business-team (1)How are you going to structure your staff?  Are you going to hire W2 employees or 1099 independent contractors?  What does that mean for insurance?

First step, if you are going to hire W2 employees you are going to need a Federal Employer Identification Number.  Sign-up online at https://www.irs.gov/. The U.S. Small Business Administration has resources for taxes and reporting your employees taxes: https://www.sba.gov/starting-business/hire-retain-employees/hire-your-first-employee

When you hire employees you ensure their safety on the job.  All employers are required by law to obtain worker’s compensation insurance.  This policy not only pays for an employee’s health insurance due to injuries on the job and 2/3 of the employee’s pay up to state defined limits, but also protects your business from an employee lawsuit due to injury on the job.

When you obtain a worker’s compensation policy from Deland, Gibson, you will also get Risk Reduction planning and guidance. As Risk Advisors, we provide advice and resources for employee handbooks, OSHA regulations, experience mod calculations, loss control and prevention.  This Risk Plan helps to keep your worker’s compensation costs low and makes you more attractive to the underwriting community.

If you are using independent contractors in your business, we strongly recommend that the independent contractors carry their own insurance.  Make sure to check all contractor’s insurance certificates to see that your business is listed as an “additional insured” and that the independent contractor’s policy has adequate limits.

Know the rules with independent contractors: the fines from the State, Department of Labor and the IRS are steep for employers who have independent contractors who are actually employees. The basic rule of thumb is if you tell staff when to show up, what to do, how to do it and when to leave then they are employees.  Independent contractors do not have to abide by your schedules or participate in mandatory meetings.  They don’t have to help with duties outside their contracted service like cleaning up or answering phones.

If an independent contractor is injured on your worksite, there is no limitation on them suing your business for damages because you are not protected under the worker’s compensation policy.  How do you know if you are an independent contractor or an employee? Take the IRS test:  https://www.dol.gov/whd/regs/compliance/whdfs13.htm

If you have questions on how to structure your employees, or for a complete Risk Analysis contact Alexis Kimball using the contact information below.

Business photograph designed by Pressfoto – Freepik.com

About the Author

risk-advisor-alexis
Alexis Kimball, Risk Advisor at Deland, Gibson Insurance

akimball@delandgibson.com – 781.239.7605 – www.delandgibson.com

Alexis Kimball monitors businesses with a proactive plan to lower the Total Cost of Risk. All costs that are related to insurance can be identified, measured, and reduced. These include insurance premiums, retained losses, risk management control, outside service fees, and indirect costs.

Stay informed on issues that impact your business and personal risk levels: Subscribe to The Advisor.