Home > Workmens Compensation > What is Prime Contractor Liability for business owners?

What is Prime Contractor Liability for business owners?

When states audit small businesses that can’t pay their taxes and penalties, they have the legal right to come after you. Your best defense in to check on them every quarter after you hire them and ask who is their bookkeeper or accountant to verify they are solvent.

You are responsible for their compliance to state laws. Unfortunately, you only have to pay the actual premiums or taxes and not the penalties. They are still on the hook for those penalties no matter what. If you are suspicious, you can call the workers’ compensation department to check on them. And another trick is to make the check out to the State Department AND them as Payee stating the tax period. That way you will not be assessed any taxes other than you paid.

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