Navigating Insurance Requirements for a Single-Person S-Corp in Delaware
Starting and managing a single-person S-Corporation can bring about a host of intricate details, particularly when it comes to meeting state-specific requirements. My husband recently embarked on this journey in Delaware, opting to establish himself as the sole employee of his S-Corp through the OneStop Delaware portal.
In setting up his payroll, he encountered an option to waive the requirement for worker’s compensation. This seemed straightforward until he was prompted to provide proof of company insurance. Given that his business is a one-man operation, we had decided to maintain his coverage under my existing health insurance plan.
This situation raises a perplexing question: is it possible to navigate around the necessity of procuring separate company insurance, especially when the enterprise doesn’t intend to expand its workforce in the immediate future? The current expectation, that despite waiving worker’s compensation, company insurance remains mandatory, seems counterintuitive for our small operation.
We would greatly appreciate any insights or advice on managing this requirement while ensuring compliance with state regulations. As we chart this entrepreneurial path over the upcoming years, understanding these nuances is crucial for both our peace of mind and the smooth running of the business.
One Comment
Thank you for sharing your experience and raising these important questions. Navigating insurance requirements for single-person S-Corps, especially in states like Delaware, can indeed be complex. Generally, even if you’re the sole employee and waive workers’ compensation, some form of business liability insurance may still be advised or required, depending on the nature of your activities.
In your case, since you’re covering health insurance through a personal plan, it’s worth verifying whether Delaware’s regulations explicitly mandate a separate business insurance policy or if submitting proof of existing coverage suffices. Sometimes, states are flexible for sole proprietors or single-shareholder corporations, especially when no other employees are involved.
To ensure compliance and avoid unexpected issues down the line, I recommend consulting with a local attorney or a certified accountant familiar with Delaware corporate law and insurance regulations. They can provide tailored advice and possibly help negotiate or clarify documentation requirements with the state. Additionally, reaching out directly to Delaware’s Division of Revenue or Department of Insurance could provide definitive guidance.
Stay proactive—this diligence will reinforce your business’s compliance foundation, making your entrepreneurial journey smoother. Best of luck with your ongoing venture!