It is an annual deed every business owner that carries a Workers Compensation policy must perform. Business owners know it's coming, however, their Workers Compensation audit always seems to be one dreaded tasks that most would avoid if possible. Although, many fellow entrepreneurs and business owners may delegate this task to their CPA or accountant, even still the surprise of an audit invoice due to an increase in payroll and/or a successful business year is usually never desired. No need to fear fellow Business Owners, below we share 3 fantastic tips that we advise all of our clients to practice to avoid any large shocking audits at the end of their insurance year.
1. Pay Attention to the Workers Compensation Policy
It is extremely rare for a Workers Compensation company to waive the audit process. Furthermore, the payroll listed on the policy is essential as it is tied to work loss benefits if a claim arises. Throughout the policy term year, workers compensation insureds should be wary of the payroll listed on their policy, and advise their insurance company or insurance agent if this payroll adjusts drastically throughout the policy year.
2. Keep great records of all of your w2'S
Business Owners should always keep organized, detailed and safe records of all W2's not only for tax purposes, but also for Workers Compensation audit purposes. In addition, Copies of your Quarterly 941 tax filings are top priority and payroll summaries for each employee are often necessary for the audit processing. By keeping a regular and maintained track of this information throughout the year, a business owner can avoid scrambling to locate and organize all of this information prior to their audit appointment.
3.Using Subcontractors? Better keep up with that paperwork too!
It is always a great idea to obtain a proof of insurance as well as additional business paperwork from any subcontractor that a business hires throughout the year. If an uninsured subcontractor is hired, your business could be held responsible for not only the payroll of the subcontractor while hired for the specific project, but also for overall workers compensation insurance coverage of the subcontractor and even their team of employees! In order to avoid an excessive and shocking audit invoice at the end of an insurance policy term, all business owners should keep and maintain documentation of all subcontractors insurance that are hired throughout the year. This may include 1099 and even 1096 forms for the audit process.
The 3 actions listed above may be elementary to any experienced business owner, however, for new entrepreneurs or owners that have recently gained employees for their company or business, these tips are critical and will prove to be extremely helpful when that Workers Compensation audit time comes around.
For further tips, advice or questions concerning your Workers Compensation policy or audit, feel free to send us a call at 919-832-5832.
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