Another Desperate Small Business Slammed By A "Shock Audit"

So, we got another email the other day from a small business facing financial ruin over what we like to call a 'Shock Audit". This business, a husband and wife team, operated a small business that used a lot of independent contractors. Their initial estimated premium for their policy, for their first year in business, was $1,600.00.  Now that this first policy has ended, they got an bill from the insurance company for an additional $59,000.00.

Needless to say, this is an amount sufficient to cripple or destroy this young business enterprise. No one bothered to inform these folks, when the policy began, that independent contractors are treated the same as W-2 type workers (unless those contractors have their own policies, or meet other criteria set by some states.)

We're looking into the matter right now, trying to determine what, if anything, can be done to reduce this audit bill. It is an object lesson, though, about the dangers that can unexpectedly devour a small business.