It is very important for employers to do a correct estimate of workers compensation payroll. A single mistake can have a profound impact on the overall cost that the employer has to bear. Usually there are two common workers compensation payroll mistakes that an employer can make. The impact of both mistakes is different but they both have a cost associated with them.
- Underestimating the projected annual payrolls: If an employer underestimates the annual payroll, mat the beginning of the policy period, it will result in the payment of additional premium at the time of audit. This is because the workers compensation premium is directly related to the estimated payroll. In addition to exposing the business to large premium payments at the time of audit, it also leads to inefficient use of premium funds.
- Overestimating the projected annual payroll: Another common mistake is overestimating the projected annual payroll. By doing this, the business is over paying for the workers compensation insurance. Though the employer will get back the extra money paid after the annual audit, the funds have been tied up unnecessarily. These funds could have been invested elsewhere to earn profits.
Making accurate payroll estimates from the very beginning sound difficult but doing so will benefit the business. Both under and over estimation can lead to unfavorable circumstances. Periodic monitoring of payroll during the policy period will help the employer keep his projected payroll up to date. Simply by checking the actual payroll with the projected payroll a couple of times during the policy period may avoid a large additional premium or return premium after audit.
Professionals at Lyle B. Masnikoff and Associates, P.A will fight to get you the medical or wage benefits you are entitled to under the law. Employers and Insurance Companies have professionals working for them and there are no fees or costs until you recover. It‘s time for you to hire us to protect your rights.