I am asked this question so frequently, I decided to put the information in writing.
For any business in NJ if you have any employees, even just a part time person, you MUST purchase Workers Compensation Insurance. This applies whether you are a sole proprietor, a partnership an LLC or a corporation.
Let's see how it works and how it would apply to you.
Sole Proprietor, Partnership and LLC's – The difference between these entities and a corporation is that the owners have the option to be included or to be excluded from NJ Workers Comp. The key is all owners must either OPT IN or OPT OUT at the policy inception date. The decision needs to made at the effective date of the policy as once it is issued it cannot be amended. So, if an owner decides to be excluded from NJ workers compensation insurance and finds his customer's contract requires that the owner be included, you cannot just add yourself at that time.
Workers Comp insurance provides coverage for lost wages, medical bills and disability payments due to a work related injury. If you, the owner decide to OPT OUT of coverage you will want to make sure you have a sufficient disability policy in place.
ALL Corporations, must purchase Workers Comp insurance in NJ. The owner(s) are considered an employee of the company and as such there is not an option to exclude them. All owners/principals payrolls must be included in the calculation of the policy. There are minimum and maximum payrolls that can be allocated to each individual owner as written in the NJ Workers Compensation Manual. As an independent insurance agent, I can help you with this determination.
This is so important for a business owners to understand.
Fines for failure to carry workers compensation are substantial to say the least. The fine is $5,000 for the first ten days and up to $5,000 for each additional ten-day period for lack of insurance. That is a heavy fine and can cause a major impact on a small business owner.
Call my office at 732-259-7816 or send us an email so we can help you with Workers Compensation insurance. This is one coverage you cannot afford not to have.