Today, a new reality in architectural practice is that most architects are no longer interacting across their workstations. Instead, they are ‘virtually’ sharing ideas and drawings across digital platforms. Nearly every practicing architect engages in some form of “virtual practice” because the pace and practicalities of life demand it–employees travel or relocate, must limit work time for family responsibilities, or want to take on other enterprises as consultants. The virtual architectural practice model is far more flexible than traditional practice–and may be all but recession-proof since it can grow and shrink with market fluctuations.
The benefits of virtual practice may include near zero fixed overhead expenses–in contrast to substantial costs associated with traditional brick-and-mortar firms such as rent, computer hardware, infrastructure and more. In some cases, employee payroll and benefits become a thing of the past when the firm limits workers to consultants or independent contractors; however, there are important regulations that must be followed, outlined in the full report.
Virtual practice differences
The virtual architectural practice model may be ideal for Millennials who prefer flexible work arrangements. Parents can raise children and work from home, while others can choose recreational activities in the middle of the day. Older practitioners may consider virtual practice as an opportunity to live out retirement travel dreams earlier, while still working from anywhere in the world. One of the most significant differences between a traditional firm and a virtual practice is work flexibility and not having to commute, which can positively impact family life in ways practicing traditionally cannot.
Just like traditional firms, virtual firms need project managers, interior designers, draftspersons, engineers, 3-D modelers, and other collaborators and team members are assembled when needed for a project. In utilizing only consultants or contractors, the elimination of human resources responsibilities and their associated costs can be a valuable characteristic of the virtual practice. It is noted that from a legal standpoint, it is best that contractors have multiple clients and incorporate or form an LLC to ensure compliance with labor laws and to demonstrate that they are not simply employees who are being treated as contractors.
Importantly, you must be registered in every state where you perform architectural services and obtain state business licenses wherever you may be doing business. You need to maintain adequate insurance for you, your firm, and your employees–and even if you’re a “solopreneur” contractor. It’s important to make any necessary changes to your policies to address your current practice and ensure it’s adequately covered.
Employee motivation is critical, and employees must be self-starters, motivated without needing much direction or feedback. Therefore, personality fit is crucial for success and must be ascertained before hiring to ensure the employee is able to work independently in a virtual office environment. Maintaining a healthy firm culture when employees are not in the same physical space may offer challenges that traditional firms don’t experience. There may be increased diversity of the stakeholders which can significantly contribute to solving pressing challenges affecting the built environment.
The services of a virtual practice may not differ from those of a traditional practice, employing most of the design team as consultants for a project including MEP engineering, structural engineering, interior design, etc. As for marketing, the firm may encourage its employees to work on business development or consider outsourcing it.
Virtual practice risks
While there are many benefits of a virtual practice, as with most any enterprise, there are also risks. Hiring the right professionals, such as an attorney, a business consultant, and a financial advisor, is the best approach to help you lay the groundwork you’ll need for future success. It’s vitally important that every practitioner understand what is legally required so they don’t discover too late what can go wrong.
Employment may be handled differently in a virtual practice, but it still must conform to the law. You’ll need to pay close attention to the factors that determine whether a worker is properly classified as an employee or as an independent contractor–or you could face huge fines. Since a virtual practice depends almost exclusively on technology for communications, you’ll need to establish and communicate clear and consistent policies and procedures for how employees and contractors use technology.
Roles and responsibilities must be communicated and understood by any new employee or contractor and everyone with a vested interest. If travel is required, those requirements must be clearly understood and agreed to before employment begins. Virtual practitioners and their workers must be self-starters, comfortably and productively working independently to be successful. A consistent and regular communications plan for all your workers, whether employees or contractors, is always necessary to avoid misunderstandings or worse, especially when not routinely seeing them. As for any type of firm, it’s also important to establish employee exit policies and procedures for the firm and keep abreast of labor laws.
Contract law and intellectual property rights require a good understanding as they apply to architectural practice. Relying on an attorney as well as one’s liability carrier for interpretation and advice as needed, or when a potential claim may arise is also necessary. A virtual practice requires you to have a thorough understanding of the business practices and culture wherever your projects and your workers reside.
Technology and software upgrades are important investments for a virtual practice for the security and efficiency that you’ll need to avoid future problems with both, which may likely arise. Project extranets can be utilized to establish relationships, streamline communications, increase accountability, and create a permanent record of project information which could be critical in the event of a future claim.
Professional registrations in multiple states are necessary for a geographically diverse virtual practice – and are required by law. Registering in many states may be accomplished through the National Council of Architecture Registration Boards (NCARB) and its certificate process.
Your own state business license may be the only license required if the architect is not signing and sealing documents in other states, but state laws will vary. Generally, the architect’s license will be on the line for unlawful practice and there could also be implications for the firm as an entity depending on the nature of the activity. Each state defines what it considers to be “doing business” in that state and generally you must register as a “foreign” entity so you can be added to the tax rolls and pay income tax and an annual license renewal fee, in addition to the architectural license. Checking with state requirements and acting accordingly is necessary to ensure the firm is not later obligated to pay back fees, taxes and penalties which in many states could be crushing.
Establishing a financial discipline that includes strategies appropriate for the firm’s size and structure is also an important consideration. You need to define appropriate profit margins, time allocations, and staffing models to address your work.
Planning how you will find work and grow the business from the standpoint of marketing, sales, and business development must be thought through carefully with clear responsibilities assigned. There will be “hidden costs” of starting and running a new business, so it’s important to organize an appropriate stream of alternate income while getting the firm off the ground for the first year.
The full paper highlights many more benefits and risks of a virtual practice, with a checklist at the end to help summarize what you’ll need to address. Starting out with a team of professionals with whom you can consult and set plans will help to ensure your virtual practice is virtually flawless.
Ann Casso, Hon. AIA, Executive Director, AIA Trust
Kevin J. Collins, RPLU, Assoc. AIA, Senior Vice President, Victor
Jessyca Henderson, J.D., AIA, Associate General Counsel, AIA
Charles R. Heuer, FAIA, Esq., Principal, Heuer Law & AIA Trust LegaLine
Lira Luis, AIA, Principal, Atelier Lira Luis Limited
Peter S. Macrae, AIA, Principal, Macrae ARCHitecture, LLC
Kirsten R. Murray, FAIA, Principal, Olson Kundig Architects
Jason C. Winters, AIA, Principal, Kezlo Group, LLC; AIA Strategic Council
The authors, contributors, and the AIA Trust assume no liability for the use of this information by AIA members or by others and who agree to use this information at their sole risk. Any other reproduction or use is strictly prohibited. This information is provided as a member service and neither the Authors nor the AIA Trust are rendering legal advice. Laws vary by state and members should seek legal counsel and professional tax and business advice to evaluate these suggestions and to advise the member on proper risk management.