Regardless of the size of your business if you have employees you are responsible for any injuries that happen on the job. One way that you protect your business from any future litigations is through supplying a substantial workers’ compensation insurance policy. Determining this policy is much simpler than most business owners think. Today, we will learn how to easily calculate workers’ comp for your business.
How To Easily Calculate Workers’ Comp For Your Business
Your workers’ comp insurance premium is based on your employees and the work they perform for your business. Here are the three workers’ comp premium factors you will need to consider:
- Employer’s Payroll Size.
- Job Classifications for Employees.
- Company’s Claims Experience.
The premium rate for workers’ comp varies for each payroll class code; however, the National Council on Compensation Insurance (NCCI) typically determines the classification rate and experience modification factor (MOD).
How Payroll Affects Workers’ Comp Rates
The foundation of any workers’ comp insurance premium is the employer’s payroll. For every $100 of payroll, there is a specific compensation rate that is determined by your employee’s classification code.
Tip: Spread your insurance premium payments throughout the year instead of paying a lump sum to help with cash flow management.
Workers’ Compensation Insurance Premium Calculation
The moment you’ve been waiting for! Here is the formula used to calculate workers’ comp insurance premiums:
Payroll (per $100) X Classification Rate X Experience Modifier = Premium
Let’s face the facts. Accidents happen and carrying a substantial workers’ compensation package not only protects your employees but your business from any potential lawsuits. Workers’ compensation covers the medical expenses, lost wages, and other expenses if the employee’s injury occurred while at work.
For more information on employee coverage, you will need to consult with your individual state as they vary widely.
While PayWow can’t help getting your employee back on their feet, we can take care of your payroll needs. We are an all-in-one solution for automating your payroll and tax compliance.
To learn more about PayWow click the link below.