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Discussion Starter #1
Hi All.

I started my licensed home improvement / contractor business less than 2 years ago. Firstly, I would like to say that I feel so lucky that I have been able to generate some income since day one, specially considering that COVID put a stop to many businesses including contractors. I hardly have enough business to hire a help, not even part-time, however, every once in a while, I have to turn down jobs (money making jobs) that are too big for my to handle by myself, requiring a second hand and not necessary even skilled hands. In my state (MD) I am required to carry workers comp if I have an employee. I just did an online quote and I am quoted $220 a month for workers comp! .. That's a lot for me! and for that rate it is not worth for me to take on those bigger jobs.

My questions are:

Is $200/month ball park amount for workers comp?
I have seen ads saying that you can buy buy business/ WC insurance hourly or as needed. Any ideas if they legit and acceptable?
Any suggestions?

Thanks all.
 

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Paying as needed your paying 3x over. Never looked for it hourly or monthly. Buy it yearly & make real money. Otherwise your limited

Mike
 

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You can hire helpers through a temp agency. Kind of a crap shoot on who they may send you but if you just need a set of unskilled hands it works. The temp agency will cover the workmans comp and payroll, ect since its thier employee and just bill you for the hours you need the helper. Not necessarily cheap but the cost gets passed on to the client.

Cant speak for MD, but i know here in CA it costs me about $25-$30/hr for unskilled laborers with no tools (the laborers are making half of that, temp agency takes half). Semi skilled cost a little more. Temp agency takes care of all the WC, payroll, tax compliance stuff, ect. I can fire a helper in the first 2 hrs for any reason and not be charged but if i keep them they charge a 4 hour minimum. Not too bad for a second set of hands but can be a crap shoot on who you get. If you get a good worker you can request them again but they ussually get hired directly pretty quick.

Other option is to find another licensed contractor to sub to. Again, not sure of the specifics in MD but here in CA i can sub to another licensed contractor. Not as cheap but for skilled help its the best and easiest way. The sub is responsible for thier WC or exemption and you just 1099 them. Can work out an hourly or flat rate that way. Always good to have another contractor to share work with or team up with on larger projects.

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I have had temps before and if you only need help now and then is the way to go , if you are only needing labor. It is always chance on the help you get. Place I use gives me a 4 hr trial , if they don't work out can sent them packing with no cost to me.
 

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$200 a month is about what I am paying. If you have an accountant they may be able to get you into a group to save you money. I pay an annual fee to be part of a much larger group. Apparently it saves me money. I have no idea about workers comp hourly.

Let me ask you this:
If you had an employee how much more work could be accomplished? Could you complete more jobs in a week? Could you take on more bigger jobs like you say? Do you think you keep an employee busy fulltime? while maybe not at the moment as you say but could do you think you could get more work if you went after it? If you think you can justify the thought of having an employee then the cost of Workman’s comp would simply become part of your overhead, along with SS contributions etc. That increased over head will then be spread over the hours you plan to work over a week or month etc. Ultimately the cost is passed on to the customer.

I started by myself and worked my way to having three employees, now I take on work that there was no way I could handle by myself. Employees can be profitable but they come with their issues too.

Is there another self employed contractor like yourself who you could call upon when needed and in return he calls upon you?
 

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I pay $6.35 per $100 of payroll in MA. Your best bet is to find a sub to work with you when needed on the bigger ones. The right one may even throw you the smaller stuff they don't want to do. I have 3 guys and you will be surprised how quickly things pickup once you have the manpower. Once people know you can take on the bigger stuff you get a whole different set of clients. Good luck, 2020 has been a crazy year for owning a business in general.
 

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Discussion Starter #7 (Edited)
I pay $6.35 per $100 of payroll in MA.

Trying to understand this. So your hires are part time and use them as needed? Example, you call one and of the guys for a 10 hour paint job and pay him $10 an hour and at the end of the month you report to your insurance that you had a payroll of $100 for that month and they send you a bill for $6.35?
 

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I think it works that way in most states. The riskier trades pay a higher per hour rate than the less riskier ones. In Ohio, we also have a few companies that "self insure" through workers comp. These have to be large business's that are capable of handling their own claims. I am part of one such group. Years ago, when I first started my business, I was paying $18 per $100 payroll for the first two years. After that. I was able to be "group rated", which meant I qalified to get into a group for a reduced rate. I was in with the local HBA for several years before switching to the group via my payroll company.

The state of Ohio still keeps a separate rating for every business, so if I ever leave my current group, I can go back to getting coverage through the states fund. It is a complicated system, that really penalizes new business's, but I think once you get past that first two years and prove to be safety conscious, you benefit.
 

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Not really, I have 3 full time employee's, for every $100 I pay them I pay $6.35 in comp. I have to pay this monthly based on last years payroll and they either bill me if I owe or send me a check if payroll is less. I get audited yearly and any sub's that I don't have certs for I pay the comp on them. Comp rates are based on accidents , so a roofer's comp is much higher than a painter.
 

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Hi All.

I started my licensed home improvement / contractor business less than 2 years ago. Firstly, I would like to say that I feel so lucky that I have been able to generate some income since day one, specially considering that COVID put a stop to many businesses including contractors. I hardly have enough business to hire a help, not even part-time, however, every once in a while, I have to turn down jobs (money making jobs) that are too big for my to handle by myself, requiring a second hand and not necessary even skilled hands. In my state (MD) I am required to carry workers comp if I have an employee. I just did an online quote and I am quoted $220 a month for workers comp! .. That's a lot for me! and for that rate it is not worth for me to take on those bigger jobs.

My questions are:

Is $200/month ball park amount for workers comp?
I have seen ads saying that you can buy buy business/ WC insurance hourly or as needed. Any ideas if they legit and acceptable?
Any suggestions?

Thanks all.
You're looking at this from the wrong angle... most everyone does at the beginning, so you're not alone...

If you hire subs who have employees, for example, or use material suppliers, who do you think pays their WC? YOUR CUSTOMER does through you... they do what you would do, pass along the expense to the customer...

It's no different than you charging the same customer for the employee you want to hire (which is going to be much more than $220/month or $55/week)... If you hired on a FT employee, where do you think their salary is going to come from? The same customer...

In your example, based on 2080 hours/year (40/hours/week), even if you couldn't get a lower rate, that works out to only $1.25/hour... and guess what? Even IF you used a temp agency while getting used to employee costs before hiring someone FT, guess who's paying for the WC? Yep... the same customer...

Getting out of the mindset that YOU'RE paying for WC is critical here... just like with every other expense... subs, suppliers, taxes, etc., you're not paying for it, the customer is... your PROFIT margin should not be affected in the least by taking on an employee or WC... don't confuse PROFIT (what you pay your company to develop things like 3-6 months of Capital Reserves, Emergency Fund and Equipment Fund) with what you pay yourself after everyone else has been paid... what you pay yourself should already be in the mix...

The challenge for most starting out, is the belief that everyone is their customer... longterm, they're simply not... only the customers that can support what you need to charge to be in business are... to put it in perspective, unless you're in starvation mode, I guarantee you there is someone in your market that will charge a customer 10-15% LESS than what you charge or conversely, a customer who wants to give you 10-15% less than what you need to make a living... as a business practice, would you then REDUCE your income by 10-15% to "compete" (because that's the only place it can come from [YOUR pocket] because everyone else still expects to be paid) on a regular basis, or focus your efforts on finding the customers that can support what you need to charge to be in business?

PROFIT insulates you to a large degree from having to be in starvation mode and taking on customers that will steal that insulation and lead you down the path of the race to the bottom and of robbing Peter to pay Paul cycles... but it's important not to confuse PROFIT with what you pay yourself (that should delineated and covered under Labor or Overhead)...

LOMP... Labor, Overhead, Materials and Profit...
 

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200 bucks a month for workers comp? thats crazy talk there is no way?
I think I'm at over 18k for w/c this year add another 20k for liablity and a bunch of other nonsense insurance
take it from me pay cash under the table the risk out weights the money down the toilet drain seriously
don't waste time with taxes legit employees unemployment paid holidays clowns all got one this week that was like pissing away 70 hours instantly for what? and PTO that's dumb too why would you reward people with 40 80 or 100 hrs off pay day is one of the worst days for me it's like watching money evaporate ten grand poof then the irs wants a check a week later it seems
all cash all under the table white envelopes next thing you know you got grey hair your working six days a week and buttering customers up all weekend just trying to reach into the purse
it's ugly so ugly
 
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