Question for fellow sole proprietors - workers comp ins

[acmanko]

If you do not pay yourself a salary, you are doing something wrong

[moon_shadow]

One insurance agent I called about this told me something I never realized... that is if you are a sole proprietor, you are not considered your own employee, thus you do not necessarily needs workers comp, however, if you are one of those who form an LLC, or any other type of corporation, then you are considered an employee of the LLC or corporation, and would need workers comp, even if you are the only employee of the LLC or corporation.

And don't worry, not to sound greedy or anything, but the sole purpose of this business of mine is to provide for myself and my family, not be a "jobs creator", so I don't have any plans to have any employees at any time. The only person who helps once in a while is my wife. This is intended to be a very simply structured, low key business, low overhead business. An old pick up truck with a magnet on the door and a home office squirreled away in the corner of my basement, we even use the same line for phone and fax.

[moon_shadow]

hang nail you might just as well hand hin the keys to the house,
Just my thoughts though.

Thankfully the bank has dibs on the house before anyone else! And if it ever got to that point, I'd just hang it up, file bankruptcy, start over and find a factory job somewhere! LOL

[toocoolforschool]

Wow lytning that is a hell of a truck.

[Pete838]

As the owner (even of an LLC) you should be able to get a w/c exemption certificate. My company accepts those from small subs that do not have employees, even if they are not a sole prop.

I would definitely consider incorporating. Sole Prop is a terrible way to operate a business.

[acmanko]

You'll pay more in taxes as a Sole Pro than the WC will cost

[lytning]

Wow lytning that is a hell of a truck.

Thanks. Not much left on it stock. Added 350, auto and 4 WD. Carries lots of stuff.

[ZeroCool]

In my state you are allowed as a company owner to be exempt from your policy and you pay the base amount to "have" a workers comp policy. This doesn't cover you but it allows your COI to show you have the policy which is all most companies want. All companies go thorough a vicious audit every year by their own insurance company, if they aren't self insured, and the sole purpose of this audit is to make more money for the blood sucking parasite insurance company. They tear through your records and if they find you had a contractor doing work for you that doesn't have a COI on file, they will charge somewhere in the neighborhood of 30% of work done by said contractor to "cover" the insurance company. So lets say Billy Bob did 100k worth of work for you last year but you failed to get a COI showing coverage well you just got a 30k bill handed to you. Same for your customer, its less of liability and more of feeding the vicious blood sucking parasite insurance companies.

I digress though, sorry.

Insurance companies have become wise to this and informed most building owners of this ploy to save money so most now have a rider written in that basically says no exempt employees. I know I sound bitter but *** (three letter insurance company) and the whole PMI mortgage insurance fraud that started this catastrophe in the housing market ticks me off to no end.

Also, you will most likely run into a customer that preys on unsuspecting contractors and will get you to do a large job and then refuse payment (or withhold 50%) due to insufficient insurance coverage and you will be in a mess, so you better get at least the certificate if your state offers that route. Even if you have the WC on yourself it really isn't worth much. If your smart you are taking as much off the books cash as you can from good customers you like and/or paying your self a small salary to have income to pay on for old uncle sucker to leave you alone and take your cut mostly off of your company dividends at a much lower rate. This will make WC useless for you.

Most small guys i see get the WC certificate to be covered and end up getting AFLAC to supplement their own private health insurance policies. JMHO.

[garyed]

Workmans Comp for a sole proprieter with no employees is really a joke but sometimes you need it to get the job. I pay around 750 a year for my policy which doesn't cover me but anyone I pay to do any work for me. I get audited every year & if I pay out more than the minimum I'm allowed to anyone without their own policy then I get charged more. All my subs have their own WC policy just like I do so its not a factor for me. The way I understand it is that the policy holder is responsible for themselves as the business owner but anyone they hire who does not have a policy is covered by their policy.
So I'm not covered by WC & my subs are not covered by WC but we all are paying for a WC policy. Only the insurance companies could figure out a way to get everyone paying while noone is covered.

[Gotwood]

Workman comp laws do not protect owners from lawsuits/liability if they show negligence
As a self employed individual I would talk to your insurance man and se if work mans comp, short term or long term disabilities air the right choice

[acmanko]

I spent over 3 years in WC as an employee and I can tell you WC does protect an employer from lawsuits from on the job accidents

[glennac]

I spent over 3 years in WC as an employee and I can tell you WC does protect an employer from lawsuits from on the job accidents

Well ace that's why it was put into law. If everyone who broke a finger could sue their employer for a zillion dollars like they do in an auto accident then no one could afford the liability insurance that would come with it and then there would be no private businesses in operation. Sorry you weren't "compensated" adequately for your injury there. The system isn't perfect but it would be disaster without it. I assumed you appealed your "compensation" from Worker's comp. Thank you, thank you very much

[fcs]

I started on the facilities management side for lager commercial. I would NOT bid any contactor in any trade who did not have work comp. Same goes for my house. While there is still the risk of a lawsuits from the proprieties stand point it reduce that risk due to the fact the contractor has some coverage.

[acmanko]

Thats what you like to think Glen. But there are other reasons. But I'm not going to hijack his thread

[pageyjim]

I spent over 3 years in WC as an employee and I can tell you WC does protect an employer from lawsuits from on the job accidents

Are you a nonsubscriber to WC? As I understand it in Texas you can opt out and sue for negligence and pain and suffering etc. I would imagine that somehow being a nonsubsriber the employee would just end up getting screwed.

[glennac]

Thats what you like to think Glen. But there are other reasons. But I'm not going to hijack his thread

Well go ahead ace. We like to hear a good "story" anyhow. Thank you, thank you very much

[acmanko]

Have you gotten so old that you forgot. It's political and this is the wrong forum

Pagey, I was not a subscriber, the Co I worked for was. Tort reform was voted in to protect business from lawsuits by injured workers

[glennac]

Have you gotten so old that you forgot. It's political and this is the wrong forum

Pagey, I was not a subscriber, the Co I worked for was. Tort reform was voted in to protect business from lawsuits by injured workers

Hey ace how you got screwed over by workers comp shouldn't be that political but could make for some good reading. Give it a shot here. Can't wait. You can do it. Thank you, thank you very much

[acmanko]

Glen, I'll start with one sentence. If the tread does not get moved I will continue.

When the GOP , which controls Texas' Senate , House and Governor decided to protect Business And Doctors. They passed WC laws that did just that.

My bad. 2 sentences

[glennac]

Glen, I'll start with one sentence. If the tread does not get moved I will continue.

When the GOP , which controls Texas' Senate , House and Governor decided to protect Business And Doctors. They passed WC laws that did just that.

My bad. 2 sentences

Funny I thought that was the case in most states. Workman's comp took the dice out of the payment for injuries and uses a scale based on how bad the injury is (disability, etc.) to pay you for the injury in addition to all legitimate medical costs. And all companies who were bonded and insured had to have the insurance. Been that way in all the states I have lived and worked in: TN, KY, MS, SC, NC & GA. No different. Why would Texas be any better or worse? Thank you, thank you very much