Accounting & Bookkeeping & Small Business Forum

[Guest]

I was recently an employee at a real estate and mortgage company (two seperate entities) where I was the bookkeeper and office manager. I ended my status as an employee to grow my bookkeeping business. I still do the bookkeeping for the company, but as an independent contractor. The owner of the company will pay me from the mortgage company and bill my services to the real estate company (where she has partners). What she wants to do is charge the real estate company 10% more than what I will charge to her for my services and the mortgage company will "pocket" that profit. The partners will not know the actual amount of time or money my services cost.

First of all, is this ethical or legal? I can see both sides of it. As a real estate and mortgage company, the business is comprised of independent contractors (loan officers and real estate agents) in which the "house" takes its cut. However, this is not a real estate situation where I need to be under a broker. I view it more as a situation where let's say the copy machine breaks down and you have a company come out to fix it. When billing the real estate company for their portion, you "tack" on a bit extra so your other company can make a profit on it.

I just need some clarity from an outsider's perspective--I'm too closely involved and the owner and I have had such a good working relationship until recently where she seems to be extra greedy lately.

[Guest]

This is not ethical at all, be very careful in this situation. Angela

[Guest]

And if the business partners became aware of it and were ok with it, is it still ok for a company to charge overhead on my bookkeeping services when I'm under independent contractor status?

[Guest]

You should end your dealings with this client. I understand that this is a paying client however she is asking you to compromise your integrity. Suppose the mortgage co. finds out what she is doing and that you knew it all along it could be some cause for litigation because that constitutes fraud. You could end up in a legal mess plus you never know who these people know and if you get a rep for being unscrupulous you are ruined. One client is not worth risking your company or reputation. If you can not afford to lose this person as a client then tell her if she is going to do something dishonest then not to tell you because you have an ethical responsibility to report it.