estimators. How do these play a key role
in being exposed to either misclassifca-
tion suits, citations from the Federal Trade
Commission or an attorney general?
DAVE: Compensation is a key. So let's start
out with a couple of "do nots." Avoid paying
salespeople on a proft sharing basis. The
proftability of each contract should be mea-
sured against the allowable compensation
built into your price. Incentive compensation
where contracts are constantly sold within
those parameters or what is considered
above average proftability can be considered
at the end of every quarter or at the end of
each year. As an example, if your salespeo-
ple are selling a product where the cost of
goods is 45 percent of the selling price, in
cases where they exceed this number your
proftability is diminished, whereas when
their jobs come in "collectively" below 45
percent, your proft is increased and you
could pay an adjustment bonus. The is-
sue here is largely the interpretation of many
forms of proft sharing (by the A.G.'s ofce)
as gouging.
Salespeople can be W-2 employees and still
be paid purely on commission. Salespeople
can also be treated as "non-employees" under
the provisions of section 3508 of the tax code.
If you elect the latter, you will need legal/tax
advice to ensure your protocols are correct
and meet the requirements of tax law.
QR : What are your fnal thoughts about en-
suring protection against the unfortunate
and unintended violations that could occur
in many home improvement businesses?
DAVE: I believe the legislators and various
agencies of the government impose costly
burdens on "small businesses" within the
industry. Contractors are asked to be a tax
collector and enforcer of both contrite and
vague laws being imposed by various federal
agencies. In 2016 there will be an awaken-
ing to numerous controls, sanctions, and
costs related to the Afordable Care Act
(Obamacare).
Despite all of the latter, the history of this
industry indicates that with the proper plan-
ning, design, and execution we can and will
overcome these challenges. Knowledge of,
and preparation for, are the two main ingre-
dients for thriving, not just surviving, in the
changing business environment. n
Dave Yoho is the president of the oldest and largest
consulting group representing the home improvement
industry. His staff of account executives provides
consulting services in person, online and by phone.
daveyoho.com , (703) 591-2490
D. S. Berenson heads Berenson LLP, a national
law firm specializing in the home improvement
industry. homeimprovementlaw.com ,
(703) 759-1055
QualifiedRemodeler.com QR October 2015 | SPECIAL SECTION: HOME IMPROVEMENT PRO 39