View Full Version : Workers comp! Ughh!

03-17-2002, 06:06 PM
Last year I paid out a whole 3,000.00 in wages, my workers comp was 750.00 , and payroll service 600.00. That seems a little crazy. Let me tell you about the help, basically what I have is no reall employees I guess. What happens is a freinds who are off or just bored go with me to cut here and there, no schedule just spur of the moment stuff, its not there real job and they dont count on this money.....What solutions if there are any, do I have to avoid paying workers comp and payroll to these people??????

03-17-2002, 07:49 PM
WC is usually a percentage of wages and your looks high. Ask your agent for the rate and get an audit done. I don't hink there is a minimum. If you don't pay anyone over $600 then you don't have to do the payroll stuff, they have to do it on their own.

03-17-2002, 07:57 PM
That workmans comp # seems REAL high

03-17-2002, 09:33 PM
I would speak to your accoutant.

03-17-2002, 09:57 PM
Each state has its own WC laws & regulations. Here in NJ the minimum state mandated premium is $850.00 for around $16,000.00 in payroll. So if you were here in your case, you'd be paying $850.00, hopefully that helps you feel better about it? ;)

As far as the costs involved, you have to adjust your pricing to reflect those costs, even though the help is only part time. It is probably better to pay the WC & the payroll service than have one injury or one audit really cost you a lot.

03-18-2002, 12:35 AM
Indiana minmium is 750.00 for 7500.00 in wages. I am wondering if these people could fsll into a sub contrator status and do a 1099 on them? What is the classification of a true employee, really they are not true employees....

03-18-2002, 10:16 AM
Originally posted by eggy
Indiana minmium is 750.00 for 7500.00 in wages. I am wondering if these people could fsll into a sub contrator status and do a 1099 on them? What is the classification of a true employee, really they are not true employees....

If you control the work, furnish the equipment, tell them what to do, when to do it, etc. they are probably an employee, whether they work for you for 1 hour or 1,000 hours. The $600 is not a fact.

Yes, you can give them a 1099 but it probably is not correct. If you have an accountant or tax preparer ask for their guidance.

I doubt that very many people in this business have anyone work for them who is not an employee.

There are a lot of people using legitimate subcontractors and using 1099's, but these are payments to people with their own businesses and equipment and other customers, not the guys that are running your mowers.

The IRS has a 25 point test for determining if a person is an employee or independent contractor. The points I mentioned above are among them.

03-18-2002, 11:21 AM
Sounds to me like you don't really need folks to help you. I would just kick'em a few bucks under the table myself.

03-18-2002, 11:39 AM
In Ohio, if you read the BWC form small print, you are supposed to add in "casual" labor into the BWC calculation on top of your "other" wages. This means you should calculate it on ALL wages paid.

Read the fine print - and ask for tax advice. What you choose to follow is your choice.

You are a small business owner who must decide at what point you need to do certain things - since it is not feasible when you start out to follow every government guideline for everything you do. Are you following OSHA and DOT guidelines yet? You must grow your business - and this will require that you pick and choose where you apply your very limited resources. As you grow and your risk increases, you'll protect yourself and your company by following the "necessary" rules/laws as you see fit. Depends on how averse to risk you are as to when you do certain things - such as WC or general liability. For instance - we will pay no one under the table. If anyone asks for it, the plain is answer is NO. It's not a policy of our company. Should this be everyone's policy? No, since every company is different. You just have to decide what is important to you - and usually your bottom line to some degree dictates what you can and can't do.

scott's turf
03-18-2002, 01:19 PM
Save yourself $600.00 and do payroll yourself. Trust me it is not that hard. Set up a excel sheet and plug in the hours and out will come the net pay and taxes withheld.

03-18-2002, 10:37 PM
Since they are friends, and being only $3k, I'd pay out cash myself. Paying income tax on that extra 3k of reported profit is alot cheaper than what you're doing.

Also, for much less than $600 you paid for payroll service, you could buy Quickbooks and subscribe to their basic payroll service, download updates, and withold correctly... if you didn't want to pay cash.

03-19-2002, 08:38 AM
If you are only using occassional labor from "friends", you can find yourself paying high dollars to meet the minumum premuims for workers compensation insurance. Payroll can be done in house, or through a service, however, those services have minimums as well. (funny, we all say that we need to have minimum charges, and perhaps high ones, then complain when an insurance co does it to us).

One way to get around this, and stay legal as well as protected, is to run your occassional helpers through a temp agency. It is a process called employee leasing.

You would have your friend become an employee of a temp. service (Manpower, LAbor Ready, Spherion), and then you work him through the temp. agency. You will pay a flat rate per hour to the temp agency, then they will pay the emoloyee, prepare payroll, withholding, and cover the employee with workers compensation coverage.

It is generally less expensive to carry your own workers compensation insurance and hire a payroll service than it is to go through one of these companies, if you are paying enough to exceed the minimum costs with insruance and payroll.

If you are only using employees for a very limited amount of time, these serives can be more cost effective.

What ever you do, do it legally. I don't care how good of a friend your employee is, if he gets injured, or worse yet disabled, he will want compensated. I have heard too many stories of contractors (not just lawn) hiring friends, and the "plan" was in case of an injury, the story would be that he was working at his own home, and was injured, then his major medical would conver the expenses. The problem happens when the ambulance or police or fire department get involved, and the insurance company reads their report... IT HAS HAPPENED.