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Putting It All Together for the Independent Contractors

Putting It All Together for the Independent Contractor Where is there a database that a small IC can go so he can be in compliance anywhere in America. Scott Grandys has done a great job with Relevant Business Solutions for the big boys. But you still need to have this quantitative information trickle down to the operator of a small concern to make sure he is reporting correctly. There are expensive construction and transportation programs out there that do ‘everything’ . But all you need to answer is: Is the independent contractor going to be my employee? Has he done the paperwork to protect the hiring authority, or does some sort of monitoring becomes necessary? This regulatory gap can be costly–especially since the DOL is hovering with its 16,000 IRS agents. Audits are time consuming and costly. HR and accounting departments are not regulatory compliance orientated. How about having annual checkups by a compliance auditor who does not have an accounting background? I am not talking about the statutory auditors from the insurance company. They have their own agenda.

New Posts Starting in August Will Be a Little Different…..

As you can tell from the change in  the title, we took a step back and found our specialty payroll and reporting programs work better than anyone else’s. Why? Because they are ‘stripped down’ without all that HR stuff that is harder to keep than a bookkeeper tearing their hair out.

We spent the last year or so playing nice and offering our services to the big boys using our integration skills. When CompuPay and Intuit found out we could get inside their programs, they sort of panicked. So we decided to go after their Mickey Mouse API add ons and bring our specialty Employee, Contractor, and Prevailing Wage accounting program to the small businesses–including small bookkeeping firms.

Just think–small employers enter hours or contact amounts, and all their reports are accurately calculated using running totals. The bookkeepers look at the data on line and see all their reporting is done automatically. What is even better, the insurance companies now have to prove the workers’ comp data is not accurate–not the other way around. A box plant in CA has to ‘repay’ 1/3 off their premiums because they could not prove the assigned risk  classifications were accurate. Ouch!

Time saver? You bet. The employer has taken back control of his insurance costs and the time to complete the quarterly reports–all of them! . In fact, we provide a library of information for Reciprocity anywhere in America. Did you know some States do not require workers’ compensation policies for one reason or another?

How about personal income tax Reciprocity? Ever heard of that?  Under what circumstances does an employer working in other States have to buy? What State  can he pay double by Statute? How does the DOL feel about all this? Why can’t the CPAs et al write a program like ours that talks to the different reports? More audits are triggered between WC insurance reports and unemployment insurance filings.

Until August, check our our other sites and buy our programs! Crowd funding is becoming an option for Version 3.0 where we can have PDAs and permissions.

 

 

What Happens When the Auditor is Not Trained on Special Industry Reporting?

Risk classification assignments have been modified in the courts to produce special classification usage to reduce premiums. They require more work on the record keeping side  to take advantage of these reporting guidelines.

LOGGING

A simple example is statute modifications for the logging industry. If a log truck driver stays in the cab and never gets out to set chokers or measure his load at the scale station, he has an exemption from the governing classification.

SHEETROCK/WALLBOARD

Sheet rock or wallboard industry has forms to capture the hours and square footage installed. When records are not kept, delivered product material is used footage is used to calculate daily installation. Next, this industry is a two stage risk classification: one for the install and the other is for finishing which is called texturing.

When you have teams handling the same wallboard sheet, the accountability for payroll and piecework requirements gets a little complicated. So, hours and square footage is required.

Next, what about the owner working along side the hourly workers? This practice is used to same labor and premiums, but if not recorded for such ‘owner deductions’ he will pay premiums on himself.

 DIVING UNDERWATER

Jurisdictional disputes arise from a history of court cases and union turf wars. In the open sea, you have the Jones Act; near a shoreline or dock you have the Longshoremen’s and Harbor Workers Compensation Act of 1927; and at the Stage level you have the local workers’ compensation jurisdiction. Then you add the depth gauge: 50 feet, 100 feet, etc. This jurisdictional maze is really fun to program for paying wages and premiums.

PAINTERS

The two classifications for painters is INSIDE and OUTSIDE. Obviously painting the outside of building is more risky. House painters get hammered because they do not keep track of the hours for both.

HEATING VENTILATION AIR CONDITIONING

Some classifications are tricky. People that work for such companies have two classifications for the salesmen: one for inside sales in a showroom, and one for the roving employee that looks at furnaces in homes and commercial buildings. The outside salesperson has to be reported in the actual worker risk class because he is a hands on guy using tools to examine the units.

ELECTRICIANS—Regular and Small Voltage

There are several classifications: apprentice, electrician, journeyman, and low voltage. I won’t go into the rules of how to report them, but this industry follows the union guidelines.

Summary

These are just a few of the twenty or so special reporting industries. Contact us more if you are in another one to see the current changes for 2014. Each State is a little different.

OREGON —The Transit Tax State

Oregon is a payroll state but has its own particularities. In addition to buying a workers’ compensation policy, there is an add-on tax called WCF or Workers’ Benefit Fund. That tax is added to your payroll dollars. The good news is the taxation is similar to Washington State where sick and vacation hours used are counted, but not counted if paid out in severance. (Don’t get me started on what California does.)

As for unemployment insurance, sick, and bonus pay are not taxed. Nice. But not for long. Policy holders pay less UI tax than self-insured firms. Because of the State payroll tax, there is a Special Payroll Tax that keeps track of the FUTA amount and is deducted from the IRS income tax for employees.

For the folks that live near any city, you get to pay a transit tax. One for the TiMet area and one for the Lane Transit Tax.

If you are in independent contractor working for someone else, someone is going to pay for a workers’ compensation policy. They are rather strict about that. Watch out.

What really grips me is the WCF or Workers’ Benefit Fund. Those working are paying a tax on themselves for others sitting on their backside and collecting unemployment, rehab, or some sort of training. I think the employer should pay for this. Sorry. Doesn’t make sense but it is Oregon.

As for Reciprocity, it is user friendly because of the Vancouver and Longview cities. For the most part, someone working out of State can pay in either if they keep good records.

What Do Schedulers Have to Do With Workers’ Compensation?

I find it interesting that no one is monitoring the TIME that schedulers spend monitoring and getting people to their jobs. Add to the situation that no one is monitoring the workers’ compensation insurance company, and you have a recipe for fraud. Should not there be a simple program to monitor all of these TIME wasting activities?

There will be soon. How about a $5 program that monitors the correct time folks show up for work, record their risk classification, and spits out a payroll check. Sounds just like what you have, right? Not really. Right now this is done by the Intuits, Peachtrees, HR, and insurance companies that employers have to take as gospel. No checks and balances as they say.

You can pay a starting fee in addition to your regular payroll program. Intuit starts around $150 a year for three employees. Peachtree can charge upwards of $1000 for their workers’ comp add-on. We start out at $60 a year just like they do. But you not only get the EMC employee module, you get the CONC contractor and PRJC Project modules, too.

A landscaper in Washington does prevailing wage jobs and pays a payroll company over $500 a month to do this work. Not only did the payroll company not pay his $8000 premiums assessment for lousy recored keeping, it did not keep track of non-prevailing wage jobs. The landscaper got re-audited by the certified payroll department and paid another $6000.

How do you stop this feeding frenzy? Use a program that calculates all workers’ compensation, unemployment insurance, benefit funds, and created paychecks that can be used for IRS reporting.

I did forget to tell you the reports count workers and independent contractors by gender, days and weeks including their risk classifications, and looks at reciprocity in other States. Does your Add-on program do that? If not, contact us real soon for a DEMO at Attestation Software.

Prevailing Wage Programs Do Not Have to Cost a Fortune

There are so many micro programs out there for small business but finding one to fit your peticular business usage is a big problem with all the programmers fighting for app space. Searching for one that save you time and benefits your bookkeeping needs is tough. Most bookkeepers and payroll companies will not be suggesting such apps because that would mean less revenue for them.

You can always start out small by looking for free apps on iTunes dealing with time capturing and more specific workers’ compensation apps like WKRComp. This little compliance app captures not only hours but the risk classification you need to export the employees or contractor to your bookkeeper or accounting staff.

As your requirements grow towards wanting to know who worked where on what job, you can expand to a full blown program for about $5 a month on the cloud so you don’t have to export. All data is accessible to save you money phoning in hours and body counts.

One really great advantage is the ability to go back and see what you bid on jobs and use that for future business. So, if you have several jobs in different states with sub risk classifications, the program should save you premium dollars. But more important, using the program ensures your reporting compliance.

Another benefit is using the program to keep an eye on your workers’ compensation insurance company annual audit. They have a tendency to overcharge. Because regulatory triggers are built in, you can argue effectively for the lesser assessment. These programs have been used in court and won consistently.

So when you have time, contact us to DEMO why this inexpensive easy to use program will save time and clerical money.

 

 

Attestation Fiduciary Compliance Programming is the Future

As more payroll and accounting firms are forced to buy errors and omissions insurance, why don’t they spend this money on integrated compliance programs that attest to the accuracy of their work? GAAP does this for the Feds. When are those folks going to make such standards available on the State level?

One reason the Department of Labor loves to conduct 1099 audits is because that data is controlled by the State legislative reporting guidelines. The criteria is specific as to how an employer can hire an independent contractor and it varies in each State.

Instead of worrying about getting sued by your client, why not use attestation compliance programs available and stop buying insurance policies? Attestation by the accounting and payroll industries to validate independent contractors needs to be a fiduciary responsibility just like the GAAP.

When the status of a contractor you hire becomes questionable, the accounting folks have to account for the time. If you show the contact dollars, they will be subject to an ‘average hourly wage’ estimated premium and penalties. If you have the hours and days the contractor worked, the auditor can only charge premiums at that rate.

All of this is explained in our compliance software CONC manual that triggers everything you need to ensure your employers. For due diligence, you have to have this information on record before hiring:

  • Contractor business name
  • State ID Business Number
  • Workers’ Compensation Account Number or Exemption Certificate
  • Unemployment Insurance Account or Exemption Certificate
  • Federal Employer Identification Number
  • Social Security Number
  • Contract start date
  • Contract end date
  • Total contract amount
  • Total labor amount
  • Sales tax registration certificate/exemption
  • Type of labor: bid, piecework,hourly, salary, commission
  • Rate of Pay
  • Bonus
  • Reimbursements

 

Let us know if you would like a DEMO of he various industry programs to keep you in compliance. They can be integrated into what accounting software you have because they are on the cloud.

 

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