Practice Test Geeks(MHIC) Maryland Home Improvement Contractor Practice Test
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Business and Labor Practices Flashcards

6 cards from real MHIC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Business and Labor Practices flashcards as text

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

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

    All employers in Maryland, including home improvement contractors, must verify workers' employment eligibility using Form I-9 and comply with federal immigration and employment laws.

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

    Answer: Schedule C of their personal Form 1040

    Sole proprietors report business income and expenses on Schedule C, which is filed as part of their personal Form 1040 federal income tax return.

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

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

    In Maryland, employers with even one employee are generally required to carry workers' compensation insurance. This coverage protects workers injured on the job.

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

    Answer: The licensed MHIC contractor remains ultimately responsible

    The licensed MHIC contractor is ultimately responsible for all work performed on a project, including work done by subcontractors. The license holder cannot delegate away their legal responsibility.

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

    Answer: Limited Liability Company (LLC)

    An LLC provides personal liability protection — shielding the owner's personal assets from business debts — while allowing business income to pass through to personal tax returns, avoiding the double taxation of C corporations.

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

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

    Misclassifying employees as independent contractors can result in liability for back payroll taxes, IRS and state penalties, and workers' compensation claims if a misclassified worker is injured.