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

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.

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

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

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

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

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

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.

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

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.

(MHIC) Maryland Home Improvement Contractor Practice Test

(MHIC) Maryland Home Improvement Contractor Practice Test

MHIC Business and Labor Practices 2