with some guy in Louisiana and some some woman that lives up in Oklahoma City and you're going to provide her with the widgets and she's going to sell them You've heard she's really good at selling stuff and you're going to pay her. There are many ways to do this. I'm going to sell her the widgets for 50 cents each and she's going to market them for a dollar. And it's up to her how she does it. It's up to her. Who she does it with I don't care, it doesn't matter. She orders a bunch of widgets and I send her widgets and she sells them to her. Okay, do you see that in that circumstance I'm going to use the term employer kind of loosely here but the widget maker, the widget seller, is not an employee and not under the control of, on the other hand, the guys that are in my factory painting widgets, who punch the time clock, they're under my control. I tell them you got to come in at eight o'clock, you got to work for eight hours. Here's your standard. I set a quota you have to paint at least 50 of them a day or I'm going to have to fire you.
Speaker 1:So a lot of the issue that we perceive in that difference is the idea of control over the employee, and that's kind of how the IRS looks at it is how much control does the employer have over the employee or the independent contractor? It gets real fuzzy sometimes in the middle because the IRS there are a couple of things Benefits. I don't have to pay the saleswoman up in Oklahoma City. I don't have to provide her health insurance. I don't have to provide a retirement benefit. I don't have to deal anything with her days off or any of those kinds of things. I don't have to pay for her continuing education. She's on her own and I just send her widgets. My worker in the plant, I have to send him occasionally for painting training, widget painting training, and I have to pay for that. Because I shouldn't have my employees. I have to buy my employees uniforms.
Speaker 1:Can you see how there are basically, if you go to extremes two kinds of employee-employer relationship? The IRS doesn't make as much money from independent contractors and the IRS doesn't have as much control over the incomes and the reporting of income of independent contractors. The IRS can hold the employer very accountable for things like taxes and benefits and there are a lot of rules. There are a lot of rules that go on and are imposed. So the IRS prefers W-2 employees over independent contractors. They like it better because the IRS has more people they can grab money from and punish and yell at.
Speaker 1:So in the aftermath of the Affordable Care Act they started all this conversation. Those people are not independent. They're not independent contractors and my friend who operates a large restaurant came face to face with that. Because waitstaff, do you see waitstaff kind of fall in kind of a gray area and they're pretty much on their own in deciding. How much control does the restaurant owner have over the cook? Almost absolute control over the cook. The waitstaff a little bit different. What if they don't come in? What if they only want to come in? What if you're in a college town and you've got a bunch of waitstaff who shift their schedules from week to week to amend their classes? So you can see that what happened and why you even asked me this question is because it got to be there. The IRS and employers realize there's this huge continuum from independent employees to employees under control of the employer. Does that make sense to you? And that's kind of what this is. So the IRS was forced and I will bring this up, if I can bring this up, dr Walker.
Speaker 1:Yeah you should be able to share. You can, you can or I can, but I'm going to pull it up. Okay, Can I do share screen? I got to remember to do that first.
Speaker 2:Yeah, you should be able to share. You can, you can or I can, but I'm going to pull it up. Okay, can I do share screen? I got to remember to do that first.
Speaker 1:Yeah, you should be able to share screen, share screen, boom, and I think that this is what I want to look at. Nope, nope, it's the other one. Okay, let me, let me stop. I'm going to come back to that in a few minutes. Ok, what I was looking for another document.
Speaker 2:Is it the one you sent me?
Speaker 1:It is the one I sent you there. It is IRS rules. I found it and the thing is I don't know how to. Well, let me just do this there. Now you can see the whole thing. Talk about boring? Okay, this is really really. No, I went back to the wrong one. How did that flip?
Speaker 2:I think we were seeing the right one.
Speaker 1:There it is. There's what I'm looking for. Okay, can you see that? Can you see the IRS 20-factor test? You stopped sharing, I stopped sharing, I stopped sharing all this technology. For heaven's sake, forgive me, I'm really really old it doesn't to everybody there you go, ladies and gentlemen, there you can see it I gotta tell you email me.
Speaker 2:I will send this to you email, dr walker she has it now.
Speaker 1:I will send this to you Email, dr Walker. She has it now. She can send it to you and I don't want to get too much into detail. I could get bogged down and read this whole thing to you, and I've got more things I want to do. I trust you all to read this, but you can see that there are factors that the IRS came up with to try to discriminate. Even the factors they help, they're not decisive. I just got through with a legal argument. We haven't gotten a decision from the board yet.
Speaker 1:A counselor client of mine has an off-site virtual assistant person who works for her, and Texas Workforce Commission wanted her to be a W-2. To be a W-2. The admin assistant and counselor insists she's independent. So we went down this list with them. Okay, how much do you have to learn? How much do I have? Does the employer have to teach the employee about you know whatever job, how much training is required, whatever job, how much training is required?
Speaker 1:And you look at some of these and the control of assistance, one of the ones that I really like because it's kind of distinct is it an ongoing, continuous relationship or is it something that comes and goes Seasonally. Okay. My widgets can only be made in April and May, so there's a seasonal time when I need the lady in Oklahoma City. It's not a continuous relationship, it's an episodic relationship. Schedule when do they have to come in? Nine to five. Is this a 9 to 5? Remember who was it? Dolly Parton. 9 to 5? Sequence Okay. Does the employer say start with blank widgets and then paint the inside and then paint the top and then add that red stripe around? Do you see how much detail and so I'm going to stop that share.
Speaker 2:So what's on my mind right now, though, is because, when the question comes about for supervisors and supervisees, when the supervisor is thinking about hiring that supervisee, and I look at that test, I mean supervisees don't meet all those criteria.
Speaker 1:No one meets all of the criteria and, as I said a minute ago, most of the criteria are not very discreet, they're kind of measures of sort of what I mean, how do you count training? Well, one thing is that when you are agreeing to an employer-employee relationship with an LPC, a licensed professional counselor, did you train that counselor or did she get her training before she ever came into your office? Do you see? And a factor of independence, a factor of independence, does your, does your I'm trying to does the LPC coming to work for you? Does she decide?
Speaker 1:There are so many contracts I've written for for counselors who want to go to work in a larger practice but they have a couple of kids so they only want to work on Tuesdays and Thursdays when the kid's in daycare. They don't want to work on Monday. They want to be mothers on Monday. Raise your hand, any of you had that feeling. They want to be at home taking care of the kids Monday, wednesday, friday or Tuesday, thursday, whatever. So I'm going to say that almost inevitably 99.83, and I measured it 99.83% of the time a professional relationship that involves a counselor or group of counselors contracting to get work done by a professional, a licensed professional counselor, a social worker, a psychologist. When you do that professional counselor, a social worker, a psychologist when you do that, that will inevitably allow for the independent notion.
Speaker 1:Okay, so that if you're planning to I'm trying to avoid using words like employee because it's a little confusing but if you're planning to organize and have other people provide services for which you're going to accept a certain amount of money, okay, that almost inevitably you have your choice. You can make them W-2 employees, you can make them independent contractors. It is absolutely the choice. It's a negotiating issue. How does the incoming LPC feel that? Would she rather be independent? Would she rather be a W employee, get certain benefits and doesn't have to fool? Of the questions you asked, in an independent contractor relationship, the independent contractor is more autonomous, takes care of her own taxes, pays her own licensing fees, although that is a contractual question, by the way. Do you see? So when you have a professional relationship between professionals and I'm saying professional you all are your question revolves a lot around pre-professional, the associate Right, that's not allowed to practice independently yet must have a supervisor. Yes, she may be an independent contractor.
Speaker 1:She may practice. There was a period I have to say this, folks there was a period I have to say this, folks there was a period of a couple of years, a few years ago, for a year or two or three, the LPC board said that and at that time I think they were still LPC interns. Remember LPCI, lpc interns? I think it was that long ago that the LPC board said that associates cannot be independent. That lasted about a year and a half. It's not constitutional.
Speaker 1:Okay, there's no way that you can support the right of a board to tell a trained professional where she can work and how she can work. Do you see that? So they hold the rule back and, yes, associates may now be independent contractors. Your bind with associates is supervision. And the question I get regularly I get this all the time okay, is that the associate must be supervised. And the question hanging in several of your mind no, the supervisor does not have to work in the same practice in which she practices. That's an absolutely separate contract. If I'm going to be an LPC associate, I need to have a supervisor, and there needs to be. And I will tell you, I'm a lawyer. Okay, don't ever do this without a written agreement.
Speaker 1:Okay there should be a written agreement between the supervisor and supervisee and associate's employment condition, employment situation.
Speaker 2:Those are orthogonal so I'm going to throw something at you real quick. So if the supervisor has a supervisor contract right, that dictates supervision.
Speaker 1:Yeah, you're going to bring all your serious cases. I get to pick which ones. You see you ask me all the questions. If you've got a client committing suicide, call me right away.
Speaker 2:Yes, and then I decide to hire that person, so then I'm going to have a separate employment contract with that supervisee.
Speaker 1:Yes, okay, for all of you who haven't been paying attention, all of you who have checked your email and looked at your text messages and you're talking to your husband in the background, this is a place where you want to listen up. Okay, this is a place where you want to listen up. You absolutely must have a written contract with anybody you employ, especially if you want them to be an independent contractor. Told you a minute ago about the counselor I'm working with in the Dallas area and the IRS actually not the IRS Texas Workforce Commission said that her admin assistant was not an independent contractor, the thing that would have nailed this down and we would have been out of it instantly. They didn't have a written agreement of any kind. Get a written agreement, it doesn't. Now, if you want, ok, I'm going to do a little bit of a sell job here. I have independent contractor contracts in template form that you and I can fill out together and you will have one with your contractor's name and your name and all the mystical, magical language that I don't want to get into, but I could tell you there are seven or eight things that have to be in there that kind of showed on the list. I talked about a minute ago. So absolutely have a contract and if you want to do it right, get a lawyer to help you with. But it has to be in writing, signed by both of you, stored away, and when Texas Workforce Commission comes banging on your door, you just wave the contract in their face and 98 percent of the battle is over. So have a written contract. Ok, do you see that?
Speaker 1:The distinction is really, it's a continuum, it's not a dichotomy. You're either this or you're that. There are some things that are very clearly. When you hire someone to answer the phone in your office and to take messages and to schedule your appointments, that's absolutely. That is a W-2 employee. There's no way around it. Okay, when you have a licensed professional who comes to you and she already has six or seven clients and her own license and her own history and background very clearly, she can be independent. Y'all just kind of working together.
Speaker 1:There are lots of places, when you think about it, lots of places that are kind of in between. There are times there are website companies that sell virtual assistant services to answer your phone and make your appointments and deal with your emails and things like that. To answer your phone and make your appointments and deal with your emails and things like that, and they're kind of in between. And that's what we got involved in in this TWC case I'm telling you about is we said there are lots of companies that provide that service, a lot of it. One of it stick this in your contract that the independent contractor is free okay, absolutely free to take on other clients to work somewhere else. Yes, you can come work Tuesdays and Thursdays at our office and see 10 patients a day or see 10 patients altogether. And yes, you're free to work at the hospital the other days of the week. You're free to work for some other provider on the far side of town those other days of the week.
Speaker 1:Okay, you can take other employment.
Speaker 2:That's really helpful. That's because I've been one of the ones who've been just kind of saying a blanket statement your own supervisees who work in your practice must be W-2. But what I hear you say is you got to have a contract and look to see if it meets the 20 factors and find it accordingly and call you.
Speaker 1:Yeah, call me if you have questions. But remember, it's almost automatic. If you are a professional, a provider of professional services, and you are going to engage another person who comes to you educated, licensed, skilled, and she's going to provide services and you're going to share the income from the services that she provides, that's inevitably defensible as an independent contractor contract. However, I want to go back and say you still need a piece of paper. However, I want to go back and say you still need a piece of paper, you still need a contract, because the contract has mystical language that you all won't think of. The only reason I know that magic language is there Because I took the time to go to law school. You all don't want to do that. Raise your hand if you'd love to go to law school. It was a lot of fun, real hard, very fun, um Good well, thank you for that, that's that bingo.
Speaker 1:I love that, mona lisa. Thank you, yes, okay, any questions? Do any of you have any specific questions? Yes, go ahead, mindy, either unmute yourself there, you go.
Speaker 3:How are you doing?
Speaker 1:I'm well, how are?
Speaker 2:oh mindy, yes, we know each other.
Speaker 1:Hi Mandy, I'll give you a plug.
Speaker 3:Dr Flynn has been great to work with in the past. He's helped me a lot in different types of situations. You're kind.
Speaker 1:Mandy Anyway.
Speaker 3:I do have a question about for the contract. Can a contract for a 1099 require? Can I require contractors to schedule a minimum of, let's say, 10 clients a week on average, something like that, so that we're not just getting people who are just coming in. Oh, I think I just want to work four hours this week and then eight hours next week. Can we require anything like that if we want them to be an independent contractor?
Speaker 1:Yes, yes, it's a little. You have to draft your language a little bit carefully. Okay, Clearly, if you set the hours and you say you must come in for at least four hours every day, do you see how that's kind of pushing against being a W-2 employer as opposed to a fellow contractor for services? But if you have a company, okay, and a corporate sense of yourself, even if it's sole proprietor, okay, I'm not talking about a formal, but if you have that, then the two of you can negotiate. The same thing would go.
Speaker 1:I've got the lady in Oklahoma who's selling widgets and I can make a deal with her and I can say I can only work with you. It's not cost effective for me to send you four widgets a month. I have to be able to send you at least 150 a month or I can't make it work. Do you see how that's a profit loss, that's an income sort of thing that I say the shipping costs, the production costs, the packaging. The only way I can make this work between us is that you have to sell 150 a month. She's still independent. She still decides for herself when she's going to sell, how she's going to sell, who she's going to sell to. I'm just saying my business needs you to do this much work in order to cover the fixed costs, the underlying cost of doing business with you. So, yes, you can Be careful how you draft the language.
Speaker 1:Okay, that again, and I'm going to. You know I'm throwing out that's a lawyer thing. Lawyers watch language. Lawyers are very picky about language. The way I like to set up these contracts, there are two ways to do it. Either one works. One is more cumbersome but a little bit safer in some indirect ways. The other one is a lot easier and most independent contractor contracts agree that the incoming, the contractor, will keep 60%, 50%, 75%, whatever your deal is, of the amount that is collected and the way that the language flows.
Speaker 1:Okay, do you see? It's not specific, but the way the language flows is that the practice is going to pay the contractor 60% of what comes in. The problem with that is that sounds like kickback. That can be made to look like kickbacks contracts, Medicare, Medicaid. You have to be extremely careful with that because it is as if you're paying them for bringing clients to your business.
Speaker 1:You see, if I'm an x-ray lab, okay, and I've got physicians and I want them to refer to me and I tell the physician that I'll give you 60% or 40% of the fee when you send patients to me. Do you see how that's paying the physician? The physician's decision is not based on the medical needs of the patient but on the profit motive. And, by the same token, when you flip that and you're paying a contractor 60% in order to come see clients, do you see? And it's a gray area, it's a slippery slope, it's hard. Almost all the contracts I have written and that I see written, almost all of them, do it that way. The language flows that way that the practice is going to give them 60% and keep 40% or some percentage and keep a different percentage. A safer way to do that, a safer way to do that, is for the practice to pay X number of dollars. I'm going to pay you $40 for each hour of service Still fishy.
Speaker 1:You see how it still kind of smells a little bit like it might be a kickback. Trust me, the feds don't care about us, but if you do federal work, then you have to be very careful about that. There's a way. I've done it. I've done it several times. It's really interesting and it's fun to draft.
Speaker 1:But that is where you organize what I call a medical services organization, an MSO, and what you're doing is for 30% of what Mendy brings in. I'm going to keep, but what Mendy's paying me for is the Wi-Fi, the office space, somebody to answer the phone and make appointments for her, paper supplies and a refrigerator full of soft drinks. Okay, do you see? So that's a different thing. I'm not giving her kickbacks for seeing clients. I am keeping a certain amount of money in exchange for. So when you write the contracts, there needs to be a clear sense for what is it that the practice is providing? And there's always got to be. And there's a list I'm going to provide cold drinks, I'm going to provide a coffee machine, I'm going to provide Wi-Fi, I'm going to provide an office space suitable, and do you see how? That's a different system. It's not a kickback, it's a business deal where I'm going to rent you space and provide a place for you to work.
Speaker 3:Is it okay if I ask you a follow-up question about that? Of course, of course.
Speaker 1:I think it applies.
Speaker 3:I think there's a lot of people here that this applies to. So is it okay to have an incentivized pay structure within the contract.
Speaker 1:The only problem with that is, Mandy, is that when you do that, the drafting on those is very complicated for me and I like my job easy. Don't make my job difficult.
Speaker 3:Yeah, I'm sure you're happy to get some more money.
Speaker 1:I have seen them drafted way overly complex, but it's very simple and I had this thought when you asked your first question. You can set it up incentivized for 10 hours. You get X amount If you have 20 hours or more. And you have to be careful because it can't be 10 hours, it has to be between zero and 10,. To be careful because it can't be 10 hours, it has to be between zero and 10, between 11 and 20,.
Speaker 1:A different pay scale, a different kind of distribution. You can pay bonuses. Yes, you can pay bonuses If you're an independent contractor. I would be very careful if they don't do this. Don't say, if the contractor brings in two thousand dollars, that you know that really sounds bad, but if she works 56 hours instead of 40 hours, then she gets a bonus. You give her a Christmas bonus of an extra thousand dollars so that you can incentivize. My answer would be very careful how you do that. Be very careful how you draft that. Now I want to do two. I want to interrupt myself and I want to do the two things and then I'm going to get you to the questions that Dr Walker sent me. Did you have another one, mandy? No, I just said thank you so much.
Speaker 1:I appreciate all okay, I want to get into the two things. The first one is the boir, the beneficial owner interest report. This applies to any corporate entity, any entity. I'm going to say for us, the simple answer is if you are a sole proprietor, okay. If you're just a person working in an office, you pay your rent, you have a secretary, okay, you're not a corporate structure, you're just a sole proprietor. This doesn't apply. This only applies if you have some kind of entity and the language kind of says if it's registered with the state, if you have a limited liability company, if you have a PLLC, a professional limited, a corporate structure, some people still actually, this doesn't make sense, but some people have professional associations. So if you have any kind of entity that's registered with the state, then there, oh God, this rule, it's to stop money laundering. You report it to the Financial Crimes Enforcement Network of the Department of Justice, don't you just love that? You're going to have a relationship now and provide information to the Federal Crime, investment and Financial Crimes Network. It spins in, it spins in and you can do this yourself.
Speaker 1:I kind of don't recommend it. You're filling out a federal form and I've done several dozen. I've done a couple dozen of these, okay, and I still get in the middle of it and I have to step very carefully because I get confused at which number goes where. So be careful. It's going to take you half an hour to 45 minutes. It will take me 15. That's a little bit of a difference. You can get any lawyer Some of your accountants will do it but it's a report to FinCEN, the Financial Crimes Enforcement Network. Okay. It provides them with the information regarding who are the owners of the company that either control the company or receive benefits in the form of money, basically profits, and most of your companies those of you who have PLLCs or corporations or LLCs or whatever you have most of you only have one owner. Sometimes you'll have two of you sharing with and that would mean that you have two beneficial owners and what FinCEN wants and you can go. I think it's FinCENgov. I really do. It's something around something like FinCENgov. I've got an automatic, I just click it, so I don't have any idea what the actual address is, but you go on their site, you register yourself as a reporter and then you register yourself as a beneficial owner of your corporation. The way I do it kind of makes sense. I go in, I have an identification number. I'm registered with FinCEN to do this, so I just put in my registration number, boom, and then I put in your name address.
Speaker 1:Unfortunately, ladies and gentlemen, your name address, your, your business's employer ID number, your birth date and a photograph a JPEG or a PDF of your driver's license you have to send me, you have to send FinCEN a valid state photo ID with a photograph you can send. Well, I've had one exception Most of the people send me their driver's license. I had one person, kind of an interesting story, but he sent me his passport, which is a picture ID with his name and his birth date on it. Name and address and birth date. I'd have to have that photograph you could use for any of you who happen to have one. You could use your license to carry a handgun. That's a valid one.
Speaker 1:A military ID would suffice, but it has to be a photo ID. So I get your name, the name of your company, your employer ID number associated with your corporate entity, and then your personal address. It has to be your well, the address of your business is fine, an address where they can get you, okay, and then your birth date and a photo ID and that has to be sent to the financial crimes. You have to have this done. If your business was in existence, if you were registered with the Secretary of State prior to January 1st of 2024, then you have until December 31st of 2024 to complete your business, your beneficial owner interest report, okay, so you need to kind of take a look at that, give it a shot. If you can't get to it, call me, email me. We can work this thing out.
Speaker 2:If you put the link in the chat if you want to.
Speaker 1:We have.
Speaker 1:Oh, excellent, Dr Walker, this this is why you are the leader of this group. Ok, this wants to go where I was going. What was I going to say? Oh, if your business, if you formed your business after january 1st of 2024, you have 90 days. Okay, you have 90 days to file your boir.
Speaker 1:Now, this is kind of like the good faith estimate. I don't know what's going to happen. Truth is, I have never seen a legal action or a board complaint that had anything to do with the good faith estimate. Do you remember the big blow up? And probably many of you, most of you? You should be Okay, it's the law. You need to be doing the good faith estimate, but I have to say nothing has ever happened. It was all that big and then nothing happened. There are lawsuits. It's my opinion, my legal opinion is that it's unconstitutional. There was a lawsuit in Georgia, but it was a very narrow class action lawsuit and for that class the federal court ruled it unconstitutional. But it's limited to that small class. It's going to take a couple of years before this gets high enough that we will begin to see that it probably can't be done. In the meantime, I would advise avoid the $500 a day. Fine, because the fine is $500 a day when you don't have your beneficial owner interest report filed timely. Okay.
Speaker 2:Don't be afraid of it. We have a hand raised. Carrie Simon, do you want to unmute?
Speaker 3:Yes, does this apply for nonprofits as well?
Speaker 1:Interesting. Oh, what an interesting question. If you are a 501c of any kind, you all know that the 501 corporation there's 501, a, b, c, d, e, f and I think G, maybe just F. Okay, these are all specified organizations and you apply to the IRS and the application is like 30 pages long and very detailed. I've done it. But if the IRS considers you among the 501 organizations, then you do not have to file that would be a 501c3 as the nonprofit, what we think of as a ordinary nonprofit. If, however, you are not approved by the IRS, there are a lot of nonprofit organizations in Texas that are just organized as a nonprofit corporation. That does not qualify under the FinCEN rules. Qualify under the FinCEN rules I'm working for, in fact. Yeah, I've already filed it for a nonprofit. It's registered with the Secretary of State as a nonprofit corporation, but we had to file a beneficial owner interest report because it's not under the IRS substance of a 501. So now I'm going to make this smaller, close this.
Speaker 1:Oh, the other one, the other one that I wanted to get to, and I'm sorry, let me. The other one is the attestation. Somebody put a question up here about the attestation. This is a little piece of politically correct government intrusion and an attack on to the HIPAA, to all the HIPAA rules. Those have just got so huge.
Speaker 1:That's just crazy stuff. It's necessary, but when the federal government starts getting involved it just starts growing like a mushroom. And this is one of the offshoots of it. Coming as of December 17th, when you provide the record and there are a limited number of cases the one you're going to run into most often that is the most frequent time that you get a crazy request is a subpoena If it has anything to do with litigation. If you're providing the record to a lawyer as a result of a subpoena, if a lawyer says they want your record because there's litigation, you will, beginning December 17th, you will have to get an attestation, all the attestation does. It's a simple, one-page deal. Dr Walker, if you can give people my email address, I am going to draft between now and the 1st of December.
Speaker 1:Wish me luck. I'm going to draft an attestation form. It's a brief, one-page form. You basically provide the name of who wants the record, what they're going to use it for, who the record covers your patient's name, your name as a receiver. It is the recipient of the record that has to sign the attestation. In its simplest explanation, it just simply says I promise that this record will not be used, is not requested, for the purpose of a criminal prosecution based on someone's access to reproductive rights, which is a code word, which is a code word, especially in Texas. For the idea that I'm not going to use this record to try to convict either the physician or the mother or anybody else involved. I'm not going to use it to try to convict them of a criminal offense involving reproductive rights, and we all know kind of what that's about. You can see how it's absolutely politically motivated. Kind of what that's about. You can see how it's absolutely politically motivated. This is the 21st century. They want a law about everything because they're afraid it might happen. I don't know what's going to happen about the attestation. What I will tell you is everyone's going to be very nervous and upset and feel burdened by it. We won't know until next summer or even this time next year exactly what the import or implications.
Speaker 1:Narrow, narrow set of circumstances that require the attestation form and the main thing that you're going to run into there two of them actually. The main thing is when you get a subpoena or a request that's based in litigation, any kind of lawsuit, okay. The other time is when a coroner, when there's a coroner's inquest, and I've got to say I've been a lawyer now for a little over 16 years and that's happened twice Twice in 16 years I have had mental health professionals who got a request for records from a coroner, a medical examiner, okay, and it really is kind of weird. It's kind of strange when that happens. If you get a weird record request like that from a coroner or you get one based on a will, call me. Those are fun to think about. Lots of ins and outs Now moving right along as quickly as possible. Oh, I don't want to do it that way. I want to do a share screen and I think I'm going to get it right this time. Yes, yes, okay, can you all see that?
Speaker 2:These are the questions right from the Facebook page. So all I did was I copied and pasted what you posted in our Texas Counselors Creating Badass Businesses page.
Speaker 1:And I want to give a big round of applause for those of you who posted. I'm a presenter. I present a lot. I love it when I get questions in advance. I love to know what kinds of things, because that helps me understand what I should be talking about.
Speaker 1:If you're hiring your first employee, what are your decision points? It's really a negotiation, okay, you and the person that's going to work with you. How do you want this thing to work? Do they want to be independent Legally?
Speaker 1:Well, legally, you are more responsible for a W-2 employee, so that if you have a counselor working in your office and she's a W-2 employee and she gets sued for malpractice which, by the way, don't ever be concerned about malpractice lawsuits you don't have much exposure. Your real exposure is to licensing board complaints, because those things get crazy and unpleasant. Lawsuits will be unpleasant. You won't like it, but I have never seen a successful malpractice lawsuit against a mental health professional, with the exception two exceptions okay having sex with clients, and the second one is cheating the government out of money. Those are the two things you don't want to do. So as long as you don't have sex with clients and don't cheat the government, you don't have to worry about malpractice lawsuits. So in hiring, your decision points really are negotiable.
Speaker 1:How can you both each of you mutually make this work best? How much independence Do they want benefits? How much are they willing to accept in terms of control? W-2 employees get paid less because you have to pay half of their taxes. That's part of it. Talk to your accountant. This is an accounting question. But if they're an independent contractor and it comes up later, they are responsible for their. It's like a separate business. They're responsible for their social security. What's called unemployment with a business? The unemployment tax, excuse me, self-employment tax. That's what the self-employment tax, which, if you're an employee.
Speaker 1:They take out withholding but they also take out Medicare, medicaid and those things. So the employer in a W-2 situation pays half of that. If you're an independent contractor you have to pay the whole thing, but if you're a W-2 employee the employer is also legally liable for anything that an employee does in the scope of her employment. So if you have a W-2 employee who gets sued, then as the employer you're part of that lawsuit. So that's kind of one of the decision points you might want to weigh Steps to hire. Basically, use your good judgment. I would, you know, be really careful. Call previous people.
Speaker 1:I just heard a story today this was so interesting to me A colleague of mine that I have in hold in very high regard, very bright woman psychologist, who had a who hired an office manager who after two months she realized that the office manager she had hired is a seriously impaired, borderline personality, okay and the things she was starting. She had access to the whole keys to the kingdom and the psychologist discovered that this employee was looking at the reports before the psychologist sent the report out to the court and she worked with the court. Before the psychologist sent the report out to the court and she worked with the court before the employer sent it out. The borderline employee edited the reports. She changed them. Yes, she added and subtracted stuff. Yes, kate, I can see. Oh, that's bad. So what I want to say is your real step is just be sure you know this person. I would be very careful. If you don't know them, call some of the people who do know them. Check the references, say I have made that. I'm just going to simply say I've made that mistake in the past because I didn't check.
Speaker 1:I remember one guy told me he said oh yeah, I'm his brother. I couldn't, I don't remember the name, but he told me that he and I had a lot of respect for the brother. So I went in and hired him to do the job. It was a roofing job. I hired him to do it and I found out later. I actually ran into the brother that I liked and held in high regard and I said dah, dah, dah, da and I hired him and he just shook his head. He said I wouldn't have recommended my brother, I wouldn't have recommended him. I didn't check his references.
Speaker 1:Okay, so that's probably when I would say your decision point what do you want to provide? Okay, what do you want to provide to this person? What do they want back from you? I've talked about the control issues. Yes, you can provide.
Speaker 1:In fact I would highly encourage, as an employer, write it down. When you haven't, and particularly what's going to happen, and I've run into this so many times when you need to get rid of them, when you need to push them to the side, you say this is not working. You're a borderline personality and you're dangerous. Don't say that that won't work. But if you keep track and keep a writing document that she didn't show up for work document, that she threw a remote control across the room at one of the clients, when you document, write that down on that date. Employee did this On that date. I asked the employee to be sure that she was making notes. You all know that I dealt with a case one time where they found out that an independent contractor employee had not done any case notes with any of the clients for over a year notes with any of the clients for over a year they didn't inspect.
Speaker 1:There's another thing. I learned this in the army. I'm very old, I was in the army. People will do what you inspect, not what you expect. So if you've got independent contractors, part of the contract has to say that you have access to their clinical files and then you have to take that access and make sure they're doing work. Yes, associates can now. There was a time when they couldn't. The law has changed. Associates may be 1099s and the supervision contract is an absolutely separate legal relationship.
Speaker 1:Good question about filing taxes With a 1099, you're going to love this. You know, at the beginning, remember when you had jobs that you were hired to do. You worked for an employer and in January or February they gave you that big form with all the different, with the numbers of how much they paid you and how much they withheld for taxes, and you use that to do your taxes. Okay, that's a W. Oh Lord, I think that's called a W-4. No, that's a W-2. I'm not an accountant. I apologize, be aware I'm not an accountant. That's a W-2. But if you have an independent contractor, you give them a form 1099. Now my advice to you is don't do this yourself. If you're not using an accountant for your employee stuff, or at least a bookkeeper for this, you're probably going to get right up to your neck before you realize how far you are into it. Report a lot more if it's a W-2. Your obligation to report income taxes withheld. Withholding all of that, you have a lot more responsibility. If it's a 1099, you just give them a 1099 form in January, february that says here's how much I paid you in 2024. And then the employee, the contractor, is responsible for paying their own federal employment, their Medicare and filing their own taxes.
Speaker 1:Okay, the S-Corp and BOIR are absolutely separate. Oh, we're getting down to the end. An S-Corp doesn't exist. Ok, if you, if you're, if you're an accountant, ok, has you listed as an S-Corp? That's an IRS.
Speaker 1:It's a chapter in the IRS I'm going to surprise you here. It's some chapter S of the IRS code and it allows income to be passed through directly to the owner of the business in a small, closely held business. Think about this Microsoft, okay, has to. They get all their income and they've made a profit. They have to pay taxes on that profit and then, after they pay taxes. They divide the profit up among the shareholders and then the shareholders have to pay taxes again. So if you've got a one-person PLLC and you've made a profit, does the PLLC have to pay taxes on the income? And that's what subchapter S is about. It says no pass-through. It's called pass-through and so the corporate entity is not required if it is a sub-S corporation. But there are other ways to do it.
Speaker 1:Do not immediately become a sub-chapter S because most of you she's early. Most of you, where is my thinking? Most of you, where's my thinking? Subchapter S most of you are disregarded entities. Okay, don't feel hurt by that. The IRS disregards the entity and taxes you for your income because it's a small, closely held, and being a sub S corporation comes with certain obligations that you don't want to be involved in. Jumping very quickly. Okay, any of you have questions? Send me emails. Dr Walker is going to give you my address. Send me questions. I'm happy to answer questions. I've learned so much from your questions, so don't feel like you're imposing. Yes, you are imposing, but it's worth my time because I learned from it.
Speaker 2:I learned so much from this. This was wonderful.
Speaker 1:Well, I'm glad Every time I teach this, I learn more stuff. Notice of intent, forfeit right. Probably you have a limited liability company and you didn't file your no tax due, your franchise tax report, okay. And when you don't file your franchise tax report, then they send you a notice. The Secretary of State says we are about to take your business away from you. If you want to solve the problem, okay, file your no tax due franchise report.
Speaker 1:Although I haven't heard all the details, but I think as of 2024, llcs, pllcs, are not required any longer to file the franchise tax report. It just created too much trouble. Be careful about that. Talk to your accountant. I haven't investigated it thoroughly and I'm not an accountant. Okay, so be careful. But I'm pretty sure that they have softened the requirements and very few of you in the future will get a notice of intent to forfeit the right. If you get a notice, all you have to do is file some papers and they put you back on their good list. It's not as bad as going to the principal. It's just the teacher shaking a finger and saying if you do that one more time, I'm going to tell your mother. Okay, and you and I both know that you're not afraid of your mother anyway. Okay, that's all. We have made it one minute past.
Speaker 2:Oh, you were awesome. This was so much wonderful information. I feel validated, I feel corrected, I feel like I can get more information out. That's accurate. And I will absolutely, dr Flynn, give people your email so they can reach out to you. I know you're going to get calls about that contract. I know you're going to get calls about that attestation letter, so I'm going to get that done.
Speaker 1:Yeah, I'm going to get that done and make that available. It's just something we've got to do. Thank you, dr Walker. Would you tell Kenda Dalrymple that, no matter what she thinks of me, I think she is an absolute gem, absolutely.
Speaker 3:Kenda.
Speaker 1:Dalrymple Okay, I've learned this Kenda defended me against about a board complaint about 25 years ago. Okay, and it was one of the scariest I had three board complaints all at one time. Long story, not a big deal. She got all of them dismissed, cost me a ton of money, explains why I'm in law school. My wife at that time said you're not doing that anymore. You're going to go to law school and get the check, not pay it. And Kenda became my mentor and truly, the more I learned about the law, the more I have been a lawyer, the more I appreciate how smart Kenda is and what a very good lawyer she is. So you can tell her that, whatever it is, she's better than I am.
Speaker 2:I will. I will tell her. Thank you again so much. I'm Dr Kate Walker. This is Texas Counselors Creating Badass Businesses. And Kate Walker Training Look for your CE. Give us about three weeks to get that done. We're training a new person who's gonna help us push those CEs out quickly. And don't forget, check the chat right now. Click the link to the form. Once I hit end, then my finger's heading there, I'm about to hit end and once it hits end, all of those links go away and if you have it open then you can access that and fill it out at your leisure. So thank you guys so much. I will see you next month at our next presentation. Have a wonderful evening.