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Operating your business as a partnership? This video is full of important information about workers compensation insurance for any business operating as a partnership. You'll learn some basics about partnerships as a business entity. We'll tell you if partners are included or excluded from a workers comp policy. You'll learn how a policy is rated and how the premium is effected if a partner is included in coverage.

Video Outline:

• Workers Compensation: Partnerships
  
  
• How operating a business as a partnership effects a workers compensation policy.
  
  
• What is a partnership?
  
  
• How to use the correct name for a partnership on a workers comp policy.
  
  
• Are partners included or excluded from coverage on a workers comp policy?
  
  
• How is a policy rated if a partner is included in coverage?
  
  
• Helpful tips you should know if operating your business as a partnership!

Video Transcription:

Workers Compensation: Partnerships

Welcome to our video series on workers compensation business entities.

Hi! I'm Randy Sieberg and in this edition of Work Comp Consultants Video Network we'll talk about operating a business as a partnership and how that can effect a workers compensation policy.

What is a Partnership?

There are different forms of this legal entity, including general partnerships, limited liability partnerships and limited partnerships. In general a partnership is a business entity owned by two or more individuals or other entities. It's an arrangement where the partners have agreed to participate and operate together acting as one to advance their collective interests. The formation and operation of Partnerships fall under individual states statutes and it�s these statutes along with common law that govern partnerships. In a general partnership, individual partners share in business profits and loss and each partner has unlimited liability for debts that may be incurred by the partnership. Other forms of partnerships act differently.

How to name partnerships on a workers comp policy:

Unlike limited partnerships, who must make others aware of their status by indicating in its name "L.P. or Limited Partnership",general partnerships are typically not required to do so. You'll also find while Limited partnerships must register their names with the state where they are formed general partnerships, are again, usually not required to do so.

So as with any business entity it is important to get the name right on a policy. Because according to the policy provisions it's the named insured who's protected under the workers comp policy.

Are partners included in a workers compensation policy?

Under workers compensation rules and statutes you'll find that most state rules exclude partners from coverage. However, most will allow partners to make an election and include themselves under the workers comp act. It's not uncommon that when partners have decided to be included in a workers comp policy they must complete and file a form with their individual state which documents this action. You'll find that once this form has been filed if at sometime in the future the partners decide to no longer be subject to the workers comp act another form must be filed indicating their decision to be excluded from coverage.

One exception, Pennsylvania does not allow partners to be included under the work comp act..so there CAN be a real difference between states as to how partnerships are handled.

How is a workers comp policy rated when partners are included in coverage?

When included in coverage the premium generated for a partner is calculated using a "rating payroll." In most states this "rating payroll" is a flat amount mandated by the state. You�ll find that in many states the "rating payroll" for partners is the same that's used for sole proprietors.

For example, Maryland uses $49,300 per partner. South Carolina uses $35,000 and New Jersey is banded between a minimum of $29,640 and a maximum of $118,040. These numbers change and are usually adjusted annually and must be checked every so often for accuracy.

Does it make any difference how much a partner is paid?

Unlike an employee where the entire payroll is used when rating a workers comp policy, the payroll for a partner is capped at the state mandated "rating payroll" so in most states it really doesn�t make any difference how much a partner is actually paid it's the "rating payroll" that's used to calculate the premium.

Here's A few tips for a partnership with a workers comp policy:

So if you are operating your business as a partnership and have a workers compensation policy remember these things:

• A partnership is a legal business entity, make sure the correct business name shows on the policy
• In most states partners are automatically excluded from coverage but have the option to be included.
• And if included, a partner must make an election to do so and may need to file a form with their state indicating that decision.
• If included, the premium charged for a partner will be based on a "rating payroll" and not the actual amount they are paid.
• Remember, each state has a different rules as to how partners are treated under their workers comp system so make sure you check out your specific state rules! That's what counts!

You can learn more about partnerships and workers compensation and find information about your specific state at our website, work comp consultant.com!

I hope you've found this information helpful!

And thanks for watching!