Worker Compensation and Liability


#1

New to business side of things. I have been exploring liability and worker compensation insurance rates. I will be employing 5 people, so lower level company at first. Appreciate any advise on insurance, especially worker compensation and hopefully a lead on a good provider. My business will focus on roofing, siding, and windows. Business in Michigan. Thanks


#2

My advice to you , since you live in southern Michigan, would be to hop over the line and do business in Indiana or Ohio, whichever you are closer to.

Bad time to be starting a roofing business in Michigan, let alone having 5 employees!!!

I don’t want to discourage you but,

DON’T DO IT !!!


#3

workers comp run me about 1000.00 a week in alabama,7 man crew working 7 days a week,worked out to be 10%,Have paid as high as 40%.Most local better home builders associations provide members some of the lowest rates ,but I agree with G,its a slow time of year for most,just make sure you put some money back for hard times.


#4

Since you asked…

WC, 49.9 % and I never had a lost time claim.
Laib., 23.5% and I never had a claim.

another good one is Unemployement taxes, right now, any seasonal or construction trade pays the highest possible tax, which is 10%

Don’t forget SS, 7.5%

Oh and that WC % includes the guys bonuses, vacation pay and any other money you give them, regardless if they are working or not.


#5

Very bad idea this tim eof the year and in michigan. I wish you good luck but to be honest you really dont have much of a chance when the snow flys to stay open let alone busy. Cut throat and cheap will be something normal when you bid.

I do have a question tho, Why on earth would you open up in November?

Im from Michigan btw. North of detroit.


#6

Thanks for the replies. I will check with builder associations in the area and thanks for the stats. Real concern from all on new business. I do appreciate that and it will be a struggle…no doubt about it. I have planned on it.


#7

How do you guys calculate your workers comp. In Ontario, Canada we pay almost 13.00 dollars on every 100.00 dollars earned per man. I see the 50% number thrown out in an earlier post. We can be assessed penalties for loss time injuries.


#8

Comp and liability rates vary by region.
My comp rate is 46.9% of payroll and hasn’t changed for years…
Liability is 17%.
I have never made a claim on either.


#9

[quote="-Axiom-"]Comp and liability rates vary by region.
My comp rate is 46.9% of payroll and hasn’t changed for years…
Liability is 17%.
I have never made a claim on either.[/quote]

basically the same here.


#10

I have been a bookkeeper in the construction business now for 15 years, my personal experience would encourage you to consider the following.

Until you get a true income coming in generated from your business, you might want to consider not hiring roofers as employees but instead having them fill out a W-9 form stating they are an independent contractor making them responsible to self insure. That way you can agree to an hourly fee, which should be quite a bit higher than what you would pay them if they were employees because they will be responsible for their own taxes, state, federal SS and so on. This also relieves you in responsibility in unemployment fees in the off seasons and during slow times.

At the end of the year you have your accountant, yes - you will need one, send a 1099 form to all your paid independent contractors who have made more than $599.00. The accountant will also send this information to the IRS when she does your year end taxes.

You will only have to worry about carrying your independent contractors on your general liability insurance then, covering your clients for damage they may cause.

If this doesn’t appeal to you, your insurance company may be able to lump you in with other companies so that all together you will be able to get lower worker’s comp rates.

In either case I suggest you do 3 things before you start. Talk to an attorney, get a good accountant, and search for a good insurance agent. I know this sounds expensive, and it will be before it’s all over. But is a necessary evil to protect your personal belongings, even your spouses income, if something bad were to happen.

The one thing that can help the costs in the beginning before you choose these professionals, is that attorneys and accountants will usually do a free consultation in the beginning. See everyone you can pull out of the phone book. That way you’ll get a good idea of practical prices for their services and also you will get a real good idea of what is the truth and what is a bunch of malarkey from crooked or inexperienced people in these professions. It should give you a good look at what is really necessary in owning your own business.

I know it sounds daunting, but it can be done. I work for 3 men right now that own 3 corporations together and are starting to add a 4th. They make a nice little fortune apeice. They get hit pretty hard in small business taxes, but there are legal “maneuvers” like running all personal insurance, vehicles, and things of that nature through the company to save alot on taxes.

What ever you decide I truly wish you the best, and admire your courage.


#11

[quote]

Joined: 01 Dec 2007
Posts: 2

PostPosted: Sat Dec 01, 2007 2:40 pm Post subject: New business worker’s comp concerns Reply with quote
I have been a bookkeeper in the construction business now for 15 years, my personal experience would encourage you to consider the following.

Until you get a true income coming in generated from your business, you might want to consider not hiring roofers as employees but instead having them fill out a W-9 form stating they are an independent contractor making them responsible to self insure. That way you can agree to an hourly fee, which should be quite a bit higher than what you would pay them if they were employees because they will be responsible for their own taxes, state, federal SS and so on. This also relieves you in responsibility in unemployment fees in the off seasons and during slow times.

At the end of the year you have your accountant, yes - you will need one, send a 1099 form to all your paid independent contractors who have made more than $599.00. The accountant will also send this information to the IRS when she does your year end taxes.

You will only have to worry about carrying your independent contractors on your general liability insurance then, covering your clients for damage they may cause.

If this doesn’t appeal to you, your insurance company may be able to lump you in with other companies so that all together you will be able to get lower worker’s comp rates.

In either case I suggest you do 3 things before you start. Talk to an attorney, get a good accountant, and search for a good insurance agent. I know this sounds expensive, and it will be before it’s all over. But is a necessary evil to protect your personal belongings, even your spouses income, if something bad were to happen.

The one thing that can help the costs in the beginning before you choose these professionals, is that attorneys and accountants will usually do a free consultation in the beginning. See everyone you can pull out of the phone book. That way you’ll get a good idea of practical prices for their services and also you will get a real good idea of what is the truth and what is a bunch of malarkey from crooked or inexperienced people in these professions. It should give you a good look at what is really necessary in owning your own business.

I know it sounds daunting, but it can be done. I work for 3 men right now that own 3 corporations together and are starting to add a 4th. They make a nice little fortune apeice. They get hit pretty hard in small business taxes, but there are legal “maneuvers” like running all personal insurance, vehicles, and things of that nature through the company to save alot on taxes.

What ever you decide I truly wish you the best, and admire your courage.[/quote]

A lot of good info there.
Welcome to the roofing forum Joanna, great post. :smiley:
This answers a couple current threads…


#12

Joanna,

Good info there…I do have one question though. Even if you do pay your roofers on a 1099 don’t they still need to have there own workmans comp policy? From what I am getting from my agent is that if they don’t and I don’t have certs on them I have to pay the premiums on it…which in MO is about 30 on every $100.

Thanks again for the info and I look forward to hearing back from you.

Jeremy
H&H Roofing


#13

Jeremy,

The business I work for in Ohio owns a cooler/freezer company in Michigan. We have a couple people working for us under the “Independent Contractor Status”. Both of them have filed a W-9 with us. We don’t carry worker’s comp or unemployment insurance for them. We also don’t have to contribute the social security or medicare coverage on these employees. We do carry liability coverage because if they screw up our plant we want to be covered. Also we have liability coverage covering our sub-contractors, which is what they are, because if they damage something at a job site we are covered. On a job site the customer’s contract would be with us and not them and we would be liable to our customer.

The best advice I can give you is consult the professionals. A lawyer, accountant and a good insurance person.

I will say talk to more than one. An insurance person wanting to sell you worker’s comp coverage may not want to tell you a way to get around it.

Also the one thing I can tell you that is absolutely correct is that, don’t ever try to use common sense in insurance or tax matters. It is impossible. Never assume anything.

There are small business associations in Michigan that will help you for free with advice in starting a new business. They give advice only, you don’t have to open your books to any one.

When we started the business in Michigan we didn’t know our hindends from a hole in the ground. Ohio and Michigan are so very very different. The suggestions I have made to you were the steps we took.

Again best of luck,
Joanna


#14

In Alabama ,I can get a card from the Department of Labor that states I am exempt from workers comp by signing a waiver.State law allows employers up to 7 employees before workers comp is mandatory.Alabama Independant Contractor Waiver, click here, However, most contractors and builders require roofers to have workers comp if they are a sub.It is my experience that without workers comp ,work is limited to jobs that I sell and Residential work.Also, even if I have workers comp ,I cannot get workers comp for myself,only for my employees.In other words, workers comp is for employees not employers so I’m exempt anyways.

click here for all states.

Arnold Swarzenneger kicking workers comps Arse in California

Lousiana Home Builders get 2 million back from workers comp.


#15

I would like to say that each and every state has different laws and requirements about worker’s comp. Some states are self insure states like Michigan, and other states are state insured like Ohio.

It has been my experience that in every state there is a way to legally get around having to pay for employee worker’s comp. Hiring independant contractors who are responsible for their own coverage, etc.

Now I would like to add as a final comment,

When I started telling the gentleman starting a new roofing business in winter ways to get out of having “employees” and carrying them on his insurance, I was suggesting something that I feel should be a short term fix. Things to do to start a business until you get revenue and steady customers and a work history that can win you big bids. It’s expensive to start a company, and sometimes you have to start small under less than perfect circumstances to get the ball rolling.

I believe that a company should cover all thier employees under worker’s comp, on their liability insurance, for unemployment, and give health benefits. I believe most people that start business want to do these things. It’s also been my personal experience (and maybe I’m just lucky) that most employers feel the same way. Not only because it covers their butt leagally, but also because they value and respect the people that work for them.

So, again, I have not suggested these things as a permanent way to do business. All states are different. And finally, do not take my word for anything, just take my suggestions as something to look into with the professionals in your area and jurisdiction.

Also, don’t forget, not only do you have insurance requirements to think about, but also tax issues. Most states have requirements about registering new businesses also. So research, talk to the professionals (taking advantage of their free consultations), and very best of luck to anyone with the guts to try.


#16

yeah i’m a small operation in Pittsburgh and i can tell you that the only way i can get comp is through the state and they want a % up front and the rest is about %38 so i’m partnered up with just 1 guy he has his company and i have mine the down side is that we do all the work and some of the bigger companies that sub work out don’t wanna hire us to do jobs because their scared that we won’t be able to handle the load luckily i’m riding on a good name with the local supplies (allied) mainly, but what i do right now works for me (we both have our own contractors liability) not sure i grew up doing this so maybe i’m doing something wrong i’d love to have a 4 to 6 man crew but i’ve yet to see it in a residential roofing company in Pittsburgh the comp I’ve seen was an 062 which is remodeling comp and its not real roofing comp and its auditable at the end of the year