When working for someone else’s company, Should I start an LLC to be able to be a contractor for the other company? Or is it standard for the company that I work for to assume liability insurance etc…
thanks!
How you organize your business (LLC, Sole Proprietor etc.) will be a personal decision between you and your lawyer and accountant. It has nothing to do with the insurance.
Do not assume anything. Ask those questions before beginning work for the company.
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It all depends on how the employer is hiring you…
Are you being hired as am employee? Or as a sub- contractor?
I haven’t looked yet, but I was wondering what the standard is. From what I gather most people start a business, rather than work for someone.
In the online courses it suggests to hire sub contractors instead of having employees
From an employer’s perspective, I would agree with that. It is safer and cheaper for them.
But some prefer to hire employees, which would then require that they pay for your liability insurance, worker’s comp, and maybe even tools and fuel. However, that also means less take home pay because of that.
There are pros/cons to both options. Do you want to be responsible for your own insurance, your own taxes, your own tools? (subcontract)
Or do you want to not worry about any of that, and just go where they tell you everyday, collect your paycheck, and have no other responsibilities?
It really depends on the employer, not on you. You would have to accept whichever option they give. (Unless, of course, you start your own business)
And very importantly… YOUR OWN SCHEDULE?
If they tell you where and when to be somewhere, YOU ARE AN EMPLOYEE.
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An employer has a huge amount of risk hiring someone as a subcontractor when the State rules define them as an employee. If the subcontractor/inspector falls off the roof and is permanently disabled, his wife only has to look at a billboard on any highway with the caption “hurt when at work??” I know a construction employer who had that exact situation happen and despite being an LLC, he lost both his business and personal assets in the settlement. Juries and the law are very sympathetic to the “subcontractor” who is State defined as an employee, and unsympathetic to the employer.
From the subcontractor side, have you checked into the cost of disability insurance? Will your health insurance cover you if you get hurt at work? You also need liability insurance and E&O insurance. You have to pay all your taxes, including employer paid taxes, such as matching social security. Do you know what your tool and vehicle expenses are that are a component of your overhead? What does your spouse think about the risks of lost income during rehabilitation from an accident?
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They wouldn’t be an employee. That’s the whole point. It’s much safer for the “employer”, because they aren’t responsible for anything that they would be with employees.
As long as they are making payments to a business entity.
Just like a builder paying individual subcontractors. They are not responsible for those taxes and insurance, as long as the subs have their own insurance.
Is this non-employer allowing the inspector to work for other companies? Is the non-employer scheduling the inspections or is the inspector?
If the inspector is not allowed to inspect for anyone else than they are an employee. If the employee is not scheduling the inspections directly with the customer, they are an employee. At least that is the way it is figured in Iowa.
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You should talk to your State work comp / unemployment insurance department. Everything works fine for all parties with this subcontractor arrangement until it doesn’t. I personally have been through this quagmire a number of times. The rules are in favor of the individual subcontractor being reclassified as an employee if any one question exists, not in favor of the company owner. Do an internet search, “subcontractor vs employee rules”. My direct experience for defining subcontractor vs employee was through UI and WC obligations as a building contractor, including appeals.
That varies from State to State!
Florida is a heck of a lot different than Minnesota.
(You better be praying your controlling political party stays the course, or you may get the shock of your business life)!!