Is workmans compensation required by the state or federal government for small businesses?

Question

I have had workman's comp on my employees for over 10 years. Our premium is due now, and my agent is telling me I MUST GO GET A BANK LOAN AND PAY IT NOW or else my policy will lapse (he won't tell me what will happen if it lapses....I'm assuming, since he is so upset I will probably be gunned down or beaten to death).

All my other insurances,debtors, etc....understand and have extended payment time because they know we have been slow to receive reimbursements for services we have provided. Please advise.

Answer 1

If you have a corporation or an LLC and don't mind risking the business you could always self insure.   If you have a sole proprietorship or partnership you could be risking all you own as well as jeopardizing future earnings.

The laws on what is now called "worker's compensation" vary from state to state.  Check with an attorney to find out what the worst case situation is in your state.  

If you decide to keep the insurance policy in effect I suggest that you divide the payment by 12 and set aside that amount every month so that you will be able to pay it without taking out a bank loan.

Hope this helps

Jerry-the-bookkeeper