Many small companies subcontract work. They do this without much thought. They might have the same guy do all their work, for many hours each week, using your tools, getting explicit direction and this person earns all their income from you.
In your eyes he his your hardworking subcontractor. Unfortunately in the eyes of many Government Insurance boards, this person is your employee. As such you would be required to register and pay workers compensation insurance. In the event of an injury, or an audit from workers compensation, you may face a fine, years of premiums due, a possible lawsuit from the injured worker for negligence. This would be of course, destructive for your business, causing you much sleep loss, anxiety, and possible bankruptcy to your small business.
So it is essential to find out how your workers compensation board views the relationship you have with your employee, make any corrections you need to to your relationship, or in the worst case begin paying exorbitant premiums to cover your employee, and your butt.
In Ontario, where I live, you have several options. You can seek, the government agency responsible to make a ruling on your relationship, or possible relationship.
I had to fill out this form for a janitorial company. To determine the relationship we would have, and whether I would be an employee (in their eyes), or an independent operator (who is not legally required to take out WSIB coverage).
Fortunately I was viewed as an independent operator for this instance. This is the form you fill out with the contractor, or if you are the contractor, you would fill this out with your subcontractor. You would sign it, and bring it to WSIB with the subcontractors invoices for other jobs he did, his business registration, a copule of invoices of supllies he bought, showing that he buys his own tools/supplies.
I did that an brought it to 200 Front St, Downtown Toronto. This is the form.
http://www.wsib.on.ca/wsib/wsibsite.nsf/LookupFiles/DownloadableFileIndependentOperator/$File/1158.pdf
What exactly is an independant operator in Ontario. This pamphlet, prepared for construction contractors, clearly shows what makes one an independent operator.
http://www.wsib.on.ca/wsib/wsibsite.nsf/LookupFiles/DownloadableFileConstructionIndependentOperators/$File/ConstIndOp.pdf
So what is an independent operator in Ontario?
offers services to various firms
• reports to the government
as a self employed business (Canada Revenue
Agency/GST)
• owns and operates his/her equipment.
I know this post may look only relevant to Ontario residents but it is vitally important to make sure that if you hire subcontractors that your government's workplace insurance board views it as such. If not, you may face crippling fines, and possible bankruptcy.
In your eyes he his your hardworking subcontractor. Unfortunately in the eyes of many Government Insurance boards, this person is your employee. As such you would be required to register and pay workers compensation insurance. In the event of an injury, or an audit from workers compensation, you may face a fine, years of premiums due, a possible lawsuit from the injured worker for negligence. This would be of course, destructive for your business, causing you much sleep loss, anxiety, and possible bankruptcy to your small business.
So it is essential to find out how your workers compensation board views the relationship you have with your employee, make any corrections you need to to your relationship, or in the worst case begin paying exorbitant premiums to cover your employee, and your butt.
In Ontario, where I live, you have several options. You can seek, the government agency responsible to make a ruling on your relationship, or possible relationship.
I had to fill out this form for a janitorial company. To determine the relationship we would have, and whether I would be an employee (in their eyes), or an independent operator (who is not legally required to take out WSIB coverage).
Fortunately I was viewed as an independent operator for this instance. This is the form you fill out with the contractor, or if you are the contractor, you would fill this out with your subcontractor. You would sign it, and bring it to WSIB with the subcontractors invoices for other jobs he did, his business registration, a copule of invoices of supllies he bought, showing that he buys his own tools/supplies.
I did that an brought it to 200 Front St, Downtown Toronto. This is the form.
http://www.wsib.on.ca/wsib/wsibsite.nsf/LookupFiles/DownloadableFileIndependentOperator/$File/1158.pdf
What exactly is an independant operator in Ontario. This pamphlet, prepared for construction contractors, clearly shows what makes one an independent operator.
http://www.wsib.on.ca/wsib/wsibsite.nsf/LookupFiles/DownloadableFileConstructionIndependentOperators/$File/ConstIndOp.pdf
So what is an independent operator in Ontario?
offers services to various firms
• reports to the government
as a self employed business (Canada Revenue
Agency/GST)
• owns and operates his/her equipment.
I know this post may look only relevant to Ontario residents but it is vitally important to make sure that if you hire subcontractors that your government's workplace insurance board views it as such. If not, you may face crippling fines, and possible bankruptcy.
2 comments:
My wife is an accountant, so I know you are right. The IRS doesn't like it when you violate the spirit of the law or the letter.
Hey Don! Great to hear from you. (3 years to reply to comments...:() ) Yes government agencies are a pain to deal with.
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