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Simplify Your Finances: Pay-As-You-Go Workers’ Compensation

Do you feel overwhelmed keeping up with payroll, workers’ compensation insurance, employee benefits, and everything else that goes into running your business?

In this post, we’ll specifically address worker’s compensation insurance and how you can reduce the burden of large lump sum premium payments, inaccurate premium estimates, and the time and effort it takes to manage it all.

Not only is it mandatory in California (and many other states), but workers’ comp coverage protects businesses from the liability of an employee who may get sick or hurt while at work.

Plan benefits cover things like employees’ medical bills, job assignment retraining, and time off that results from a work injury or illness.

Clients often tell us about what a burden workers’ compensation insurance is for them.

They complain about making difficult lump sum payments only to learn at the end of the year that they paid too much or not enough, and how managing it pulls them away from other things they’d rather be doing.

Every time it happens, the encumbered client is thrilled to learn about how easily we can simplify their finances and improve their workers’ comp experience with pay-as-you-go coverage!

One Source Services, Inc. dba Sherman Oaks Accounting & Bookkeeping uses a workers’ comp provider that offers pay-as-you-go insurance premiums as an alternative to traditional lump-sum payments.

Pay-As-You-Go means exactly that: employers pay their workers’ comp premiums each time they run payroll instead of in one lump sum.

To illustrate this point, let’s assume that a business’s workers’ comp coverage costs them $0.75 per $100 in employee wages (this is on the very low end of the workers’ comp cost scale). If they have three workers who will earn a total of $200,000 between them, then we divide the total wages by $100 to get $2,000 and multiply the $2,000 by the worker’s comp rate of $0.75. That results in a $1,500 premium.

In the above traditional plan, the employer would have to pay the full $1,500 all at once.

But on a pay-as-you-go plan, they would make installment payments with each payroll run instead.

Pay-as-you-go plans also eliminate under and overpayments with more accurate premiums instead of estimate-based ones.

Traditional plans base insurance premiums on projected estimates of what an employer anticipates their total payroll expense will be for the year. The premium is based on that estimate and must be paid up-front before the year’s wages have actually been paid.

Then when the year ends, the insurance provider will determine whether the employer over or underpaid what was estimated and issue refunds or demands for the difference.

Pay-as-you-go plans, on the other hand, base their premium amounts on what is actually paid with each payroll run rather than an estimate of anticipated wages.

PLUS, having more accurate premium amounts instead of estimates greatly simplifies the audit process.

Automate pay-as-you-go premium payments and simplify the workers’ comp process even more!

And, it’s worth mentioning that it helps to improve cash flow.

At One Source Services, Inc. dba Sherman Oaks Accounting & Bookkeeping, we strive to simplify finances, improve quality of life, and deliver peace of mind.

Modern tools like pay-as-you-go workers’ comp insurance allow our clients to experience our vision of simplified finances firsthand.

Our clients who pay-as-they-go experience less burdensome, more accurate workers’ comp premiums and benefit from modern accounting automation applications.

Contact us and let us know that you’re interested in the pay-as-you-go workers comp option.

We can set you up!

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