# Workers Compensation



## Recon Rican (Jan 28, 2015)

What up everyone,

I am from Buffalo NY I am in the process of starting up my own business.


I have had pretty good jobs and I am making decent money, I am trying to go legit but it's very discouraging with this WC. I know it takes money to make money, but damn I hate ins.. I can see why it's so much because of the abuse, but I don't see why I would have to pay about 6G when I don't have a full time employee yet. 

I am getting mix reviews about WC. 

I guess I am just looking for some advice about WC. Why it so much, can you pay when u need it? 

for ex. 

I don't have any work this month so won't have any payroll this week. Do need WC. Can I just get when I have jobs?

Thanks


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## kiteman (Apr 18, 2012)

I'm not driving this week. Can I just get car insurance next week. I'll just need it for two weeks this month.


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## TNTRenovate (Aug 19, 2010)

My insurance guy said you can but it throws all kinds of red flags up.


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## red_cedar (Mar 30, 2005)

There are some guys on here that are from New York and know the laws pretty well. Hopefully they will chime in on this.
For me, the work I contract for is of higher injury risk than others and don't want to be sued if someone gets hurt. When I got hurt in 2013 it was the only time. Was off for 9 months. Received weekly money based on how much income I had. Surgeries, follow care as well as therapy were all paid. Was entitled to a settlement at the end.

Accidents happen when we least expect them., some people are not as careful or aware as we would like them to be.


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## eastend (Jan 24, 2006)

usually , you pay premiums based on your payroll, so if you have no payroll for a month that would reflect itself in what you would end up paying.

And if you are a corp officer, you can choose to have your payroll excluded altogether.


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## EthanB (Sep 28, 2011)

There are two ways, that I know of, to avoid paying WC up front. You can use a service like Intuits payroll which offers pay-as-you-go WC through a third party or you can hire your employees through an employment agency(you find the employee and set the wage).


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## schaefercs (Jul 10, 2008)

Pay as you go payroll and workmans comp. You pay w/c on your true payroll, not what it "might" be only to get audited later in the year and find out you owe.

I am in Rochester, and can give you my guys contact info. He'll come out and meet with you. Send me a pm if you're interested.


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## pcplumber (Oct 12, 2008)

If you don't hire employees in California you don't need worker's comp insurance.

You can avoid paying worker's comp insurance if you are a corporation and your workers are officers of the corporation. This is because worker's comp insurance companies consider that business owners are virtually working 24/7 and they don't want to insure the officers. I am not positive if the same applies for partnerships. Check and see.

If you purchase worker's comp you need to put the people you exclude on your application at the time of your purchase. When I do my worker's comp audit forms I write the total for my employees and deduct from that total my earnings. I could exclude my officers, but I don't because I prefer that they are covered.


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## pcplumber (Oct 12, 2008)

EthanB said:


> There are two ways, that I know of, to avoid paying WC up front. You can use a service like Intuits payroll which offers pay-as-you-go WC through a third party or you can hire your employees through an employment agency(you find the employee and set the wage).


In essence, with all worker's comp you pay as you go. When I purchase a worker's comp policy the first question asked is what your estimated gross payroll will be. I always tell my insurance about 1/3 of what I think it will be. The insurance company doesn't really care about the number I give them because they will get what they have coming when I turn in my monthly reports. So, if I have no payroll for one month I don't have to pay one penny for worker's comp. When I have payroll I pay as I go. 

About 15 years ago, I had a month where I closed my company and I had no payroll for one month. So, I didn't submit my monthly worker's comp report. I had State Fund at the time. They canceled my insurance, penalized me (can't remember what) and they increased my rate by 20%. I was smoking hot because I thought I had made a legitimate mistake by not sending a monthly report with zero payroll.

The reason I always give lower numbers to for both worker's comp and liability insurance companies is because the upfront cost for the policy is higher and because I would rather wait to see how my year goes. Either way, the insurance companies get every penny they have coming and there are no penalties for giving them lower numbers.

As a business owner, you are putting out a lot of upfront cash when you pay in advance for worker's comp, general liability and for estimated income taxes. Every year, my CPA gives me those estimated tax payment forms and they go directly in the trash. I think the IRS charges me about 1/4% interest, but that cost is so low and the amount is so high that I have to pay I prefer to invest my estimated tax money in real estate, make 100% on my the money I owe and pay what I actually owe at the end of the year.

In my entire 50 years of paying taxes I only filed my taxes by April 15th about 10 times and I always wait until October to send my forms and money to the IRS and the state.


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## sunkist (Apr 27, 2012)

Is there no comp exempt in ny ?


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> If you don't hire employees in California you don't need worker's comp insurance.
> 
> You can avoid paying worker's comp insurance if you are a corporation and your workers are officers of the corporation. This is because worker's comp insurance companies consider that business owners are virtually working 24/7 and they don't want to insure the officers. I am not positive if the same applies for partnerships. Check and see.
> 
> If you purchase worker's comp you need to put the people you exclude on your application at the time of your purchase. When I do my worker's comp audit forms I write the total for my employees and deduct from that total my earnings. I could exclude my officers, but I don't because I prefer that they are covered.


I'd be careful with this advice. Even though you may be technically correct, if you get hurt on the job you are putting your customers at risk. It could be there homeowners policy that has to pay for your injuries.

You are however incorrect on not having to pay. In order to be exempt you have to have a policy. In order for a one man show to claim exempt you would have to pay for a policy, exempt yourself. There is a minimum charge. I had to have one for a job, but I could be exempt. I think that I paid about a grand to have the policy for 6 months.


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## Framer53 (Feb 23, 2008)

Ok here goes.

In NY if a sole proprietor you don't need w/c.

I use paychex and w/c through them.

I have one employee, my son who works around 30 hours a week

My insurance company for my liability insurance recommended using Paychex because of the pay as you go feature.


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## kiteman (Apr 18, 2012)

pcplumber said:


> In essence, with all worker's comp you pay as you go. When I purchase a worker's comp policy the first question asked is what your estimated gross payroll will be. I always tell my insurance about 1/3 of what I think it will be. The insurance company doesn't really care about the number I give them because they will get what they have coming when I turn in my monthly reports. So, if I have no payroll for one month I don't have to pay one penny for worker's comp. When I have payroll I pay as I go.
> 
> About 15 years ago, I had a month where I closed my company and I had no payroll for one month. So, I didn't submit my monthly worker's comp report. I had State Fund at the time. They canceled my insurance, penalized me (can't remember what) and they increased my rate by 20%. I was smoking hot because I thought I had made a legitimate mistake by not sending a monthly report with zero payroll.
> 
> ...


A lot of bs and misinformation/bad advice in this post.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> I'd be careful with this advice. Even though you may be technically correct, if you get hurt on the job you are putting your customers at risk. It could be there homeowners policy that has to pay for your injuries.
> 
> You are however incorrect on not having to pay. In order to be exempt you have to have a policy. In order for a one man show to claim exempt you would have to pay for a policy, exempt yourself. There is a minimum charge. I had to have one for a job, but I could be exempt. I think that I paid about a grand to have the policy for 6 months.


You will always have a difficult time disproving something I write and so far you never have. Even though, you won't admit it I still won on that argument about bartering and capital gains. 

A sole owner nor an officer needs to purchase worker's comp in California. Every building department permit application has a box where the homeowner and/or contractor can state that he is exempt from worker's comp because he is doing the work himself and the contractor puts a check on a box stating that he will not hire employees. This exemption applies to all officers of a corporation and sole owners. I am not positive about partners.

The customer's risk is an entirely different subject. The purpose for worker's comp is to protect the employees to make sure they are provided for should they be injured. A business owner nor officer is required to be covered, but the FAQ that is below and from the state proves what I said. The FAQ's state that officers need to be covered, but there are rules with the labor board that apply and say whether or not officers can be excluded. My statements are correct regarding whether or not officer can be excluded because I have been excluding offices of my corporation including my wife, my son, my ex-wife and myself since I have been in business. If I have been reporting these people to several different worker's comp companies for 43 years then it must be legal.

If the state of California allows officers and sole owners to be exempt from worker's comp then that is the way it is. Generally, if an owner or officer is injured he is covered by disability insurance, personal health insurance, or life insurance should he kill himself on a job.

in California a one-man show does not need a worker's comp policy. None! Period! You only need worker's comp when you have workers. There is an an exception to that rule for roofers and I have a roofer's license. Roofers have to buy worker's comp insurance even if they don't have one employee. I would imagine this is because virtually nobody does roofing by himself and roofers have a very high accident rate with very expensive injuries.

Q. Do I need to have workers' compensation insurance?

A. Yes, California law requires employers to have workers' compensation insurance if they have even one employee. If you are a roofer and don’t have any employees, you are still required to carry workers’ compensation insurance.

Out-of-state employers may need workers' compensation coverage if an employee is regularly employed in California or a contract of employment is entered into here.

Q. My spouse and I are the sole owners of our business. We have no employees. Are we required to obtain workers' compensation coverage?

A. Generally, coverage for sole owners is optional. You would, however, need to have workers' compensation coverage for any employee you may hire, even if it’s just one employee, and even if it’s just temporary employment. You should consult with your attorney, insurance agent or broker, or carrier regarding the specifics of your situation and your options.

Q. Are executive officers or directors of the company covered under its workers' compensation policy?

GENERALLY, does not mean it is required. GENERALLY, can mean it MAY NOT be required. It says the officers can be exempt if they are the sole owners. That is with an 'S' meaning multiple officers can be excluded. Sole owners is officers who own stock in the corporation and the requirement does not state what amount the officer has to own. It he owns 1% then he is an owner in my book.

A. Generally, all employees of the company, as legally defined, including corporate officers and directors, must be included in the policy unless they are the sole owners of the firm. In the case of sole owners, they may elect not to be covered. Several sections of the California Labor Code must be considered to answer this question. You should consult with your attorney, insurance agent or broker, or your carrier regarding the specifics of your situation.


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## pcplumber (Oct 12, 2008)

kiteman said:


> A lot of bs and misinformation/bad advice in this post.


Too bad we can't put some money on that! I think I did a very good job backing up what I wrote in the post above this one. I don't make mistakes very often and when I do I will apologize.


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## jlsconstruction (Apr 26, 2011)

I'm here now. First off, what kind of work are you specializing in? If you plan on roofing you're going to have to be insured through nysif. If not you can find plenty of alternatives for wc.

Paychecks offers wc and disability with there payroll services for roughly 30% of your employees gross. 

If you need liability I can get you information for an excellent agent.


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## rselectric1 (Sep 20, 2009)

PC Plumber,

Please take a peek at this thread.

http://www.contractortalk.com/f16/workers-comp-subcontractors-164978/

Exclusions to the WC policy are accepted as long as you actually have one. Otherwise, the GC will have to pick up the tab after the audit. Since you have it, even with the exclusions, no GC should bother you and you probably didn't know this little angle they have to sell WC insurance.


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## kiteman (Apr 18, 2012)

pcplumber said:


> Too bad we can't put some money on that! I think I did a very good job backing up what I wrote in the post above this one. I don't make mistakes very often and when I do I will apologize.



I'm not disputing your claim about w/c and officer exemptions. Hell, I've exempted myself for 35 years. 

I think your payment advise is bad, for one thing. You said yourself you got cancelled for non- payment. Most companies aren't going to let you underestimate for long either. I write a policy for a year and make 9 monthly payments. 

And that is some of the worst tax advise I've ever heard.


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## rselectric1 (Sep 20, 2009)

kiteman said:


> I'm not disputing your claim about w/c and officer exemptions. Hell, I've exempted myself for 35 years.
> 
> I think your payment advise is bad, for one thing. You said yourself you got cancelled for non- payment. Most companies aren't going to let you underestimate for long either. I write a policy for a year and make 9 monthly payments.
> 
> And that is some of the worst tax advise I've ever heard.


:thumbsup:

And they will re-classify your percentage of work to each class code on a yearly basis after the audit. The only year I was able to guess was the very first one.


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## pcplumber (Oct 12, 2008)

Framer53 said:


> Ok here goes.
> 
> In NY if a sole proprietor you don't need w/c.
> 
> ...


I did not know that Paychex sells liability insurance. If they do cover worker's comp and liability insurance I am betting that you will pay a premium price for the service.

Personally, I would never use a payroll service. With all the simple software programs it is very easy to manage insurance and payroll for one employee. 

The problem I see with using a payroll service is you still have to provide the service with the information they need to do your payroll. This means you have to set aside the time, not forget and you have to be punctual. You have to keep records of the information you provide every time you submit information to them and then you have to set aside time to make sure they did their job right. When your payroll service makes an error (and they will) you have to spend more time clearing up the problem. You have to wait until they correct the problem and check it again. If your employee needs an emergency payment it is more difficult and takes more time when you use a payroll service. I can go on and on with the types of problems you have even though you are paying a premium for their service. 

If you can't do payroll for one employee then I'm betting that you need an accountant or CPA for your taxes. Now, you paid a payroll service, an accountant, yourself and too many hands in the soup can lead to a big mess and a waste of money.

There is nothing better than doing everything you can in-house and having full control. 

Personally, I hate Quicken online for doing payroll, but I have been too lazy to look for a better service that calculates the deductions for paychecks. I pay $39 per month (maybe less expensive for you) and you can use the service for your entire checking account. I use the system only for writing the checks, but for you the system will tell you what tax agencies you have to pay, when and how much. Worker's comp is probably very inexpensive for one employee and you can pay monthly. Learn to do things in your early stages and learn to have full control of errors. Put another way. Too many people outsource their work to too many businesses that do incompetent work.


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## jlsconstruction (Apr 26, 2011)

Framer53 said:


> Ok here goes.
> 
> 
> 
> ...



Who are you using for liability?


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> You will always have a difficult time disproving something I write and so far you never have. Even though, you won't admit it I still won on that argument about bartering and capital gains.
> 
> A sole owner nor an officer needs to purchase worker's comp in California. Every building department permit application has a box where the homeowner and/or contractor can state that he is exempt from worker's comp because he is doing the work himself and the contractor puts a check on a box stating that he will not hire employees. This exemption applies to all officers of a corporation and sole owners. I am not positive about partners.
> 
> ...


So what was your point? I said that it's bad advice to tell someone not to get WC. It not only protects the worker, but the HO as well. Not to mention if you are a sub and don't carry it and your GC does, his will automatically cover you and he will be charged additional fees for your coverage.

The fact that you have to tell everyone that I haven't disproved you ever, is proof that I have. You give nothing but bad business advice and many, many, many tell you so. You ignore it. You think that you are some business guru, when in fact you are far from it. You may be a great plumber but stop giving business advice.

Did you see Ron's post? Kiteman? Are we all wrong and you right?


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## Calidecks (Nov 19, 2011)

I as a sole I proprietor I can't even get workers comp in California they won't give it to me for myself. I don't have to protect myself from myself or a job injury. I asked my Comp agent if I could get comp ,she said it's not allowed for a the business owner to be on his own workers comp in the state of cali. as a sole proprietor.


If this is what pcp is saying than he is 100% correct.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I did not know that Paychex sells liability insurance. If they do cover worker's comp and liability insurance I am betting that you will pay a premium price for the service.
> 
> Personally, I would never use a payroll service. With all the simple software programs it is very easy to manage insurance and payroll for one employee.
> 
> ...


It's better to leave these things up to the professional. I doubt that you would suggest that a carpenter do his own plumbing for the same reason. It's just more bad advice. It takes very little time and effort to submit payroll to a provider. QB makes it super easy.

Find a good lawyer, cpa, electrician and plumber...don't attempt to do any of these trades without training and supervision. I am all for educating oneself to make sure you can choose a competent person to fill those jobs, but I don't think most of us should attempt to do those things in-house.


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## pcplumber (Oct 12, 2008)

kiteman said:


> I'm not disputing your claim about w/c and officer exemptions. Hell, I've exempted myself for 35 years.
> 
> I think your payment advise is bad, for one thing. You said yourself you got cancelled for non- payment. Most companies aren't going to let you underestimate for long either. I write a policy for a year and make 9 monthly payments.
> 
> And that is some of the worst tax advise I've ever heard.


I said my worker's comp was cancelled because my business closed for one month and I did not know (realize) that I had to submit a report even though my company was closed and their was no payroll. It was an error on my part and B.S. for the company to cancel my insurance with no warning. Generally, A person would think there would be a grace period, warning, and/or a chance to submit the missing payroll report. The only notice I received was that I was cancelled and I was furious. Of course, State Fund is run by the state and what would you expect from the government.

I've been underestimating the amount of gross payroll and gross sales for 43 years. The insurance companies ask you to estimate (forecast) your payroll and sales just like the weather man. There is no legal requirement that says you have to be accurate when forecasting and there is no foolproof way anyone in this world can be accurate. 

I can do $10 million one year because I landed a juicy job and when I forecast my next year I may have terminal cancer and not expect to last through the year. There are a million reasons why a person may want to forecast lower sales and payroll. Every year, I promise myself that it will be my last (in business). 

The only thing that matters is the insurance companies get what they are entitled to. One reason insurance companies 'would like' you to forecast as accurate as possible is so they can set up a payment plan where you pay by the month and at the end of the year you have a zero balance.

Suppose, I tell my insurance company that my sales are $5 million. My liability insurance is 2.9% and the cost for liability is $150,000. The insurance company would like to set up a plan where I pay $30,000 down and $10,000 a month = $150,000 (not totally accurate). At the end of the year I owe nothing.

If I tell the insurance company my forecast is $2 million then I may pay $10,000 down and the balance in 12 months. When the end of the year comes and I do $5 million I a get an audit whether I did $2 million or $5 million. It doesn't matter what my sales are. I will still get audited.

My auditor looks at my books and he tells me I had a better year than expected and I owe $100k more for insurance. There are no penalties for my forecast that was not close. I write a check for $100k and nobody dies.

I've been doing the same thing for 43 years. I've had many great years where my company did double the sales I really expected. 

There is no penalty for having a good year.

As for how I do my taxes I wrote about what I do and people can take that for only advice if they want. I don't make the IRS rules and if they allow people to file extensions then it is legally okay to wait until October. As I wrote, there are many reasons I personally wait until October and the most important is because I like to invest my money in real estate and make 50% to 100% (not always possible) on my money before I pay. When I pay the IRS late there is only an interest charge and there is not a penalty (not 100% positive), but if there is another charge it is very insignificant.

As far as not paying estimated taxes, I have never been questioned nor have I ever received a letter from the state or IRS asking where my estimated tax money is. If they don't care then why should I be worried. I believe there is a small penalty and interest, but it is very insignificant compared to what I earn on my money.

That is leveraging your money and I think that what I write is great advice. I don't live in the same world with people who freak out and have to get in the line at the post office on April 15th. The only thing the IRS gets from me on April 15th is an extension. 

I read an article that claims that the people who file their taxes on-time are the first to get audited and by the end of the year people like myself are less-likely to get audited because the IRS was already too busy and not finished with the early birds.

Believe me! I purchased several homes by using the tax money I held until October. In fact, this is the first year in my 43 years that I filed my taxes on the very last day (October 15th) and I owed the IRS $100k, the state $43k and I sent my forms in with no money because I used the money to purchase an 11-unit apartment building that was a very hot deal. Now, I have the 11-unit, $4,500 monthly income (profit, positive cash flow) and I thank the IRS and state for understanding my methods and waiting. I am not going to lie and have no problem presenting copies of my IRS Late Notice.

I have no problem with posting a copy of my tax notice on CT for anyone who does not believe. The amount I owed the IRS on October 15th was $100k plus a few dollars. That is the amount that shows on my tax records when I sent them to the IRS on October 15, 2014. My apartment building closed escrow in September of 2014 and I used my tax money for the down payment. If I had paid the IRS all their money I would have probably owed the IRS about $103k, but since I did not pay the IRS on October 15th I received a penalty and my entire penalty with interest was $6k. That is a pretty sweet deal since it cost me only $6k extra to purchase an 11-unit building that nets $4500 monthly, or $54,000 per year.

I'm too tired to do the math, but it has to be pretty impressive. If I held back $100k from the IRS for 7 months and I earned $54,000 with that money in a 2-year period I think I am earning 50% per year on that $100,000 and in 20 years I will earn $1 million that I would not have been able to earn if I paid the IRS by April 15th.

I call that being smart!


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I said my worker's comp was cancelled because my business closed for one month and I did not know (realize) that I had to submit a report even though my company was closed and their was no payroll. It was an error on my part and B.S. for the company to cancel my insurance with no warning. Generally, A person would think there would be a grace period, warning, and/or a chance to submit the missing payroll report. The only notice I received was that I was cancelled and I was furious. Of course, State Fund is run by the state and what would you expect from the government.
> 
> I've been underestimating the amount of gross payroll and gross sales for 43 years. The insurance companies ask you to estimate (forecast) your payroll and sales just like the weather man. There is no legal requirement that says you have to be accurate when forecasting and there is no foolproof way anyone in this world can be accurate.
> 
> ...


I love how you completely exaggerate the opposing side. The opposite of filing in October isn't waiting in line on April 15th. Responsible adults file in February or March. I usually have my return by the end of February. I don't need to pay them any fines and interests nor do I need an interest payment from the gov't.

And you definitely don't live on the same planet as most, that is for darn sure.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> It's better to leave these things up to the professional. I doubt that you would suggest that a carpenter do his own plumbing for the same reason. It's just more bad advice. It takes very little time and effort to submit payroll to a provider. QB makes it super easy.
> 
> Find a good lawyer, cpa, electrician and plumber...don't attempt to do any of these trades without training and supervision. I am all for educating oneself to make sure you can choose a competent person to fill those jobs, but I don't think most of us should attempt to do those things in-house.


I wrote my personal evaluations, pros and cons regarding whether to use a payroll service. 

Your statement is like saying nobody should purchase their own software without seeing the advice of a professional. Nobody should use Paychex until they speak with another third-party professional, first. 

That is like saying you should seek the advice from a professional in regards to whether or not you should outsource your work to a another professional. Is not Paychex a professional service. Does a person need to speak to a third-party professional to make a decision whether or not he wants to use another professional or do his taxes in-house. If I start a new company tomorrow do I have to call my attorney to ask if it is better to do my taxes in-house.

I'd love to be a fly on the wall at your place and see what you are drinking.

I really enjoy your rebuttals.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> I love how you completely exaggerate the opposing side. The opposite of filing in October isn't waiting in line on April 15th. Responsible adults file in February or March. I usually have my return by the end of February. I don't need to pay them any fines and interests nor do I need an interest payment from the gov't.
> 
> And you definitely don't live on the same planet as most, that is for darn sure.


Filing taxes by April 15th has nothing to do with being an adult. If the IRS allows extensions then I have no moral nor legal obligation to file. There are several legal, legitimate, financial, and common-sense reasons I don't file until October 15th.

1) I don't have to.
2) There is no reason that makes me want to.
3) I like to take my sweet time and make sure all my 1099's are in.
4) My tax records contain several thousand pages
5) I have to wait for my ex-wife's paperwork because we are partners in some businesses.
6) It is smart to leverage my money for the tiny cost for extending to October.
7) MY CPA is super busy before April 15th and because I have several businesses and thousands of pages I accommodate him and he has more time to work on my records during the year. Thus, he makes less errors.
8) I like holding the cash in MY account just in case I come across a real estate deal I can't refuse.

That is smart! And...I will do the same thing this year. Before April 15th, I will file an extension and hold onto my wad of cash until October. Maybe, between now and then I will purchase another apartment building with the money I owe the IRS and the state. If it is okay with IRS and state to wait then it is okay with me. It is pure business and has nothing to do with maturity.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I wrote my personal evaluations, pros and cons regarding whether to use a payroll service.
> 
> Your statement is like saying nobody should purchase their own software without seeing the advice of a professional. Nobody should use Paychex until they speak with another third-party professional, first.
> 
> ...


I am currently drinking a Diet Dr Pepper. And I for one can't stand to see your posts. It's like watching a slow accident with a blind monkey with no thumbs steering my car.

But I do feel it my duty to point out the BS and ignorance in your posts. The fact that so many agree with me proves that I am on to something. If you don't get that, I can't explain it. It's an inside joke.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> Filing taxes by April 15th has nothing to do with being an adult. If the IRS allows extensions then I have no moral nor legal obligation to file. There are several legal, legitimate, financial, and common-sense reasons I don't file until October 15th.
> 
> If you say so.
> 
> ...


It's actually the opposite of smart to owe the gov't anything. Never has been, never will be, regardless of what shiny new thing you can buy with it. Also, what happens when that sweet deal happen in October? I don't get the logic. Deals can come at any time.


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## Calidecks (Nov 19, 2011)

I never let myself owe the government anything. Not that I ever have, but I'd take the money from my kids college fund if I had to, whatever it took.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> So what was your point? I said that it's bad advice to tell someone not to get WC. It not only protects the worker, but the HO as well. Not to mention if you are a sub and don't carry it and your GC does, his will automatically cover you and he will be charged additional fees for your coverage.
> 
> The fact that you have to tell everyone that I haven't disproved you ever, is proof that I have. You give nothing but bad business advice and many, many, many tell you so. You ignore it. You think that you are some business guru, when in fact you are far from it. You may be a great plumber but stop giving business advice.
> 
> Did you see Ron's post? Kiteman? Are we all wrong and you right?


Before I use someone's advice I would need to see their portfolio and know if there achievements are better or worse.

I find that people don't believe when they can't do something and when they don't understand. I don't think I am a guru at all. I makes mistakes every day and I have some serious business problems every day that I will not mention and I cannot resolve these problems.

I don't know everything, but I do make $millions and I would be successful in business in any state or country. I can start out again without one penny and be rich within a few years. I am that confident!

The difference between successful businesses and failures is how people decipher the information that goes through their eyes, ears and brains. People process identical information in different and often mysterious ways. If you think you are patriotic by paying your taxes on April 15th then knock yourself out in the post office line. My tiny brain tells me to hold onto that money and earn 50% on it the first year and $1 million over a 20-year period. Someone else tells me I am full of crap. Someone else tells my I can't do what I do. 

I'm tired and had enough! No more on this subject!


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> Before I use someone's advice I would need to see their portfolio and know if there achievements are better or worse.
> 
> I find that people don't believe when they can't do something and when they don't understand. I don't think I am a guru at all. I makes mistakes every day and I have some serious business problems every day that I will not mention and I cannot resolve these problems.
> 
> ...


Thank you! But no one cares what you make or what you buy. It's like you have something to constantly prove...to yourself. Success isn't about millions and portfolios. Money is only one indicator of success and not a very good one at that. If you want to argue that, I've got a Grandfather to prove you wrong. One of the most successful men to have ever lived, but never saw much money.

And on the flip side, I had a business partner that it never rained on and opportunities just fell into his lap and I made a ton of cash with him. To bad he had to cheat on his wife and steal from me and the company. Money defines very little. You never see a U-Haul following a hearse.


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## jlsconstruction (Apr 26, 2011)

You're full of chit


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## pcplumber (Oct 12, 2008)

Californiadecks said:


> I never let myself owe the government anything. Not that I ever have, but I'd take the money from my kids college fund if I had to, whatever it took.


I don't see how you say that whether you pay your taxes in April or October equates to whether or not you 'owe' the government. When you pay the government and whether or not you 'owe' the government is no different than a owing money for a mortgage or credit card debt.

The government says you can pay in in full in April, October, or you can make monthly payments if you pay interest.

The credit card company says you can pay in full when you receive your statement, monthly, or you can extend the period if you pay interest.

Your mortgage company says you can pay in full (if you don't have a pre-payment penalty), monthly, or you can extend your payments with interest if you have an interest-only loan, or until foreclosure time comes.

People with huge wads of cash can pay cash for properties, but they don't because they want to leverage their money.

People with credit card debt can pay cash, but they make payments to leverage their money.

People (like myself) can pay cash for taxes in April, but I don't have to, so I pay taxes in October and even later to leverage my money.

You owe 100% of your dept on a credit card every day until that credit card is due, but you don't owe the payment until the Due Date. You owe your mortgage company 100% of the principal on a property every day, but you don't owe your payment until the Due Date. You owe the IRS 100% of the money you owe them throughout the entire year, but you don't owe the payment until the Due Date and the Due Date is between April 15th and October 15th. That is better terms than a mortgage or credit card. I would rather owe the IRS than a credit card company. In fact, I pay 100% of my credit card debt every month.

As far as I'm concerned, the Due Date for the IRS is October 15th. The IRS would like everyone to be good boyscouts and pay by April 15th, but why do they give you until October.

Why is making a payment to the IRS (or state) so much more of a rush to pay when they are willing to wait.

For myself, I don't look at it as owing the government money. I always have more than enough cash to pay at any moment because I always have a reserve. I look at owing money as when you don't have the money on-hand and you really owe it. That is a huge psychological difference. A person who owes money and does not have a good reserve is going to have anxiety and either can't pay, or will be anxious to pay so he won't have to worry. A person with a good cash reserve will kick back, not worry, take his sweet time and look for the best way to leverage that money to make even more money.

It is all about psychology in my book. You pay your debt and don't worry. I will make the tax collectors wait and continue to turn than money into $1 million over a 20-year period and just think; if I do the same thing every few years and get an apartment building with their money I will make $5 million, or alot more.

Sorry! I don't see the rush to pay if the IRS and state is willing to wait. Pay the credit cards, mortgage and leverage your money. Of course, you do have to pay the IRS at some point and if you screw up with their money you are going to be screwed. Therefore, I see the reason to get the IRS paid ASAP.


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## Calidecks (Nov 19, 2011)

pcplumber said:


> I don't see how you say that whether you pay your taxes in April or October equates to whether or not you 'owe' the government. When you pay the government and whether or not you 'owe' the government is no different than a owing money for a mortgage or credit card debt.
> 
> The government says you can pay in in full in April, October, or you can make monthly payments if you pay interest.
> 
> ...


If it's not due I don't owe it.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> Thank you! But no one cares what you make or what you buy. It's like you have something to constantly prove...to yourself. Success isn't about millions and portfolios. Money is only one indicator of success and not a very good one at that. If you want to argue that, I've got a Grandfather to prove you wrong. One of the most successful men to have ever lived, but never saw much money.
> 
> And on the flip side, I had a business partner that it never rained on and opportunities just fell into his lap and I made a ton of cash with him. To bad he had to cheat on his wife and steal from me and the company. Money defines very little. You never see a U-Haul following a hearse.


That is what everyone says who can't make $millions and I am not being cocky. 

People always ask, "would you rather be rich and unhappy, or poor and unhappy."

A person has to be really stupid to give the wrong answer. If I have to be unhappy I want the $millions to go with it. So, don't try to tell me when they say money doesn't make a person happy. It doesn't, but I would rather have the money, anyway vs. being unhappy and living with trailer trash in a trailer park. 

Now, I am finished and will not write another post on this thread. As far as I'm concerned, if a person wants to leverage their money I told you what I do. That is neither advice nor an opinion. Everything I said is facts and what I do makes me a lot of money. If you think I am an idiot, full of poop, or whatever then that is okay and I will get no benefit from arguing about something that works.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> That is what everyone says who can't make $millions and I am not being cocky.
> 
> People always ask, "would you rather be rich and unhappy, or poor and unhappy."
> 
> ...


For the love of money is the root of evil.

Blessed are the poor...

BTW I had a company that grossed millions. So it is coming from someone who had done it. I am currently a one man show that is managing 300-400k on my own. I can make money. I could make more.

You think things and money measure your success. They don't. You can't treasure them with you. 

Why tell someone your experience if not to influence their decision. We are not that naive.

Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal.

But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal.

And I wish you would be a man of your word. You said you were done with the subject. Please be done.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I don't see how you say that whether you pay your taxes in April or October equates to whether or not you 'owe' the government. When you pay the government and whether or not you 'owe' the government is no different than a owing money for a mortgage or credit card debt.
> 
> The government says you can pay in in full in April, October, or you can make monthly payments if you pay interest.
> 
> ...


You so realize that after the first year paying in October is no advantage. I thought you were smart.

Seriously other than not paying with the majority of people what is the advantage? You can buy property all summer when everyone else is or I can buy property in Fall when prices drop? Yea your way seems a lot smarter.

October to October versus April to April...I dont see the advantage.


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## Framer53 (Feb 23, 2008)

No where have I said I can't do the accounting required. I have a degree in accounting, BS if you are interested.
I choose not to do it so I pay.

My life is too short to have to worry about keeping up with everything.
As far as a premium, yes it is a little more when you buy through paychex, but I do not have to pay up front


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## Framer53 (Feb 23, 2008)

jlsconstruction said:


> Who are you using for liability?


Dryden
I am carrying handyman insurance that excludes me from roofing or using a paint sprayer outside. Everything else seems to be covered.


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## Framer53 (Feb 23, 2008)

TNTSERVICES said:


> You so realize that after the first year paying in October is no advantage. I thought you were smart.
> 
> Seriously other than not paying with the majority of people what is the advantage? You can buy property all summer when everyone else is or I can buy property in Fall when prices drop? Yea your way seems a lot smarter.
> 
> October to October versus April to April...I dont see the advantage.



hE HAS EXPLAINED THE ADVANTAGE TO YOU.
That is using the laws to your personal advantage.
Yes you have to square up, but the longer you hold on to money you have opportunity working on your side.

By the way, I am filing my 2013 taxes the end of January, and yes there is a penalty and some interest due, which I believe is deductible. I use the gov money on two larger jobs for cash flow purposes.
Everything I do, is guided by my CPA.


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## TNTRenovate (Aug 19, 2010)

Framer53 said:


> hE HAS EXPLAINED THE ADVANTAGE TO YOU.
> That is using the laws to your personal advantage.
> Yes you have to square up, but the longer you hold on to money you have opportunity working on your side.
> 
> ...


Like I said I pay April to April he pays October to October how is he hanging on to the money longer other than in the first year. It's silly.


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## mrcharles (Sep 27, 2011)

pcplumber said:


> If you don't hire employees in California you don't need worker's comp insurance.
> 
> 
> This is true in most states, but you also cannot hire subcontractors.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> Like I said I pay April to April he pays October to October how is he hanging on to the money longer other than in the first year. It's silly.


That is true, but if I switch back to paying in April I would have to pay two time between October and the following April. The reasons for filing in October are because my CPA is too busy before April, I want to make sure I have taken my time to gather all the 1099's and some don't come in until after April 15th, my CPA does a better job when he is not rushed and I keep the money in my account just be because I can and just in case I have come across a hot place to invest the money.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> That is true, but if I switch back to paying in April I would have to pay two time between October and the following April. The reasons for filing in October are because my CPA is too busy before April, I want to make sure I have taken my time to gather all the 1099's and some don't come in until after April 15th, my CPA does a better job when he is not rushed and I keep the money in my account just be because I can and just in case I have come across a hot place to invest the money.


By law you are to have all 1099 post marked 01/31.

And like I said there is no different in the amount in your account and others. Just what time of year you have it.

My accountant has everything he needs by Jan 31st. It's up to him to complete as he sees fit. I operate so that I either owe nothing or get a return. So in actuality, I also have that money the same time you do (usually before the end of February beginning of March. I just don't have to think about taxes until the next year.


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## jlsconstruction (Apr 26, 2011)

Framer53 said:


> Dryden
> 
> I am carrying handyman insurance that excludes me from roofing or using a paint sprayer outside. Everything else seems to be covered.



That's who I use


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## Calidecks (Nov 19, 2011)

mrcharles said:


> pcplumber said:
> 
> 
> > If you don't hire employees in California you don't need worker's comp insurance.
> ...


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## TNTRenovate (Aug 19, 2010)

Californiadecks said:


> Nope, In Cali, subcontractors are required to have thier own workers comp for thier employees. And they also can be exempt for themselves. Actually if they are a sole pro. They can't be on thier own insurance. They have the same rules the general does. They aren't employees of the GC, by the way. They have to be dually licensed to be classified as a sub though.


So as a sole proprietor do you have to get your own policy?


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## Calidecks (Nov 19, 2011)

TNTSERVICES said:


> So as a sole proprietor do you have to get your own policy?


If you're self employed they don't care how you handle your own injury. You don't have to have anything. You do however have sign a paper stating you don't have any employees, with the state. However, if your a general contractor you can only hire licensed sub contractors that filed this exemption, otherwise they are considered by the state to be employees.


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## Calidecks (Nov 19, 2011)

A HO is bound by these laws to. If they hire a gardener who isn't properly licensed, he is the HO'S employee and the HO is required by law to have a WC policy on him.


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## TNTRenovate (Aug 19, 2010)

Californiadecks said:


> A HO is bound by these laws to. If they hire a gardener who isn't properly licensed, he is the HO'S employee and the HO is required by law to have a WC policy on him.


I bid jobs that require WC. And it states no exemptions allowed. That is not something they can require of sole proprietors in CA?


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## mrcharles (Sep 27, 2011)

Californiadecks said:


> mrcharles said:
> 
> 
> > Nope, In Cali, subcontractors are required to have thier own workers comp for thier employees. And they also can be exempt for themselves. Actually if they are a sole pro. They can't be on thier own insurance. They have the same rules the general does. They aren't employees of the GC, by the way. They have to be dually licensed to be classified as a sub though.
> ...


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## Calidecks (Nov 19, 2011)

mrcharles said:


> Californiadecks said:
> 
> 
> > I think you misunderstood what I said.... If you are a contractor and do not have a work comp policy it is "in most states" illegal to hire subcontractors if you do not have a work comp policy.... You then should only hire subcontractors with their own work comp policy, otherwise you will pay very hefty penalties when you get your audit..(ask me how I know)
> ...


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## Calidecks (Nov 19, 2011)

TNTSERVICES said:


> I bid jobs that require WC. And it states no exemptions allowed. That is not something they can require of sole proprietors in CA?


Or laws allow for sole pro. To be exempt. Every time you pull a permit it asks if you have employees and if you don't have you filed your exemption notice.


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## Calidecks (Nov 19, 2011)

Here's where I get my info.


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## Calidecks (Nov 19, 2011)

Now there are different laws pertaining to corps. I'm not knowledgeable enough to know them. Makes sense that I only study the laws that pertain to me.


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## TNTRenovate (Aug 19, 2010)

Californiadecks said:


> Now there are different laws pertaining to corps. I'm not knowledgeable enough to know them. Makes sense that I only study the laws that pertain to me.


Unless you find that you are missing out on some savings. I'm surprised you are not an S-Corp.


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## TNTRenovate (Aug 19, 2010)

mrcharles said:


> I think you misunderstood what I said.... If you are a contractor and do not have a work comp policy it is "in most states" illegal to hire subcontractors if you do not have a work comp policy.... You then should only hire subcontractors with their own work comp policy, otherwise you will pay very hefty penalties when you get your audit..(ask me how I know)


It's not illegal here to hire a sub without WC. If I were to hire subs without WC, and I have a policy, my policy would automatically cover them and I would have some catching up to do when I was audited. Ask me how I know. :thumbdown


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## Calidecks (Nov 19, 2011)

When I do sizable remodels the subs I use are fully insured. They all have employees. I have an electrician that does an electrical box here and there for my deck lights. I slide him cash. He is also my golfing buddy.

He isn't required to be insured anyway.


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## Calidecks (Nov 19, 2011)

I make damn sure others like the Painter who has employees is fully insured if they are on my job.


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## Calidecks (Nov 19, 2011)

I have a whole crew that does my mobile homes for me. He comes with his own WC policy and his own employees. He's not cheap, but he's also like my clone. I've known him for 40 years. We go back to elementary school together in little league. We dug ditches side by side as youngsters in the trades.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> It's not illegal here to hire a sub without WC. If I were to hire subs without WC, and I have a policy, my policy would automatically cover them and I would have some catching up to do when I was audited. Ask me how I know. :thumbdown


Since the cost for worker's comp is based on gross payroll, I don't see how your sub could be covered on your worker's comp policy if you are not reporting his payroll (earnings) on your worker's comp reports. I never saw a line on a payroll report for subs. I could possibly see liability being covered for your sub. I am betting that a sub is not covered under my worker's comp policy in California.


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## mrcharles (Sep 27, 2011)

pcplumber said:


> Since the cost for worker's comp is based on gross payroll, I don't see how your sub could be covered on your worker's comp policy if you are not reporting his payroll (earnings) on your worker's comp reports. I never saw a line on a payroll report for subs. I could possibly see liability being covered for your sub. I am betting that a sub is not covered under my worker's comp policy in California.




When you go through your work comp audit they look at everyone you have either paid payroll to and or issued a 1099 to. If you issued them a 1099 and you have to provide either a copy of their work comp policy, and/or their exemption letter filed with the state then you are good. If you cannot produce either of those documents then you have to pay your insurer a penalty which is a percentage of every dollar paid out to some one uninsured. Yes your blanket policy will cover uninsured subs, but it is not free.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> Since the cost for worker's comp is based on gross payroll, I don't see how your sub could be covered on your worker's comp policy if you are not reporting his payroll (earnings) on your worker's comp reports. I never saw a line on a payroll report for subs. I could possibly see liability being covered for your sub. I am betting that a sub is not covered under my worker's comp policy in California.


Once again you are just wrong. During an audit you are required to list everyone you paid along with a cert of their WC policy or exemption letter. If you cannot provide that you are required to show the 1099. You are then charged based on the 1099.

But like I said, ask me how I know. Want the answer? I've been audited and one of my guys policy had lapsed and I had to pay up. So once again the million dollar plumber is wrong.

EDIT: I'm not sure what every state's laws are, but it is a possibility.


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## Framer53 (Feb 23, 2008)

During an audit you are required to list everyone you paid along with a cert of their WC policy or exemption letter. If you cannot provide that you are required to show the 1099. You are then charged based on the 1099.
..........
Except if it in an incorporated sub where there is no 1099.


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## Chris Johnson (Apr 19, 2007)

You are correct Rob, for my 5 years in Cali any sub I hired I had to get his current WC cert before they started on the site and also when they invoiced for a draw or payment I would have to get it again. CYA

I was fortunate that everyone had coverage, as I understand if they are not then you pay WC on the full amount of there invoice, so if the guy is suppling and installing you are paying WC on materials as well, assuming he doesn't break out materials and labor on the invoice and it just shows a lump sum.


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## Calidecks (Nov 19, 2011)

Chris Johnson said:


> You are correct Rob, for my 5 years in Cali any sub I hired I had to get his current WC cert before they started on the site and also when they invoiced for a draw or payment I would have to get it again. CYA
> 
> I was fortunate that everyone had coverage, as I understand if they are not then you pay WC on the full amount of there invoice, so if the guy is suppling and installing you are paying WC on materials as well, assuming he doesn't break out materials and labor on the invoice and it just shows a lump sum.


If the sub has no employees he isn't required to have workers comp. He has to file an exemption with the state. State comp which is ran by the state, can't require someone to have workers comp if the law doesn't require them to.


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## Chris Johnson (Apr 19, 2007)

Californiadecks said:


> If the sub has no employees he isn't required to have workers comp. He has to file an exemption with the state. State comp which is ran by the state, can't require someone to have workers comp if the law doesn't require them to.



Your correct

My comment should have stated any sub with employees I would get WC certificate before start and again at every payment or draw.


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## CarrPainting (Jun 29, 2010)

this is why i no longer have employees.

I am in Buffalo NY

6G per year per employee with a base minimum payroll of 25G a year for that employee.

It doesnt matrer if the employee works one day one month or the whole year. it is still 6,000

the pay as you go crap is marketting bs. sure its pay as you go, but the deducation comes out every time you have pay roll, and it snow balls.

for instance say you have pay roll in the first week of Jan, and your next payroll is the 3rd week of february.

those 5 weeks you didnt have payroll will be lumped up into one sum and deducated from your account the next time you have payroll. '

another words pay as you go offers like $350 a week fro WC. but if you dont have payroll for 5 weeks, the next time you do payroll, WC will be $1,700.

welcome to NY.

I am also about to annoy alot of people here, but it needs to be said.

This is why no body under 500K gross sales in NYS carries WC and pays everyone under the table.

as a start up with no customer base, you simply can noit compete with others who are paying their guys under the table.

alot of guys here are well established. they forgot what its like to not have a customer base or they wont openly admit it.

point is, you will go bankrupt, if you do it legally. gaurenteed.

LMOP does not apply when your first second year in business as you dont have a clue as to what your expenses are going to be. and in NY they make it extremely difficult.

for instance, if I had employees, I would have to raise my prices by 50% over what they are now. sure price isnt everything, but are you willing to pay 2 guys $800 to paint a master bathroom? ofcourse not. especially when the next guy will do the bathroom with two guys for $500.

is what it is. if you go legit this early on, you may as well get it over with and file for bankruptcy now.


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## Calidecks (Nov 19, 2011)

CarrPainting said:


> this is why i no longer have employees.
> 
> I am in Buffalo NY
> 
> ...


I'll bet the industry still cries broke. Not positive but I'll bet the insurance people working for the state have nice pensions. Just a hunch.


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## rselectric1 (Sep 20, 2009)

Chris Johnson said:


> so if the guy is suppling and installing you are paying WC on *materials as well*,.


Same here. What a racket.

In reading some of these responses, I am astounded at the differences between states, assuming that what has been posted on this thread is accurate.

Rob laid out Illinois to a tee.


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## Chris Johnson (Apr 19, 2007)

I'm back in Ontario now. We have self reporting WC here. It is a division of the government, but run independently. We pay 30 days end of month based on payroll.

Now our federal government is allowed to compare all your remittances between unemployment, pension, payroll taxes and WC. They have formulas so they can tell if you are playing games with them.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> Once again you are just wrong. During an audit you are required to list everyone you paid along with a cert of their WC policy or exemption letter. If you cannot provide that you are required to show the 1099. You are then charged based on the 1099.
> 
> But like I said, ask me how I know. Want the answer? I've been audited and one of my guys policy had lapsed and I had to pay up. So once again the million dollar plumber is wrong.
> 
> EDIT: I'm not sure what every state's laws are, but it is a possibility.


I said I can't see how a sub is covered if you do not claim him on your payroll reports. There is a difference and I will not agree that you are right until I check with my worker's comp broker. 

So far, you have not convinced me that your subs are automatically insured. I've been in business many years, hired many subs, sent out hundreds of 1099's and I've been audited every year by my insurance company. No auditor has ever asked me to see whether or not our subs has worker's comp insurance.

You may be right, but I've never heard one contractor tell me that their worker's comp insurance covers subs and no insurance company has mentioned subs in one audit. 

When you send out a 1099 how does your worker's comp auditor determine what a 1099 is for and whether or not your sub has a VALID worker's comp policy. A 1099 can be for the total contract amount and how can your worker's comp determine which portion of a sub's 1099 is for materials, labor, or payroll. To verify that your sub has worker's comp are you saying that you have to provide an auditor with a copy of every sub's insurance policy. It seems like a lot of work to police and verify. I will check with my company Monday and get my agent to put the answer in writing. 

Don't get excited! You may still be wrong.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I said I can't see how a sub is covered if you do not claim him on your payroll reports. There is a difference and I will not agree that you are right until I check with my worker's comp broker.
> 
> So far, you have not convinced me that your subs are automatically insured. I've been in business many years, hired many subs, sent out hundreds of 1099's and I've been audited every year by my insurance company. No auditor has ever asked me to see whether or not our subs has worker's comp insurance.
> 
> ...


Do you not read? They ask for the WC policy info and if they are not exempt and they do not have a policy, you are charged based on the 1099. If they don't have a break down of labor and materials you are dinged for the entire 1099.

And here is that last thing you said: I am betting that a sub is not covered under my worker's comp policy in California.

I'll take that bet.

The last time I was audited I have to provide the insurance companies name and policy number. I would assume that it's the same with you.

A sub works for you, but as a sub-contractor, under the contract you have signed with your client. They are an extension of you. Your insurance company covers your job, even the work your subs complete. The same is true for WC. If you hire a contractor that does not have WC, because you have hired that company, your insurance covers them.

Your liability insurance should work in the same way. They require anyone your hire to be covered. That way they are not liable.


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## kiteman (Apr 18, 2012)

Yes, we request and receive a certificate of insurance from any sub. And I routinely provide the same to all the contractors I work for, as well as the state dept of labor. I believe I will be charged w /c rates on the sum total of what I pay any sub without a certificate.


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## CarrPainting (Jun 29, 2010)

you really need to sit down with someone who does this in your state, it helps to read the laws and regulations as well.

I ran into this problem with Paychex and ADP. they both signed me up with the pay as you go plan with the understanding that I would only pay WC on hours worked.

Unfortunately that is not how it works in NYS. In NYS for landscapers, construction, and maintenance its based on a base salary of $25,000 per year regardless of actual salary.

that base cost is $6,000, its actually a little more than that, and thats just WC. that doesnt include all other taxes.

Problem is this: Paychex and ADP BOTH are ill informed regarding this issue, as this WC issue ONLY applies to the industries above. If you open a gas station, you only pay WC on the actual hours worked by said employee.

It should also be noted that 25% of all WC comp policies in NYS are tax. 75% of that $6,000 is the cost of the policy... 25% of it is NYS tax.

Thruogh further research, I found out this was a neat little piece of legislation pushed thruogh by the unions in order to force the private businesses out. Unfortunately it had a major negative effect on small businesses across the board. This is why you wont find many commercial contractors working in the residential markets when work gets slow. Most residential people will not pay the premiums that commercial contractors charge. 

That is reality. no ifs ands or buts about it.

When people say (in NY) that every contractor is guilty of cheating on their taxes/the IRS its true. Because if you followed the letter of the law, you wouldnt be in business, you wouldnt own anything, and you would be bankrupt. The laws and regulations are designed in such a way to bankrupt you with in the first year. If not the first year, then the second year.

my advice to the OP is to either pay cash and hope for the best and shut up about it, or dont hire anyone. When people ask why you dont have any employees, simply explain to them that the cost to hire an employee would bankrupt your business. When that leaves them with that stupid look on their face, simply state: $6,000+ a year to hire one guy in NYS. then say: And people wonder why unemployment is rampant.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> Do you not read? They ask for the WC policy info and if they are not exempt and they do not have a policy, you are charged based on the 1099. If they don't have a break down of labor and materials you are dinged for the entire 1099.
> 
> And here is that last thing you said: I am betting that a sub is not covered under my worker's comp policy in California.
> 
> ...


I've been doing research on the internet and most of the information I've read is in your favor. I still have never had an auditor question a 1099 and I have never been asked to provide a certificate of insurance for a sub. It seems like there is a bad loophole if a contractor can allow a sub to work on a job with no worker's comp and then only have to pay the worker's comp for the sub if and when he is caught. I am still going to contact my worker's comp broker on Monday because I have about 20 questions and one website said that subs are not covered.

One important question is regarding how the worker's comp is deducted from the sub before or after he is paid. You make a deal with a sub and he is going to want 100% of his money. This creates some legal questions. If you knew in advance that your sub did not have his own worker's comp and you allowed him to work, anyway, without getting approval from your insurance company then this is a gray area because maybe there are reasons your sub is not insurable. If you allow a sub to work without worker's comp and you are going to pay the bill after-the-fact then this seems to be another gray area. if you are going to allow a sub to work without his own worker's comp you would need a contract with the sub that allows you to withhold a large sum of money because you don't know what his exact payroll will be. What and how do you pay a sub's worker's comp insurance when your sub's labor exceeds 3 times his estimated cost. 

Sorry! I am still not positive that this is allowed in California. I never heard a contractor tell a sub that the sub did not need insurance because he would be covered under the General's policy. 

I will find out on Monday.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I've been doing research on the internet and most of the information I've read is in your favor. I still have never had an auditor question a 1099 and I have never been asked to provide a certificate of insurance for a sub. It seems like there is a bad loophole if a contractor can allow a sub to work on a job with no worker's comp and then only have to pay the worker's comp for the sub if and when he is caught. I am still going to contact my worker's comp broker on Monday because I have about 20 questions and one website said that subs are not covered.
> 
> One important question is regarding how the worker's comp is deducted from the sub before or after he is paid. You make a deal with a sub and he is going to want 100% of his money. This creates some legal questions. If you knew in advance that your sub did not have his own worker's comp and you allowed him to work, anyway, without getting approval from your insurance company then this is a gray area because maybe there are reasons your sub is not insurable. If you allow a sub to work without worker's comp and you are going to pay the bill after-the-fact then this seems to be another gray area. if you are going to allow a sub work without his own worker's comp you would need a contract with the sub that allows you to withhold a large sum of money because you don't know what his exact payroll will be. What and how do you pay a sub's worker's comp insurance when your sub's labor exceeds 3 times his estimated cost.
> 
> ...


I can cover my subs under my policy if I choose. We aren't required to have it by law so it's only when we do a job that requires it by contact would this come into play. 

Rules are a bit didn't when laws attention governing the action like in California.


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## rselectric1 (Sep 20, 2009)

pcplumber said:


> I've been doing research on the internet and most of the information I've read is in your favor. I still have never had an auditor question a 1099 and I have never been asked to provide a certificate of insurance for a sub. It seems like there is a bad loophole if a contractor can allow a sub to work on a job with no worker's comp and then only have to pay the worker's comp for the sub if and when he is caught. I am still going to contact my worker's comp broker on Monday because I have about 20 questions and one website said that subs are not covered.
> 
> One important question is regarding how the worker's comp is deducted from the sub before or after he is paid. You make a deal with a sub and he is going to want 100% of his money. This creates some legal questions. If you knew in advance that your sub did not have his own worker's comp and you allowed him to work, anyway, without getting approval from your insurance company then this is a gray area because maybe there are reasons your sub is not insurable. If you allow a sub to work without worker's comp and you are going to pay the bill after-the-fact then this seems to be another gray area. if you are going to allow a sub to work without his own worker's comp you would need a contract with the sub that allows you to withhold a large sum of money because you don't know what his exact payroll will be. What and how do you pay a sub's worker's comp insurance when your sub's labor exceeds 3 times his estimated cost.
> 
> ...


TNT is telling it like it is for us here. 

I learned the hard way just like him.

The insurance companies don't voluntarily cover subs but my audits want broken down numbers of every sub I used, a COI for both GL and WC and they have to cover MY insurance period or it becomes more confusing by sending them expense reports showing that any sub was NOT paid anything during a period prior to the COI coverage dates I submit.

The problem is that they don't ask for clarification, they just send a bill for the full amount and hope you don't challenge it. Like I did several dozen posts above.


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## Mr Knucklehead (May 31, 2014)

There's a case in NYS (maybe ten years ago) were a contractor was totally legitimate and had all the proper insurances covering his employees. He was hired as a sub trade (I believe he was a roofing contractor) and he (the owner) of this company wasn't covered under his own wc policy got hurt on the project. Guess what? He sued the general running the project for WC and won. 

Take the exemption and leave it in the bathroom.

Here's another tidbit and all this pertains to my state, NY. 

If you think you're smart running a so called one hat show (with illegal workers (whether legit Americans or not) getting paid cash and need to pull a permit you need to submit either workers comp or a waiver along with your permit paper work. If you submit the waiver the town, village, etc. will assume you are a paper contractor and subbing everything out. 

Guess where you get the waiver from? NYSIF. Guess what NYSIF fund does? send out a field investigator for a surprise visit to your project site to confirm you are in fact a one man show. 

Guess who else shows up after NYSIF? NYS Dept of Labor. It gets fun after that.



P.S. How do I reset my post count back to zero?


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## Chris Johnson (Apr 19, 2007)

And that Knucklehead is how the system works

I think I posted above

Payroll taxes talks to HST office
HST office talks to Tax Dept
Tax Dept talks to WC 
WC talks to Payroll

It's a big circle and everyone is checking with everyone else what you are reporting and what your claiming

They all have ranges in place

If you claim sales of $***
you should have payroll between $a & b, which means WC should be in the range of $c, and your expenses should be between $d & e, which means your taxes should be in the range of $f

You can't beat the system and succeed very easily


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## TNTRenovate (Aug 19, 2010)

Mr Knucklehead said:


> There's a case in NYS (maybe ten years ago) were a contractor was totally legitimate and had all the proper insurances covering his employees. He was hired as a sub trade (I believe he was a roofing contractor) and he (the owner) of this company wasn't covered under his own wc policy got hurt on the project. Guess what? He sued the general running the project for WC and won.
> 
> Take the exemption and leave it in the bathroom.
> 
> ...


There was an old lady who sued McDonalds because she spilled her coffee on her lap when her teen granddaughter was driving. She sued because it was too hot. You can sue anyone for any reason and win.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> I don't recall ever calling you stupid. Can you quote the post and thread?
> 
> As for this poll of being right and wrong and keeping track, in this very thread you started a post proclaim that you won the capital gains barter thread. When you point a finger you have three pointing back.
> 
> ...


When did you call me ignorant (stupid)?

http://www.contractortalk.com/f16/your-method-filing-receipts-155509/index7/

Ignorant is synonymous with stupid in this context. According to the dictionary definitions calling someone ignorant is worse than calling someone stupid. Calling someone ignorant would be like me calling someone illiterate or even retarded. Intelligent people do stupid things i.e. the intelligent person knows better, but he does a stupid thing, anyway. 

I think you have a hard time arguing with me and you get frustrated. Maybe, the caffeine in your Dr. Pepper is getting you wound up. 

Nobody has to be 100% right all the time and sometimes we can sit back and give an answer the benefit of the doubt. Not every answer is in black and white. And...sometimes I am wrong!


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## Mr Knucklehead (May 31, 2014)

TNTSERVICES said:


> There was an old lady who sued McDonalds because she spilled her coffee on her lap when her teen granddaughter was driving. She sued because it was too hot. You can sue anyone for any reason and win.




you missed my point entirely. It's not about anybody can sue anybody, we all know that. It's about thinking a sub with a waiver has no attachment to your wc policy.


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## mrcharles (Sep 27, 2011)

CarpenterSFO said:


> I had jury duty last week. I was sent for selection in a lawsuit against a contractor, involving a death on a construction site. The wife and daughter of the man who died were in the courtroom. Most likely the contractor didn't have worker's comp, else he'd be shielded. But I didn't find out, as I filled out the questionnaire and was sent home.




It's possible he was being sued for gross negligence in which insurance does not protect you.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> When did you call me ignorant (stupid)?
> 
> http://www.contractortalk.com/f16/your-method-filing-receipts-155509/index7/
> 
> ...


Sorry, but you are just wrong again. You flat out said that I called you stupid on another thread. Which I didn't. I would never call someone stupid. Ignorant may have been hijacked by the illiterate and the uneducated but it has a meaning that you cannot redefine. It simply means lack of knowledge.

Doing something stupid and ignorant are also two separate, and far from equal, things. I really need to buy you a dictionary.

Here's is the definition:

ig·no·rant
ˈiɡnərənt/
adjective
l
acking knowledge or awareness in general; uneducated or unsophisticated.
"he was told constantly that he was ignorant and stupid"
synonyms:	uneducated, unknowledgeable, untaught, unschooled, untutored, untrained, illiterate, unlettered, unlearned, unread, uninformed, unenlightened, benighted; More
antonyms:	educated


lacking knowledge, information, or awareness about something in particular.
"they were ignorant of astronomy"

synonyms:	without knowledge of, unaware of, unconscious of, oblivious to, incognizant of, unfamiliar with, unacquainted with, uninformed about, ill-informed about, unenlightened about, unconversant with, inexperienced in/with, naive about, green about; More


informal
discourteous or rude.
"this ignorant, pin-brained receptionist"

I don't see stupid as a synonym. Even the informal doesn't mean stupid, but rude.

Stupid has to do with lacking intellegence, or capacity for intellegence. Ignorant means you have the capacity but lack the education. That's why I say willful ignorance. You choose to be ignorant on the subject.

The fact that you have to keep saying I called you stupid to have more impact proves my point.

Believe me, the only thing that I am frustrated with is someone who chooses to ignore facts.

You keep saying that sometimes you are wrong but when presented with clear facts as well as corroboration from others you refuse to acknowledge it and even claim victory. To me that is willful ignorance or just plain stubbornness.


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## TNTRenovate (Aug 19, 2010)

Mr Knucklehead said:


> you missed my point entirely. It's not about anybody can sue anybody, we all know that. It's about thinking a sub with a waiver has no attachment to your wc policy.


No you missed mine. A judge can be wrong. One case doesn't make law nor true precedent. 

We also don't know the details of the case. There is just more to a verdict than just the verdict. In generally you are protected if the owner of a company has an exemption.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> No you missed mine. A judge can be wrong. One case doesn't make law nor true precedent.
> 
> We also don't know the details of the case. There is just more to a verdict than just the verdict. In generally you are protected if the owner of a company has an exemption.


I quit!

I will get you on the next big debate.


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## Calidecks (Nov 19, 2011)

Mr Knucklehead said:


> There's a case in NYS (maybe ten years ago) were a contractor was totally legitimate and had all the proper insurances covering his employees. He was hired as a sub trade (I believe he was a roofing contractor) and he (the owner) of this company wasn't covered under his own wc policy got hurt on the project. Guess what? He sued the general running the project for WC and won.
> 
> Take the exemption and leave it in the bathroom.
> 
> ...


Not this state. The owner can't be on workers comp unless he's an employee. The laws here are clear who's an employee and who's not, especially when the guy has a contractors license had workers comp on his own guys ands files a schedule C each year. Now if the guy is getting paid by the hour from the general the line could be crossed from sub to employee, a lot of factors have to be met for certain classifications. But in California, I couldn't insure the sub (the owner) if I wanted to. He's not my employee.


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## Mr Latone (Jan 8, 2011)

I can't believe this thread is as long as it is with the OP being a one post wonder :laughing:

But the WC topic is surely a hot one.

Knucklehead has it right for NY.

The State Fund allows for the sole proprietor to be exempt from premium and coverage. Most savvy GCs or builders who hire subs with employees will call for the owner to be covered on the policy as well in their subcontractor agreement. But that is not going to prevent an award to the sub should he/she get hurt and and go after the GCs comp.

Still, WC is capped outside of the medical bills. The real payouts would be outside of WC.

Even when a proprietor elects coverage, their premium is based on an annual salary of $27,500. This keeps wage compensation low, but provides for needed medical coverage.


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## Calidecks (Nov 19, 2011)

In this state the higher the workers are paid the lower his comp costs are.


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## red_cedar (Mar 30, 2005)

> got hurt on the project. Guess what? He sued the general running the project for WC and won.


Not only this, but if a contractor has everyone covered and a worker gets hurt and there is some negligence from a building owner or even a previous contractor who had a hand in the area of say 'construction failure' ( ie: roof or floor caving in ) they may be on the hook as well for liability. Even if it years down the road.


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## dave_dj1 (Mar 16, 2010)

Anyone ever heard of having to have WC in two states? WC Investigator told me today I have to get WC in VT, I'm a NY based GC doing a job in VT. 
Thanks


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## LI-Remodeler (Feb 3, 2015)

Dave,

I do know that workers compensation insurance is regulated on a state by state basis. So you probably do need a separate policy. 

I'd call my insurance agent


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## Framer53 (Feb 23, 2008)

dave_dj1 said:


> Anyone ever heard of having to have WC in two states? WC Investigator told me today I have to get WC in VT, I'm a NY based GC doing a job in VT.
> Thanks


Someone is feeding you a lot of BS.
Do you think that large companies have a separate policy in each state? The answer is no.

Here is the problem, in NY we have a choice right now of one insurance company, according to my agent, that being the state insurance fund. I would call your agent to find if you may need a rider for working out of state


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## dave_dj1 (Mar 16, 2010)

LI Remodeler and Framer 53 thanks for your rapid responses. I called my agent immidiately, he is checking and will call me back. I was in shock I think, she was babbling about issuing a stop work order etc. etc. 
I did try to explain to her that we thought we were covered. 
I'll find out more tomorrow.
Thanks,
Dave


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