Proposed New Jersey Legislation Gives S Corporations A Break
An interesting Bill that is now proposed New Jersey Legislation would give S Corporations that are micro-companies a break on having to acquire Workers Comp coverage. Some states such as West Virginia require even micro-employers to have Workers Comp coverage.
J&L Risk Management Consultants, the corporation that provides this website and over 2,000 free articles has been an S-Corp since its inception in 1996.
All micro-businesses are small businesses. The only difference is a micro business is a subset of the small business community based on the number of employees within the company. While your company can technically be considered a small business even if it has dozens of employees, your business is a micro business if you employ less than six people. If you are a sole trader, self-employed, or have no employees, you operate a micro business. There are other guidelines that can also define whether your company is micro or small. If your company required less than $50,000 to start or if your company does not access traditional capital loans, you are running a micro business.
I tend to define a micro-company as a one-person company. The above definition from Intuit says 6 or less. A clause from the new Bill can be found below.
I first heard the term micro-company from a Clark.com podcast. Clark Howard defined his business as a one-person company better known as a micro-company.
If you are a New Jersey small business, please use the first link in this article for a full copy of the pending Bill.
Changes to Workers Comp Laws – New Jersey Legislation
21 “S corporation” means a corporation included in the definition of 21 an “S corporation” pursuant to section 1361 of the federal Internal 22 Revenue Code of 1986, 26 U.S.C. s.1361. 23 (cf: P.L.1999, c.383, s.1) 24 25 2. This act shall take effect on the 180th day following 26 enactment and apply to all policies issued on or after that date. 27 28 29 STATEMENT 30 31 This bill revises the definition of “employee” in the workers' 32 compensation law, R.S.34:15-1 et seq., to permit an S corporation that 33 has only one individual who performs services for the corporation and 34 is the only shareholder in the corporation to choose whether or not to 35 obtain workers' compensation coverage.
The New Jersey Legislation would not go into effect until 6 months after it is passed and signed by the Governor. The old legislation would stay in effect until that date.
This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.
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