What do you do to cover yourself?
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I cover myself by NOT hiring uninsured subs.
Don't hire them.
You miss 100% of the shots you never take."
Wayne Greztky
in RI , any sub with employees has to have GL & WC.. any sub with no employees is not eligible for WC, so they give me an affidavit called a DWC-1IC..
my insurance company requires one or the other or they assume they are covered my my policy and charge me a premium based on their labor classification..
long story short... no insurance or affidavit.. i don't hire them..
and i still haven't got thru on your faxMike Smith Rhode Island : Design / Build / Repair / Restore
The company that issues our WC and disability insurance audits our books every year. We are charged for any sub (with employees) that cannot prove that they carry their own insurance. We do hire uninsured subs but end up paying for the insurance. We figure this added cost in our markup to the customers. Some of our best subs fall into this category.
Me too and that's the reality of the business we find ourselves in. It is extremely rare to find craftsmen who are also great businessmen so those of us who stand between them and the customer need to have the insurance to protect ourselves, the customeers and the subs, in that order. The cost passes on to the customer.
.
Excellence is its own reward!
Round here, an uninsured sub gets a percentage of their draws deducted. The amount is up to whoever hires them. Sometimes the contractor's bookeeper will also take a percentage...makes most subs get insurance! EliphIno!
You hit on my bigest problem.
I can't get insurance!
I have never had a claim, never a problem. Last year I got involved with a property management company who insisted on 2 things-WC and insurance.
WC is not a problem, although the premiums are high. But, I've been trying since September to get insurance and there is no underwriter willing to write a policy.
A whole bunch of friends are having renewals denied.
The companies are saying they were hit with 9-11 (like, what has this to do with construction?) and are reviewing everything.
I can't stop putting food on the table. I'll work without insurance and take the chance.
At my age, my fingers & knees arrive at work an hour after I do.
Aaron the Handyman
Vancouver, Canada
Call your insurance company and ask them what happens if they conduct an insurance audit and find out you have been hiring uninsured subs.
You will never do that again.
WAHD
Never staff or supply a job with uninsured subs or suppliers. The downside could put you down for a life time.
I looked up uninsured subcontractor in Websters::
un·in·sured sub·con·trac·tor View Image ( P ) Pronunciation
Key (View ImagenView Imagen-shView ImagerdView Image sView Imageb-knView ImagetrView ImagekView ImagetView Imager)
noun.1. Employee
I really can't see any other way of looking at that kind of situation.
View Image
"If you do what you always did, you're gonna get what you always got." --Yogi Berra
A friend of mine followed the practice of hiring locals and paying cash. We were working together on a fairly large job and I was a little uneasy with his situation and explained to him that not only was he risking all he had worked for, but it was also making his "payroll" non-deductible on his taxes.
So he had his guys sign up with a temp place while he put together a payroll system. The very first day his guys were legal, a bundle of steel roofing slid off a delivery truck a little off-center and one of his guys tried to align it mid-slide and ended up with a fractured toe. The hospital bill was over $1000....but his butt was covered. He's been legal ever since.
When an employee is injured and requires ER care, the first question most hospitals will ask is "did this happen on the job?"
Cover your hiney's, gang!
OK, so I am getting up to speed here. There are a couple small parts of my job where I want to bring in some "sole proprietors" that want to charge and be paid by the hour rather than for the package, and I know they are uninsured. What they want to say is that their spouses have nice state jobs and that they are covered by a nice health insurance policy, but I know that is no good for a workplace related thing. My accountant will handle this as payroll, and do checks, deductions, quarterlies, etc. So I guess what these folks need to hear from me is this: "OK, I will pay you the $NN.NN per hour you want, but your checks will be for $NN.NN times hours, less federal and state withholding, and also less FICA, and workers comp will be in the amount deducted." So that the $NN.NN will cost me $NN.NN plus maybe 15% plus my accountant's fee. What might happen is this: they guy who is getting paid in cash by others and making, say, $35 per hour, will say to me, "In that case I will need $45 per."
To which you say, "See ya around, Bud."
and, it may, or may not, be worth your while to pay the add-on.. depending on the local labor market.. that may be all that's availableMike Smith Rhode Island : Design / Build / Repair / Restore
My thoughts exactly, Mike. These little "specialties" I speak of are the kinds of work that I would never tackle myself, and there is simply no one else available, other than these couple locals that work solo, to do the tasks. Real artisan stuff.
This whole question really boils down to where the subcontractor is a sole proprietor or an employee. Leaving aside the question that this issue could always be contested in court after the fact, there are plenty of legitamate sole proprietors out there. You are not responsible for their disability insurance or their taxes.
We use an electrician who is a sole proprietor for over 90% of our electrical work and have been doing so for 18 years. We seem to have to establish this to our worker's comp insurer every few years but they have always given us a rebate on our audit which recognizes his status as a sole proprietor and our lack of responsibility ( and the insurance company's as well) for his insurance coverage. If he hires an employee and does not cover that employee, then we are responsible.
If you offered me the deal as an employee, I would snap it up. You are paying costs (especially insurance) that would give me better coverage at a lower cost than I can get myself as a sole proprietor or general partner. Also keep in mind that as an employee I would have no liability or legal obligation(though maybe moral) if there was a problem with the job, even if it was caused by a mistake that I made.
I fail to believe there are no insured/legal subs working in your area.
Maybe they just scared ya off with realistic prices in the first place?
and sole prop had nothing to do with this discussion.
I'm a sole prop and have all the necessary insurance to conduct business legally and above board.
I am however...more expensive than those without.
And I'll work hourly too, if ya want....or give a bid......no difference to me......same numbers no matter how you add or divide them out.
One more thing...hourly doesn't always mean cash......and paid in cash doesn't mean I didn't deposit it into the biz checking and declare it.
Lotsa sideways implications going on here.....
pay a crook...get a crooked job......simple enough.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
I started out as I guess most here, doing small side jobs that nobody wanted to tackle. At the time, I had no insurance or an occupational license. I charged a rate that was a little above what I was getting as an employee and things were fine.
When I decided to go out on my own, the first thing that hit me was that the cost to do business legally was pretty substantial, especially if I hired any employees. With that, I knew I had to raise my prices even if I was going to make the same money for myself. The thing is that there are many guys out there doing work that are not legal and plenty of customers willing to hire them.
I'm not unhappy with the course I've chosen as I see myself as a "captain of industry" (Ok, ok, it wasn't THAT funny!) and I don't mind too much when I'm busy, but when things get slow and my price is anywhere from $2,500 to $3,500 higher than one of these guys on the same bathroom, I get both angry and nostalgic for the simpler times when I was just an employee taking side jobs and making money without worries.
Captain of Industry....I like that.
I'm not quite there yet....
Just call myself...."A Big-Time Contractor".....
That get's their attention....
I started the same way.....just I wouldn't hire myself now!
Then again......times were different way way back then.....like 5 yrs or so! Much simpler....
I also worked for cheaper people! Used to do small/average jobs in small little mill towns.
Now....I charge lots more...and work for way richer people..doing much nicer/fancier jobs. I make lotsa more by going the legit route...costs me more to operate....but I bring in way more than before.
And..the pics look better!
Uptown is the only way to fly, in my opinion.
I can now even leave the van unlocked in the customers driveways......
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
For a newbie who has never hired an employee, tell what is required to set things up, insurance for example, and the quarterly reporting and payments, etc., etc.
Mr Micro,
This may not be complete. But.... First need to get a Fed ID number. With your Fed ID number you should be able to get State numbers for unemployment, etc. See your accountant/attorney.
Decide on business form, corp, S corp, sole prop, etc. then you need liability ins. Even if you do not hire an employee. You MAY want workers comp on yourself. Maybe just a disability policy. ( I broke my ankle on a job the first week I went full time, after 2 years PT)
The easiest way to get your tax deposits is to do a payroll service. We have been doing it for years and it is the cheapest and easiest way to go. About $100/mo. 12 employees or so. They take care of tax deposits, Fed unemployment and more that I don't want to think about.
When you hire you need a Form I-9. Directions on the back. W-4 for witholding. pplication would be nice too. lol
Probably more that I forgot.
I've done the biz setup stuff: LLC, sub S election, federal EIN, and have plans for general liability insurance. I will do one spec house or contract house job at a time, and the only items I won't sub out to people that are fully insured, are a few small specialties like tile and interior carpentry I don't feel comfortable doing myself. I will probably have a maximum of $15,000 in direct employee costs.
I'm still confused....I sun tile and trim...
and I'm insured.
I can't be the only guy in the country.
As someone that is above board...I'm hoping this bites ya in the a$$. Get what ya pay for.
Pay the dollars saved in legal fees.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Let me explain. I will not hire uninsured subs. I do have a couple "sole proprieters" who want to be paid by the hour, because they are incapable of bidding the work at a fixed price. They are therefore employees. I was asking, as someone new to payroll, WC insurance, quarterly reporting and payments, what to expect.
Then it's your use of "Sole Prop" that's been throwing me.
They aren't sole proprietors......they're employees.
My fault.
I will offer a word of caution........or maybe just a point to consider......if they do the work..why can't they figure the time needed and offer a bid?
Personally....I'd even look for someone willing to work T and M..if the job's that complicated...but what U described....tile and trim.....should be pretty straight forward? Pretty much no unforeseens or hiddens there. All the dirty work is done.
I'd be cautious. Wondering why they can do the work....but don't know how long it's gonna take.
This whole deal has me confused.
I'll go away now......
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
They worked for me before when I built my own house. Paid them weekly, cash. It is real common here. But now that I am legit, and building for profit, I want to stay clean. All my majors, sitework, foundation, flatwork, framing, roofing, plumbing, electrical, drywall, etc., have insurance and furnish certificates. But the little guys cannot, nor are they willing to read drawings, estimate, and bid. Furthermore, they need the weekly check.