Are your Workers Employees or Independent Contractors?
The United States Department of Labor and the Internal Revenue Service have combined their efforts to help various states share resources and information that will expose worker classification violations. Employers found to be in violation could face paying back taxes, back pay to workers, missed overtime, retroactive benefits, interest, fines, staff effort charges and legal fees. With situations where there are multiple violations or willful negative intent, the penalties and fines are worse. In addition to the money a violation would cost, employers would also face the negative effects of this damaging information being made available to the public.
The IRS has made it clear that it is not easy to classify independent contractors and employees. Every case they evaluate is different based on a wide variety of factors. To start, employers may think about whether they have control over a worker's performance and work outcomes. This is not based on whether an employer decides to exercise control. It is a matter of whether the employer actually has the legal ability to control the workers in these areas. The IRS has a set of rules called the Common Law Rules, which cover the categories of financial control, behavioral control and relationship classifications. None of these factors are individually decisive. The entire situation must be evaluated to make an accurate determination. In addition to these evaluations, employers may take the Economic Reality test from the Department of Labor. This test is based on the Fair Labor Standards Act and includes six factors that are similar to those used by the IRS.
One of the best ways to show that a worker is not an employee but an independent contractor is to show proof of that individual's ownership of a business. In addition to this, employers can show proof that the worker's tasks are not an integral part of the employer's business. Workers who are free to be hired by others or who perform freelance work are not considered employees. For every independent contractor used, businesses should keep vendor folders on file. The following paragraphs outline what information should be included in each file.
Every independent contractor should complete a W-9. This is necessary for creating a 1099 tax document. If the individual does not claim exemption, employers should withhold taxes. For current tax withholding percentage information, discuss the topic with an agent. However, independent contractors should be encouraged to check the box and file their own self-employment taxes.
Keep every invoice the contractor submits. Payment should be made based on these documents. If a worker is not an employee, he or she should not submit expense reports. Since mileage and equipment are a contractor's business expenses, contractors should not bill for these items. Make sure all invoices match 1099 forms, which must be sent to the independent contractor after the end of the year.
Proof Of Separate Business
If an independent contractor has his or her own business, keep any items that reflect proof of this. Business stationery, advertisements, brochures, business cards or any similar items are acceptable. For contractors who have their own sites on the Internet, it is important to print copies of any online pages where services are outlined.
It is important to have a written contract for every independent worker. This document should clearly state the nature of the relationship between the business and the worker. In addition to this, the project's details should be outlined. A contract should include what the business expects from the contractor, the payment terms and any deadlines. Make sure the document is dated and signed by both parties. If a contractor has a tax identification number, this should be included. New contracts should be created for each project when the same contractor is hired for multiple projects.
Before classifying a worker as an independent contractor, it is important for a business owner to do his or her homework carefully. Employment laws today are very strict, so discuss any concerns with an agent at Halo Insurance 314-351-HALO(4256).
Imagine these scenarios affecting organizations of varying types and sizes:
D&O insurance covers corporate managers for claims that result from management decisions that have negative financial consequences. Unlike general liability insurance, it does not cover bodily injuries or property damage; rather, it covers decisions that result in lower revenues, higher debt, lost profits, and similar losses. It also may cover suits resulting from mistakes made in regulatory or tax filings for which the company must pay fines.
Insurance companies provide this coverage on a "claims made" basis. Unlike traditional general liability insurance, it applies to claims first made against the insured organization during the policy period, but only if the "wrongful act" (the term the policies typically use) occurred on or after a "retroactive date" entered on the policy's information page. For example, a policy that has a term of January 1, 2017 to January 1, 2018 and a retroactive date of January 1, 2012 will cover lawsuits arising from wrongful acts committed on and after January 1, 2012, but only if the claims are first made during 2017. The organization may have additional time to report claims after the policy expires if it is not renewed.
Another difference from traditional liability coverage is that the cost of defending claims reduces the amounts of insurance available to settle them. If the policy provides $10 million in coverage and defense costs use up $1 million, there will be only $9 million to settle the claim. In traditional policies, defense costs are covered in addition to the available amounts of insurance.
D&O insurance covers suits arising from legitimate business decisions and employee complaints of unfair treatment or harassment. It does not cover criminal or fraudulent acts or acts that the perpetrators intended to be harmful. However, it does cover innocent officers and directors who are sued because of their colleagues' misdeeds. For example, if the entire board is sued because one member embezzled funds, the insurance will protect the innocent board members but not the embezzler. It will also not cover officers and directors who improperly use their positions for personal gain.
D&O insurance is often thought of as a coverage for large businesses. However, small corporations, non-profits, charitable organizations and public entities face these types of lawsuits as well. Every organization that has employees or investors should consider buying this coverage. Call one of our agents today at 314-351-HALO (4256) to discuss your need for D&O Insurance.
The Aegon Center for Longevity and Retirement worked with Transamerica Center for Retirement Studies to release a survey about retirement outlooks for self-employed individuals. Their study base spanned 15 countries including the United States. Over the years, self-employment has been a term linked mostly to professionals, some trade workers and entrepreneurs. With so many advances in technology, many people are self-employed today with their own websites, online businesses and independent gigs.
For self-employed individuals, a target retirement age is not a major issue since they do not have employers setting one. According to the researchers, many self-employed people retire well above age 65. About 40 percent of people across the world never retire. Researchers said that about 17 percent of self-employed workers in the United States will work longer before retiring. More than 20 percent of self-employed workers in the USA said that they would not change the way they worked when reaching the age of 65.
Self-employed people cited good reasons for continuing their work such as staying active while others simply enjoyed their work. However, about 30 percent of American self-employed workers cited financial reasons for continuing work. Most of these workers also said that they had anxieties about earning enough money to live on throughout retirement. Additionally, about 25 percent said that they had not consistently saved enough to think about retirement.
According to researchers, self-employed people also lack the motivation to save in many instances. In a traditional workplace, employers emphasize the importance of retirement savings and have initiatives to participate. However, self-employed people must take a DIY approach to successfully save. According to the survey, about 30 percent of self-employed individuals saved money regularly for retirement.
6 Ways Self-Employed People Can Save For Retirement
While self-employed people have more flexibility in their work and retirement, they must be dedicated to retirement planning in order to succeed. Only about 25 percent of people across the globe said that they were very confident in their financial retirement preparations. These are some simple ways for self-employed people to boost their retirement savings.
Save consistently over time. Start saving as early as possible. When income fluctuates, save more at high points and less at lower points.
Use tax advantages for saving. Many savings plans come with some good tax benefits. For self-employed people who pay their own taxes, these breaks can lower financial responsibilities. Individual 401(k) plans, IRAs, SEP IRAs and several other options exist.
Research local options. Check with a trade association or the local chamber of commerce to see what options exist. These programs often provide an excellent value.
Automate savings activity. Set up automatic funds transfers as an extra incentive. The automatic transfers can be from a checking account to a savings or retirement account.
Make Social Security contributions. Although some people are tempted to report a leaner income for a lower tax burden, this also hurts future Social Security income. A lower benefit amount may not be worth the few dollars saved in taxes over a long period of time.
Build a financial plan with a backup plan. First, develop a solid savings strategy. Think about disabilities or other incidents that could cause a negative financial impact. Next, use those possibilities to develop a backup plan. Investments, contingency planning and a business exit strategy are all important topics to consider.
For more information about retirement planning, speak to an agent at HALO Insurance & Benefits Group today. 314-351-HALO (4256)
Every organization has risks; they are unavoidable. Therefore, every organization, whether it realizes it or not, practices risk management. Those who do it well reduce their costs, particularly for insurance premiums.
The first step in risk management is to identify the organization's loss exposures. They could be any buildings or property it owns, such as furniture or goods held for sale. They could be cars, trucks or heavy equipment used in the business. They could also be activities the organization performs, such as consulting, running a store, or paving a road. Finally, they could be products it makes or sells or its finished work.
The next step is deciding how to control the exposures. These are the options:
The next step is to implement the risk management options chosen. For example, the manufacturer might design the product following industry safety standards; use lightweight materials to prevent crushing injuries; set up a toll-free phone number for end users to call for assistance; draft contracts with installers that transfer liability to them; and buy general liability and umbrella insurance policies. The last step is to monitor the risk management program's effectiveness and make any needed changes.
Organizations that practice good risk management can realize several benefits. One of the foremost is reduced insurance premiums. An organization that actively controls its risks is very attractive to insurers. They will actively compete for its business. Also, the more losses the organization retains, the less the insurer has to pay. The insurer will lower the premium to reflect its own reduced risk. Some insurers offer dividend programs under which a business may get part of its premium back if its losses are less than a certain amount.
Beyond that, risk management creates safe workplaces that attract good workers. Safe workplaces are also less likely to be penalized by regulators for violations. They are more productive because managers do not spend as much time investigating accidents and doing associated paperwork.
In short, risk management helps an organization generate more revenue and hold down its costs. Even the smallest businesses can reap the benefits of sound risk management. Let us support you each step of the way. Give your HALO insurance agent a call at 314-351-HALO (4256).
Life insurance is a crucial step in planning for your future. Not only can life insurance provide assurance for your family if you are no longer around, there are life insurance policies that offer benefits while you are living.
At HALO Insurance & Benefits Group, we understand the life insurance needs of our customers.
The necessity of life insurance depends on your own personal and financial needs. We assist and help you determine the type and amount of life insurance that is appropriate for you and your family.
Generally, you should consider life insurance if:
Additional benefits of life insurance other than providing for your loved ones, in case something happens to you include:
The right coverage for you is unique – talk to us today at 314-351-HALO (4256) and find out how to protect your family and your future with the right life insurance.
We are now eight years past the 2008 stock market crash and the beginning of the ensuing recession, but Americans have still not quite regained their financial footing.
That is the gist of the 17th Annual Transamerica Retirement Survey - one of the longest-running retirement sentiment surveys in the industry, which was just released last month.
The cross-generational sample of U.S. workers overwhelmingly believe that their standard of living will decrease in their retirement years, and that they will have a harder time achieving any kind of long-term financial security compared to their parents.
In all, more than 8 out of every 10 Generation X workers anticipate that their generation will struggle to achieve retirement security. Baby Boomers fare better, with 45 percent of these workers expecting their standard of living to decline in retirement. Of Millennial workers, only 18 percent report that they are 'very confident' of their ability to retire.
"Although the Great Recession ended years ago, millions of Americans are still regaining their financial footing," said Catherine Collinson, President of the Transamerica Center for Retirement Studies. "As each year passes, people's fears about our current retirement system come more sharply into focus."
Among other key findings:
"Amid retirement savings shortfalls, American workers are attempting to prop up our system's three-legged stool by adding a fourth leg: working during retirement," said Collinson.
The survey, published under the title Perspectives on Retirement: Baby Boomers, Generation X, and Millennials, looked at the differences in sentiment and outlook between the generations.
The survey found that 87 percent of Baby Boomers - the cohort born between 1946 and 1964 - expect Social Security to be a major source of retirement income, and one in three believe that Social Security will be a primary source of retirement income.
About one out of three expect income from a defined benefit pension, and 78 percent say they will be receiving income from private savings such as IRAs and other investments.
The median Baby Boomer savings in all retirement accounts among this cohort is $147,000.
Generation X, those born between 1964 and 1978, is more pessimistic about their retirement prospects: Just twelve percent say they feel confident about being able to retire with an acceptable lifestyle.
Among Generation X workers, the total median household retirement savings for members of this generation thus far is $69,000. Generation X workers also tend to have very little in the way of funds to cover unexpected shorter-term setbacks, with a median of $5,000 set aside in reasonably liquid savings. One out of four Gen-Xers have less than $1,000 saved up.
Millennials - those workers born since 1979 - now make up the majority of the U.S. work force. They have begun saving in droves, with 72 percent of those with access to a retirement plan at work actively contributing. 30 percent of them are contributing more than 10 percent of their incomes to retirement plans such as 401(k)s.
Millennials overwhelmingly report that they would value more guidance and education from employers when it comes to saving for their retirement goals. Unsurprisingly, they are also the most digitally connected generation when it comes to their financial affairs: 80 percent of Millennial workers report that mobile apps to help track their finances are helpful, compared to just 48 percent of Baby Boomers.
At HALO Insurance, we want to help you with your goals. Call your agent at 314-351-HALO (4256).
Many people die without letting their relatives know about life insurance policies. If the policies were created before the companies had electronic records, there may seem to be no way for surviving family members to find them if no papers were left behind. In a Consumer Reports study, the average lost benefit was about $2,000. There is about $1 billion in lost claims today. Although life insurance companies make efforts to find beneficiaries when they learn about the death of a policyholder, individual state agencies want them to work harder to find beneficiaries.
Tracking Down Life Insurance Policies
Anyone who may be a beneficiary of a life insurance policy that is now payable should be prepared to do some work to find out. They should also be prepared to prove their identity. To track down a payable policy, have the decedent's name and Social Security number available. Former addresses are also helpful. Use the following steps to find a policy:
These are the best starting places for finding a policy. When searching, use the name of the beneficiary if the policyholder's name does not bring up any results. Also, be aware that some companies may make spelling mistakes in names. If the decedent had a complicated last name, try common misspellings as well. This is especially important if the policy is very old. When these steps do not bring any results, the final step to take is to pay for a search in the MIB database. Since the fee is upward of $70, this should be a last resort for people who are sure that a policy exists but have been unable to locate it.
Anyone who goes through the process of tracking down a lost life insurance policy learns the valuable lesson that it is important to communicate with family members. The takeaway lesson is to let beneficiaries know that they are included in a policy immediately. Also, tell them who provides the policy and how to get in touch with the company. Past generations were known for being more secretive about making plans for covering final expenses and not understanding the implications of keeping their life insurance policies secret. Today, the importance of communication is evident thanks to the Internet. To learn more about setting up a policy, communicating with beneficiaries or tracking down a lost policy, discuss concerns with an agent at HALO 314-351-HALO (4256).
Terrorists attack a power plant that supplies electricity to a data center. The center houses numerous servers hosting hundreds of Web sites. A small business's site goes down, shutting off 80 percent of its revenue flow.
Terrorists open fire at a shopping mall. The authorities close it for several days while they investigate the crime scene.
A bomb goes off in a building that is the location of several businesses. Hundreds of employees suffer serious injuries.
Terrorism is an unfortunate but real fact of life today. It can affect any business in any location at any time. With some exceptions, businesses do not have to buy terrorism insurance. However, it is a purchase they should seriously consider.
Terrorism insurance became a major concern after the September 11, 2001 attacks in the US. They cost insurance companies the 2014 equivalent of $43.5 billion. After that, properties and operations in likely target areas had trouble finding coverage.
To restore the market, in 2002 Congress enacted the Terrorism Risk Insurance Act (TRIA). Under this law, the federal government shares in loss payments with insurance companies. The government steps in once insured losses exceed a specific dollar amount. The law requires insurers to offer terrorism insurance to their personal and business customers. Business customers do not necessarily have to buy it.
To keep the terrorism coverage market viable, in early 2015 Congress extended TRIA for six years. The extension requires insurers to absorb a greater and increasing share of terrorism losses before they can receive federal reimbursements. For example, in 2015 industry-wide losses must exceed $100 million. That rises gradually to $200 million by 2020.
In some states and for some insurance coverages, terrorism coverage is not optional. For example, some states do not permit businesses to reject it for Workers' Compensation. Others require it for fire insurance on buildings. For many other types of coverage, businesses can buy it for an additional premium.
Many business owners think the coverage is unnecessary. They cannot imagine a terrorist attack in their city. While attacks have occurred in large cities like New York and Boston, they have also happened in:
Because of the unpredictable nature of terrorism, every business owner should consider buying the optional coverage. A professional insurance agent can answer questions and estimate the costs. Cal us at 314-351-HALO(4256) No one knows when or where the next major attack will be. Business owners should prepare for the financial hit they will take if it happens to them.
When doing business with someone else, it is crucial to know whether that person is insured or not. Asking this question is very important. If a service worker such as a gardener, arborist or contractor does not have insurance and causes damage on a homeowner's property, the homeowner may be on the hook to pay for it. The same is true if an uninsured worker is injured. Hired workers who do not carry insurance tend to be less responsible than those who do, so asking about coverage is also a good way to determine whether someone will be a reliable worker. It is always best to pay a little more for someone who is insured than to take the risk of hiring an uninsured worker.
Avoid taking a person's word if he or she says there is insurance. A verbal confirmation will do no good if the person is actually injured while being uninsured. Ask the individual to have his or her broker send a certificate of insurance. If the broker sends it via email or fax, then the policy can be verified. In some cases, smaller firms may try to convince homeowners that insurance is not necessary. Avoid falling for this lie, because it is a common trap used by amateurs to convince homeowners to buy services or products that are usually poor quality. In addition to this, damages or inadequate services will have to be compensated for out of pocket due to lack of insurance.
The following are some examples of types of workers and services a homeowner should request insurance certificates for:
- Installation or repair services for home, business or automobiles.
- People who have a lease or rental agreement with the homeowner.
- Contractors hired to work on commercial or home remodeling projects.
- Independent contractors or contract-based employment agreements.
- Professionals such as mortgage brokers, staffing firms, CPAs and consultants.
- Housekeepers, gardeners, maids and other service contractors.
Contractors and carpenters should have a general liability policy or CGL that is designed for their field of work. Professionals such as CPAs and consultants should carry professional liability insurance, which includes errors and omissions coverage. Hired workers should also carry workers' compensation insurance. This is especially important if they will be bringing in a sizable crew of their own workers to complete a project. If vehicles will be used on the job, ask for commercial auto coverage as well. Whether or not to request insurance proof for every service agreement is a decision each homeowner must make. However, it is especially important to purchase coverage when paying large sums of money for jobs. Also, consider the type of job and potential for injuries. To learn more about these types of insurance, discuss concerns with an agent at 314-351-HALO (4256)