For some reason I am getting a lot of potential agents wanting to join my company asking me if I categorize my agents as 1099 or W-2. Apparantly a lot of companies are classifying their agents as W-2 now. I honestly cant think of a benefit offering agents a W-2 status. Classifying them as this status (at least in California) subjects the brokerage to so much more taxation. Am I missing something?

Interesting, VM....have not had that question asked yet. I am guessing why agents would want to go W-2 is so you as the broker must pay your portion of their social security contributions.

Well, the benefit is to the agent not the Broker but if brokerages in CA are utilizing it then it may help w/ recruiting for you to consider it.

It's less hassle for the agent come tax time
http://www.bizjournals.com/houston/stories/2005/04/11/focus5.html

I know someone who will pay them W-2 but reduces their commission split a little to cover the taxes he must pay.

By having W-2 employees you may be able to get them group health benefits

Yes, as a broker, it is a lot more hassle for someone to be a W-2 that is for sure

I can imagine you may have to rethink your commission splits if you had to convert over to W-2