Under Florida Statute 440.107, which type of business entity can be exempt from workers compensation coverage if it has fewer than 4 employees?
Correct Answer
D) Partnership
Florida Statute 440.107 allows partnerships and sole proprietorships in construction with fewer than 4 employees to be exempt from workers compensation requirements. Corporations and LLCs must carry coverage regardless of employee count.
Why This Is the Correct Answer
CORRECT_ANSWER - Florida Statute 440.107 specifically allows partnerships (and sole proprietorships) in construction to be exempt from workers compensation requirements when they have fewer than 4 employees. This exemption recognizes that smaller unincorporated business entities may have different risk profiles and financial capabilities compared to corporations. The statute treats partnerships and sole proprietorships similarly in this regard, allowing them flexibility in workers compensation coverage for very small operations.
Why the Other Options Are Wrong
Option A: Corporation
Corporations must carry workers compensation coverage regardless of the number of employees they have. Florida law does not provide an exemption based on employee count for corporations, as they are considered separate legal entities with different liability structures than unincorporated businesses.
Option B: Limited Liability Company
This is actually correct - partnerships can be exempt from workers compensation coverage if they have fewer than 4 employees under Florida Statute 440.107.
Option C: Sole Proprietorship
Limited Liability Companies (LLCs) are required to carry workers compensation coverage regardless of employee count, similar to corporations. LLCs are treated as separate legal entities under Florida law and do not qualify for the small business exemption that applies to unincorporated entities.
Memory Technique
Think 'Incorporated = Insurance required' vs 'Unincorporated = Under 4 exemption' - the 'I' words go together, and the 'U' words go together.
Reference Hint
Florida Building Contractor's Reference Manual - Chapter on Workers Compensation Requirements or Florida Statute 440.107
More Business & Finance Questions
A general contractor purchases equipment worth $45,000 with a useful life of 9 years and no salvage value. Using straight-line depreciation, what is the annual depreciation expense?
What is the typical recommended coverage amount for general liability insurance for a small to medium-sized general contracting business?
A contractor estimates startup costs of $75,000 for equipment, $25,000 for initial inventory, $15,000 for insurance premiums, and $10,000 for working capital. They can finance 70% of the total. How much cash do they need?
When establishing professional relationships with architects and engineers, what is the most important factor for a general contractor to consider?
A partnership agreement for a construction company should address all of the following EXCEPT:
A contractor purchases a truck for $60,000. After 5 years, it has accumulated depreciation of $35,000. What is the truck's book value?
A contractor's business plan projects first-year revenue of $500,000 with a 15% net profit margin. If actual revenue is $450,000 with the same profit margin, what is the variance in net profit?
Using the Modified Accelerated Cost Recovery System (MACRS), construction equipment is typically depreciated over how many years?
A contractor is comparing financing options for equipment purchase. Option A: $80,000 cash purchase. Option B: $20,000 down, $65,000 financed at 6% for 4 years. What is the total cost of Option B?
A contractor purchases equipment using a capital lease with a present value of $120,000. How should this be recorded on the balance sheet?