Continuing with the idea that for every decision, there are both intended and unintended consequences, another type of decision to consider relates to company growth and the impact of not knowing what exactly you get when you acquire a new business.
Often the prospect of expanding a business by acquiring a new one has countless factors to consider before moving forward. But as a business owner, or prospective owner, it’s important to know as much about what you’re getting into as possible – including how the prospective company’s worker’s compensation and unemployment history can affect you as a new owner.
Did you know that a company’s unemployment history carries over across owners, meaning you could get stuck with higher rates and costs related to unemployment as soon as you take over the business, regardless of your own company’s unemployment history? These costs could be so high they end up threatening your ability to do business. It’s like purchasing a new house and realizing (after the fact) that all the electrical work and plumbing are not up to code. It doesn’t matter that you ‘inherited’ the problem – it’s still your problem to fix. It’s the same with worker’s comp – these historical figures carry over when a business is acquired.
For this reason, when underwriting a new business it is important to obtain the past worker’s compensation claim history and unemployment claim history. Using this information, along with the worker’s comp rate and unemployment tax currently being paid on the existing business, a business owner should be able to calculate the impact a good or bad claims history could potentially have if the new business is acquired.
Here at StaffScapes we can help you identify these types of HR-related issues before you take on unnecessary risk for your business. Acquiring a new company can be a very exciting venture and should not be ruined by a preventable, unintended consequence.