DO I NEED TO BE AN OWNER?

Every day we get the question, “To qualify this business, how much do I need to own?” While it is true that to be eligible for a Worker’s Compensation Exemption the individual must be an owner with at least 10% ownership, it is not true that to qualify a business you must have ownership. To be a qualifier, you can be an employee; or if not an employee, have a minimum of 20% ownership.

From there stems another question; what does it mean to be an employee? This is a black and white answer. An employment relationship shall include the employer’s regular payment of wages and compensation, F.I.C.A. deductions, tax withholding and provision of Workers’ Compensation to the employee by the employer, all as prescribed by law.

What does not fall in the category of employment is payment on a per-instance basis. Anyone receiving a 1099 or payment for each permit pulled is technically an independent contractor. The company that is hiring them needs its own license to be able to subcontract to that independent contractor.

The Construction Industry Licensing Board has said it best. A contractor either must be a W-2 employee or have minimum 20% ownership to be legally qualifying any business. It is that simple.