MHIC Business and Labor Practices 2

Question 1

A Maryland home improvement contractor wants to hire workers. Which of the following is a legal requirement?

Accepted Answer

Workers must be verified as legally authorized to work in the US via I-9 documentation

Answer

Workers must hold an MHIC license to perform any labor

Answer

Workers must be bonded separately from the contractor

Answer

Workers must complete a state-approved apprenticeship program

Question 2

In Maryland, a home improvement contractor classified as a sole proprietor must report business income on which tax form?

Accepted Answer

Schedule C of their personal Form 1040

Answer

Form 1120 (Corporate Tax Return)

Answer

Form 1065 (Partnership Return)

Answer

Form W-2

Question 3

Which of the following best describes the employer's responsibility for workers' compensation insurance in Maryland?

Accepted Answer

Employers with one or more employees must carry workers' compensation insurance

Answer

Workers' compensation is only required for businesses with 10+ employees

Answer

Sole proprietors with no employees are required to cover themselves

Answer

Workers' compensation is optional if employees sign a waiver

Question 4

An MHIC contractor uses subcontractors on a project. Under Maryland law, who is responsible for ensuring the work meets MHIC standards?

Accepted Answer

The licensed MHIC contractor remains ultimately responsible

Answer

Each subcontractor bears individual responsibility

Answer

The homeowner assumes responsibility once they approve subcontractors

Answer

Responsibility transfers to the subcontractor upon hiring

Question 5

Which business entity type provides Maryland home improvement contractors with personal liability protection while avoiding double taxation?

Accepted Answer

Limited Liability Company (LLC)

Answer

Sole Proprietorship

Answer

C Corporation

Answer

General Partnership

Question 6

A Maryland contractor discovers they are misclassifying employees as independent contractors. What is a consequence of this misclassification?

Accepted Answer

Back payroll taxes, penalties, and potential workers' compensation liability

Answer

Only a warning from the Maryland Department of Labor

Answer

Automatic revocation of their MHIC license

Answer

The workers must refund wages already paid