Contractor Talk - Professional Construction and Remodeling Forum banner

1 - 20 of 22 Posts

·
Registered
Joined
·
2,556 Posts
Discussion Starter · #1 ·
I have been a one man band for about 3 years now and have not gone one day without carrying liability insurance.

However, I have always had either my dad or another contractor helping me when I need it as 1099 guys. All legit since I only need help on pour days or randomly through the year.

I have a kid that wants to work for me this year and I am at a point where I need a full time helper now. He will be out of school in a few weeks and he turned 18 a few months ago. I want to have my accountant set up a payroll for me and pick up comp through my insurance company.

I am having trouble finding out exactly what is required by me though. I am acting as a sole proprietor right now, will I need to get an EIN or can I continue to just use my SSN? How much should I expect it to cost me to have a guy on payroll making 500-600 bucks per week?

I am sailing through uncharted territory here, and I want to make sure everything is legit. I have been working really hard to push my name and my work as top quality and people are finally responding, the phone has been ringing quite a bit this year and to keep moving upwards I need to take this step I think.
 

·
Registered
Joined
·
358 Posts
I just went through this - just hired my guy on Friday.

Something I can tell you is that in PA I couldn't get WC through a private insurer - i had to get it from the state until I had 2 years experience. It also took several weeks to get everything approved...

With that came a rate of 21 cents on the dollar for residential carpentry... Seems astronomical but my normal agent tells me he can get me rates about 50% lower after my 2 years.

Look into your state government website for more info on your particular trade. If nothing else it will give you a starting point... Good luck!
 

·
I'm The BOSS
Joined
·
1,904 Posts
You should get a EIN #(easier for payroll & taxes)

RATE = It's so much per hundred of payroll. (check w/ insurance Co.)

Don't forget you have to match taxes and other contributions,
(check w/ your accountant.)

IT'S BETTER TO DUE IT LEGALLY,THAN CHANCE GETTING CAUGHT.
 

·
water re-locater
Joined
·
7,511 Posts
The state run comp company pretty much has the monopoly in NY. I have a $650 per week guy and his comp is about $4800 a year.
 

·
Registered
Joined
·
2,556 Posts
Discussion Starter · #5 ·
I just went through this - just hired my guy on Friday.

Something I can tell you is that in PA I couldn't get WC through a private insurer - i had to get it from the state until I had 2 years experience. It also took several weeks to get everything approved...

With that came a rate of 21 cents on the dollar for residential carpentry... Seems astronomical but my normal agent tells me he can get me rates about 50% lower after my 2 years.

Look into your state government website for more info on your particular trade. If nothing else it will give you a starting point... Good luck!
How do they know your experience level?

I have 3 years worth of self employment tax history, NY probably isn't the same anyway.
 

·
Registered
Joined
·
358 Posts
sitdwnandhngon said:
How do they know your experience level? I have 3 years worth of self employment tax history, NY probably isn't the same anyway.
I think it refers specifically experience with workers comp.

Have you called your insurance agent? Mine had a fairly good understanding of the state system.
 

·
Registered
Joined
·
3,196 Posts
They base it on industry averages until you can prove otherwise. Expect 0 customer service while in the state pool. I am pretty sure how it works is the state makes insurance companies take pool employers as a requisite to selling policies in the state. They do not want you as a customer in the first place and they could care less about you. You also get stuck making way higher deposits or worse yet have to pay in full upfront. Because of our years in business we are now in a program where we pay weekly based on each weeks payroll.
 

·
Registered
Joined
·
2,556 Posts
Discussion Starter · #8 ·
The state run comp company pretty much has the monopoly in NY. I have a $650 per week guy and his comp is about $4800 a year.
I am terrified about the rate I might get. About 5% of my work is chimneys, and about 10% involves scaffolding.

How you do you pay it? Do you have to do it monthly, or quarterly?
 

·
Registered
Joined
·
3,005 Posts
Do yourself a favor and call onadaga employee leasing. They used to do construction workers and it is easy to get started.

They are a local firm and can handle payroll with W?C in weekly payments. much easier.

Good luck.
 

·
water re-locater
Joined
·
7,511 Posts
sitdwnandhngon said:
I am terrified about the rate I might get. About 5% of my work is chimneys, and about 10% involves scaffolding. How you do you pay it? Do you have to do it monthly, or quarterly?
I pay it monthly. Based on wages so they might make you keep track of hours on roof or scaffold etc. or they might just hammer you like they do for roofing Go on nysif.com if you already haven't
 

·
Banned
Joined
·
2,247 Posts
The problem with the state run workers comp in California (probably other states, also) is they are real bstd's. I had to use them for several years and they cancelled and raised my rate for the dumbest things.

One month I had no payroll to report and I didn't send them my monthly report because I was in the Philippines. They cancelled my worker's comp and when they re-instated the policy they tacked on a 25% increase.

Worker's comp can be very difficult to get and I think there are some national insurance companies you can get out-of-state. Try Towers Insurance since that is the company I use and they seem to have the best rate.

Always get quotes from no less than two insurance brokers and don't waste your time trying to get insurance on your own by contacting the best-known insurance companies.

One thing you need to do with worker's comp is make sure you send in your monthly payroll report on time, or quarterly.

You have to remember that there is a premium for the policy and at the end of every year the insurance company audits your books and may get a bill for several thousand dollars when your payroll is higher than the premium you paid.

One way around paying worker's comp is to make an employee or relative a partner or officer in your company. Workers comp insurance companies don't like to insure partners and officers because they consider that partners and officers of companies work 24-hours a day. Put another way; a partner or officer could be on their way to their golf course at 10 a.m. on Sunday morning, get into an accident and say they were on their way to a service call or an estimate.

Another thing you need to remember about workers comp is to make sure you exclude your partners and officers both when filling out the application and when reporting your payroll. This is where you need to pay special attention to what your bookkeeper is doing because he (or she) may report to workers comp your entire payroll for a period and forget to exclude non-insured partners and officers. Workers comp will charge you based on your total payroll and you will lose thousands.

You have to put their employee notice poster on a wall in your shop and this has to state the exact name and location of a doctor or medical clinic your employees can go to when they have an accident.

Workers comp has what they call a modifier. The worker's comp rate for construction workers in California is 35% of the gross payroll. Then, when your employees have been good boys the workers comp companies apply a modifier to your rate and they multiply this modifier times your rate to give you a discount. In the end, if you have no claims you will pay a rate of about 16% of your gross payroll. When you have even one tiny claim your modifier kicks in because the insurance companies are greedy, they know they can get away with it and your rate is increased probably no less than 20% and as much as 100% (double).

These are only my experiences! Check with your accountant, CPA or insurance company regarding making employees partners and officers. I have been doing this for several years because I really do have several officers in my company, have been audited every year and have never been questioned.
 

·
Registered
Joined
·
7,076 Posts
Call a local employee leasing/payroll service/temp agency, and see if you can hire your guy through them. They will give you a bill that might be double the nominal hourly rate that the employee sees, possibly more.

If your evening and weekend time is worth more than 50 cents an hour, that outrageously high number will be less than the total cost to you of employing the guy directly. And you'll go to sleep at night knowing that things have been done right.
 

·
Super Moderator
Joined
·
24,668 Posts
To answer your original question...

Workers Comp is expensive, a pain in the arse & audits suck...

but it is a necessary evil....just don't cheat when reporting...
 

·
Been around
Joined
·
1,151 Posts
Comp is easy. In New York you will likely find yourself using the State Insurance Fund, but there are some private risk groups around. Probably you won't meet minimum premium requirements that a lot of them have.

I am pretty sure a new policy in New York will run around $2500 to establish if your estimated payroll x the comp rate for your classification doesn't exceed that. You will pay 50% down and have two more payments of 25% due at 3 and 6 months.

Within a couple months after the close of the policy period they will send an auditor to look at your payroll and basic company financials like sales. If your annual payroll x your rate class is more than the $2500 then you will have additional billable premium due. If it is less you will get a credit. Credits can be requested to be applied to your current policy or refunded by check.

If you decide to employ as opposed to leasing, keep in mind that that government reporting of wages and with holding and unemployment and the the like aren't to be taken lightly. Penalties and interest are severe for late filing or non-compliance.

Get set up properly with a payroll service or accountant or learn the requirements yourself.
 

·
Registered
Joined
·
2,556 Posts
Discussion Starter · #17 ·
Call a local employee leasing/payroll service/temp agency, and see if you can hire your guy through them. They will give you a bill that might be double the nominal hourly rate that the employee sees, possibly more.

If your evening and weekend time is worth more than 50 cents an hour, that outrageously high number will be less than the total cost to you of employing the guy directly. And you'll go to sleep at night knowing that things have been done right.
That is probably a good idea for this situation, I will look into it. He will only be working for me from June- August.
 

·
Talking Head
Joined
·
5,388 Posts
Call a local employee leasing/payroll service/temp agency, and see if you can hire your guy through them. They will give you a bill that might be double the nominal hourly rate that the employee sees, possibly more.

If your evening and weekend time is worth more than 50 cents an hour, that outrageously high number will be less than the total cost to you of employing the guy directly. And you'll go to sleep at night knowing that things have been done right.
I've found several agencies that offer a discount if YOU supply the employee. They also don't have the crazy "buyout" if you want to hire the employee and run them through your own payroll. I currently pay my helper through an agency as they handle everything, he works only for me, and I just email them his hours at the end of the week. My additional burden actually ends up being about $.60 per hour more but I don't have to do a damn thing. They also offer a pretty solid health insurance package(which I certainly couldn't).
 

·
Champion Thread Derailer
Joined
·
1,228 Posts
I'm not at all sure how applicable this is now, but when I worked as a project manager for a mid-sized firm in Memphis, with about 18 in-house employees, during the course of one year, we had a couple of claims filed in addition to another claim a couple of year prior. This eventually caused an astronomical jump in WC costs. We did a bit of research and found a payroll service that we joined, and by doing so we were able to use the numbers of total employees of said payroll service and ended up getting much more affordable rates on WC via some "group discount." (we also provided weeekly safety meeting, which helped with our WC rates too)

It really was a win-win, as we no longer had to deal with all involved in weekly payroll, but benefited in the WC area as well. This, however, was back in 2000-2001, so this may not be as viable now. I really don't know, as I'm now merely a 1-2 man operation with no WC claims. Sure wouldn't hurt to check into, though.
 
1 - 20 of 22 Posts
Top