Workers Compensation Insurance Audits for 2021
It’s important to be organized and up to date when you are audited for Worker’s Compensation year end audits. If your paper work is not in order you could face penalties and other problems. You also might be overpaying if you are filing the wrong classification code or in the wrong category.
In most cases, Workers Comp policies are based on an estimated payroll amount which is adjusted at the end of the official policy period. This adjustment is called an Audit. The actual premium is determined after the policy year end by completing an audit.
Your Worker’s Compensation Premiums are determined by your Gross Payroll (remuneration) and Classification codes.
- Gross Payroll is defined as salaries, bonuses, commissions. It also includes all vacation, holiday, and sick pay.
- Classification Codes are the categories created by New York Compensation Insurance Rating Board (NYCIRB). Each code describes specific work groups which you must assign to each employee. There are 35 pages of codes which cover contractors, truckers, retailers, wholesalers and manufacturers.
Organization is the key to a favorable worker’s compensation audit.
Take the time to classify all of your employees before the audit appointment. If you rely on the auditor setting classification codes, you may end up paying higher premiums. Let’s say a small portion of an employee’s activity falls under a higher classification code, the auditor could place the employees entire payroll under the higher code.
You will need the following documentation for your workman’s comp audit.
- 941, NYS45 and Business Tax Returns, 1099’s
- Payroll Book
- Sales Records
- Cash Disbursements Book
- General Ledger
Remember, an organized and prepared approach to your Worker’s Compensation Audit can save you time and trouble. The classification codes can be overwhelming, but applying the correct codes to all of your employees can make a big difference to your bottom line.
We will be happy to email you the NYS audit rules and procedures upon request.