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We're incorporated in California and do not carry WC. We've been told that if we don't have any employees (other than the corporate officers), WC is not required. The state of California tried really hard to convince our last contract that we had to have it, but they lost.

We refused the contract if we had to carry WC so the company who wanted to hire us contacted the state and specifically asked: "Is it a requirement if they don't have any employees" and the state representative apparently got really annoyed and answered "no." Then went into some tirade about how we're not taking care of our families.

I had to laugh at that, as if WC is the only solution.

I think there is some misconception here. It is not that our type of business is required to carry it. We are not required to carry it if we have no employees. The rub is that we get some of our contracts, husband is general contractor, through Sacrament Housing and Redevelopement. They require us to carry it in order to get contracts. If we stop getting contracts through them, we could drop insurance.

I don't know the WC differences between corporations and sole proprietorships. If that's what makes the difference, and I have no idea why it would, but making the change to a corporation would be worth the savings.

In Calif, you must pay a MINIMUM state corp income tax of $800, whether you made ANY money in the fiscal year or not.Right off the top for incorporating.

If sole proprietorship, you can take your "income" out of the business with "DRAWS", and no matching soc sec/medicare taxes, nor fed and state unemployment ins taxes. The owner then pays ALL of the soc sec/med, but never pays fed of state unemployment taxes on his draws. You can be a sole prop and have employees on the payroll, which would have the usual tax deductions applied, along with the unemployment taxes on the employees only, not on the draws.
If incopr, the corp become the new "ENTITY". The owner(s) must then go on payroll and have the usual deductions and also the unemployment taxes.
In both cases, workmen's comp ins applies to the GROSS PAYROLL. This includes all sick time, vacation, holiday, etc. If a sole prop taking a draw, their draw IS NOT included in the "gross payroll" for the w.Comp ins premium calculations. So if owner is taking a gross salary of $60,000, which is far from alot for a small business, you have just added $80,000 X the rate for your category of job. If rate is $4.00 per $100 of gross payroll, you just added $3200 to a lower bottom line.
Most policies in Calif exempt the officers of the company from w/Comp because then you have a conflict of interest: The employee (owner) gets injured, and the paperwork on the claim goes to the owner (officer) to validate the claim. Leaves a person testifying for or against himself all at the same time, and I don't know how the 5th amendment would apply ....