There are a number of reasons some QuickBooks users wish to track workers’ compensation costs as they accrue, rather than when they are paid only.
Some of these reasons include:
- Wanting to prepare for the coming premium.
- Accurate financial reports.
- A specific report giving the computations needed to complete forms for a workers’ compensation insurance provider.
- Tracking workers’ compensation insurance costs in the correct accounting period or by various customer:jobs.
QuickBooks will help you do these things.
In Preferences, we will be sure the setting to track workers compensation is turned on.
Next, we will access the Workers’ Compensation setup wizard at Employees->Workers Compensation->Manually Track Existing Workers’ Comp Policy.
The first screen of the wizard is informational and lists a few items we will need in order to complete the setup process like:
- The name of our workers’ comp insurance carrier.
- Job classifications and rates.
- Experience modification factor
- Policy number (optional, but good to have)
Proceed to the next step by clicking Next.
Assign each employee a default workers comp classification. If this is your initial setup, you won’t have any of the classifications in QuickBooks. As you type the numbered codes into the appropriate space in this window, QuickBooks will give you the opportunity to specify a description and a rate for each of the codes.
This screen will allow you to specify the Experience Mod factor for your insurance policy. As you can see, this setting is grayed out here. This is because the sample company, Rock Castle Construction, has already entered this information.
You can alter the experience mod, it can change over time. But, you would not use the initial setup wizard to do so.
The next screen asks if you ever pay overtime wages. The options are a simple yes or no.
If you do occasionally pay overtime wages, the above screen will allow you to specify whether or not the overtime premium is included for premium calculations.
Let’s say a worker earned $10 per hour for regular time and $15 per overtime hour. Excluding the overtime premium would cause QuickBooks to calculate the premium for every hour as though it were paid at $10. The additional $5 paid for overtime hours would be ignored.
A subsequent screen allows naming that payroll item QuickBooks will create based on the information we have entered into the wizard. The default will be Workers Compensation.
The next and final screen will show a summary of entered information. On this screen you can choose “Finish.”
Above is a report based on the use of the Workers Compensation feature in QuickBooks. It gives us all the information we need to fill out a workers’ compensation report for our insurance carrier.