QuickBooks has a feature that will allow the cost of workers’ compensation to be tracked in the system. This will accrue the expense so it appears in the correct period on financial reports. It also informs the owner of the amount accumulating that will be due in the next payment.
Tracking this expense as it accrues rather than when it is paid also allows it to be associated with various jobs and/or classes.
The first step to tracking workers’ compensation costs is to set the preference.
Once the preference is set, a wizard is available under the Employees dropdown menu to help you accomplish the setup. Employees->Workers’ Compensation->Manually Track Existing Workers’ Comp Policy.
The wizard will take you through a number of steps setting up the workers’ comp accrual. You will need information like:
The name of our workers’ comp insurance carrier.
Job classifications and rates.
Experience modification factor
Policy number (optional, but good to have)
You will need to assign each employee the appropriate workers’ comp code. This should be available in the information about your policy. If an employee can be classified under more than one code, because they do different jobs, use the one in this setup window that is the most common.
You will also need to enter your Experience Modification as this affects your premium.
Enter the rates for each workers comp code.
If you pay overtime wages, a screen will allow you to specify whether or not the overtime premium is included for insurance 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.
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.