In British Columbia we call workers’ compensation, WorkSafeBC (WCB). This is probably one of the most red-taped organizations that a business can deal with, especially if you deal with food, construction, and other businesses that deal with even somewhat hazardous workplaces. Unfortunately, it also catches small businesses that are basically an office and nothing more.
When you’re covered by WorkSafeBC insurance, you’re protected against lawsuits from injured workers. If a worker is injured or contracts an occupational disease while on the job during the course of employment, WorkSafeBC covers the worker’s medical and wage-loss costs. Of course, WorkSafeBC will do its best not to have to ever pay out anything.
Sole-proprietorships or Partnerships
If you are an unincorporated business, or sole-proprietorship, then you are not required to register for WorkSafeBC (WCB). However, if you do work in the construction/renovation industry you really should; otherwise, your clients end up having to pay it on your behalf. That’s another beauty of WCB, if you’re not registered and contract your services to others, then they are required to pay WCB on the monies they pay you to WorkSafeBC.
For example, let’s say you contract out to ABC Company Ltd. for $40,000 in one year, ABC would have to pay WCB on that $40,000 at whatever rate they are at (for construction could be 5%+) for the year. Many companies in construction require all subcontractors to be registered for WCB.
This is called Personal Optional Protection (POP) is optional workplace disability insurance for individuals not automatically covered under the Workers Compensation Act. POP will cover your lost salary and medical expenses if you are injured on the job or if you contract a disease as a result of your work.
If you’re not working in renovations/construction, then you’re much better off to get short and long-term disability protection via an insurance product than WCB.
Incorporated companies differ from unincorporated companies because the shareholders, directors, officers of the corporation and principals (officers who also own shares in the corporation) who have any degree of activity in the operation are considered to be workers, and as such, are entitled to compensation. They cannot purchase Personal Optional Protection, WorkSafeBC’s optional insurance plan. Therefore, principals of corporations must register their companies and declare the number of principals/active shareholders and their total earnings.
The only exception to mandatory registration for an incorporated company is when the corporation is deemed a “personal service corporation”. This is when no other help is employed and, but for the incorporation, the principal clearly falls into the worker category. The exception also applies to situations in which there is a degree of common ownership between two companies and the sole function of the principal firm is to provide labour to another firm’s operations (e.g. administration or management function).
WorkSafeBC is also trying to get draws by shareholders declared as earnings, even if your corporation owes you money and you’re just paying it back.
If you employ a domestic worker (e.g, a maid or housekeeper), home care nurse, nanny, construction or repair worker or contractor, or a gardener or landscaper on a regular basis you may be required to register for insurance coverage with WorkSafeBC. You do not need to register if you hire a person or business:
Once you start employing people, you need to register for WorkSafeBC you don’t have a choice. Talk to your bookkeeper or accountant whether you have to register or not, and how to go about doing so.
Do Businesses Need Better Access to Rent Subsidies?
Think Carefully Before Lending Money to Relatives or Friends
Over-contributed to your TFSA or RRSP? Here’s what you should do.
Need Money? Should you Withdraw from your RRSP?
Financial Literacy Lessons Should Begin Early in Life
Financial Considerations for First Time Home Buyers
Will Covid-19 Relief Measures Affect my Taxes?
Covid-19 Now is the Time to get Serious About Your Financial Wellness