In the fast-paced, highly regulated world of New York construction, one thing is certain — keeping clean, accurate, and organized payroll records can make or break your business, especially when it comes time for a liability insurance audit. If you’re a contractor performing multiple trades on your projects, failing to separate your payroll records by trade could cost you thousands in unexpected premium charges.
Let’s dive into a common scenario and break down how New York contractors can protect themselves, their businesses, and their bottom line with proper bookkeeping practices.
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Meet John: A Multi-Trade New York Contractor
John owns a small but busy construction company in New York City. He takes on a wide variety of projects and performs 25% carpentry, 25% drywall, 25% plastering, and 25% insulation work. In addition to his in-house labor force, he subcontracts out about $100,000 annually to other tradesmen on the same percentage basis.
Everything is running smoothly until his annual general liability and workers’ compensation audit comes around. That’s when John finds out that because his payroll records weren’t properly separated by trade, the auditor lumped all of his payroll into the highest-rated class code — in this case, probably carpentry — leading to a huge unexpected premium increase.
It didn’t have to happen this way.
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Why Accurate Bookkeeping is Crucial for New York Contractors
If you’re a New York contractor working multiple trades, your liability and workers’ compensation rates vary depending on the trade. Carpentry liability insurance premiums, for example, can be much higher than those for drywall or insulation. If an auditor cannot clearly see how your payroll was divided among trades, they will default to the highest-rated class, and you’ll get stuck footing the bill.
Proper bookkeeping isn’t just about avoiding a painful audit — it’s about smart business management. It ensures you’re paying fair premiums, keeping clean records, and reducing your risk exposure.
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How New York Contractors Should Keep Payroll Records
If you, like John, perform multiple trades, your payroll system needs to track employee hours and wages separately by trade category. Here’s how you can do it effectively:
1. Create Distinct Payroll Categories:
When setting up your payroll system, create separate categories for each trade you perform — for example:
• Carpentry
• Drywall
• Plastering
• Insulation
2. Assign Employees by Trade and Track Daily Hours:
Have your employees fill out daily timecards that note the hours worked in each trade category. For example, if an employee spends four hours on carpentry and four hours on drywall in one day, the timecard should reflect this split.
3. Separate Subcontractor Payments:
If you subcontract work, keep detailed records of what percentage of the subcontractor’s work falls into each trade category. Since John subcontracts $100,000 in total, his records should show:
• $25,000 for Carpentry
• $25,000 for Drywall
• $25,000 for Plastering
• $25,000 for Insulation
4. Reconcile Weekly and Monthly:
Regularly reconcile payroll reports and subcontractor invoices to make sure everything is accurately coded. This way, if an auditor arrives, you’ll have clean, organized records ready to present.
5. Document Everything:
Keep copies of timesheets, job descriptions, subcontractor agreements, and invoices clearly labeled and organized by job and trade category.
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Speak to Your Accountant for Help
If all of this sounds overwhelming, you don’t have to do it alone. Speak with your accountant about how to set up your bookkeeping system to properly track payroll by trade. A qualified accountant familiar with New York contractor liability insurance audits can help you create a system that not only keeps your records clean but also helps you lower your insurance costs.
Ask your accountant to:
• Review your current payroll process.
• Help you implement a system to separate payroll by trade.
• Set up regular reporting to catch discrepancies early.
• Assist you in preparing for audits with organized, trade-specific reports.
The investment you make in accurate bookkeeping now can save you thousands later.
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How BGES Group Helps New York Contractors
At BGES Group, we specialize in working with New York contractors liability insurance policies, especially those in the construction industry. We understand the challenges contractors face in today’s complex insurance landscape and provide tailored solutions that protect your business and save you money.
When it comes to buying new liability insurance for New York contractors, you don’t just need a policy — you need a partner who knows the nuances of your trade and local regulations.
Here’s what BGES Group can do for you:
• Review your current liability and workers’ compensation policies.
• Help you structure your bookkeeping and payroll systems to comply with audit requirements.
• Shop the market to find better coverage and lower rates.
• Offer risk management advice to keep your business safe and compliant.
• Provide ongoing support and advocacy, especially during audits and claims.
We’ve helped countless New York contractors avoid costly audit surprises, improve their insurance programs, and lower their premiums through smart planning and proactive service.
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Contact BGES Group Today
If you’re a New York contractor searching online for new liability insurance for contractors, New York contractor’s liability insurance quotes, contractor insurance audits, or liability insurance for carpenters, drywallers, and plasterers in New York, give us a call.
We’re ready to help you protect your business, save money, and give you peace of mind.
Contact Information:
BGES Group
Gary Wallach – Construction Insurance Specialist
Phone: 914-806-5853
Email: bgesgroup@gmail.com
Website: http://www.bgesgroup.com
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Final Thought:
In New York’s ever-demanding construction scene, staying ahead of liability issues is about being proactive. Proper payroll bookkeeping isn’t just a best practice — it’s a necessity for protecting your profits. Don’t wait until audit time to realize your records are working against you. Connect with your accountant today and reach out to BGES Group to make sure your contractor liability insurance is working as hard as you are.