Why pay-as-you-go Worker's Comp is a savy solution for business owners
Why you should consider Pay-as-You-Go Worker's Comp for your business
I really hate getting a tax refund. Seriously. The first time I got a tax refund in my adult life, I wasn't happy. I'm that weird person who doesn't want a refund. I want to pay what I owe to the IRS, exactly what I owe. Nothing more, Nothing less. There are a million ways I could have used that tax refund throughout the year - choosing to invest those dollars, save them, or spend them! But hand them to the government for an interest free loan? Not a fan.
As business owners, you probably already know the frustration of over-paying (or under-paying taxes). This frustration can also bleed over into other areas of your professional life, and one of those might be your insurance needs. One day, I'll get into the weeds on the value of a assessing your insurance needs each year, but today, I want to let you in on an industry secret you may not be aware of.
You don't have to pay a 25% deposit down to have worker's comp insurance. You can avoid a down payment altogether with Pay-As-You-Go worker's comp. Let's dive in.
Introduction
Pay-as-you-go Workers Compensation insurance is a great benefit for small and midsize companies. It can help you manage cash flow, save your company money, and eliminate administration headaches for your payroll team. Take a look at the following reasons why you should consider pay-as-you-go workers compensation for your company instead of traditional workers comp methods.
Why consider Pay-as-You-Go Workers Compensation?
Why consider PAYGO Worker’s Compensation?
The Advantages are Many!
The Advantages are Many
Pay-as-you-go workers compensation is advantageous to businesses because it provides the following benefits:
Simplified Administration
When the dust settles, your administrative costs will be significantly reduced. No more year-end premium surprises, no more underwriting and claims processing headaches, no more recordkeeping hassles and billing expenses, no more reporting on employees' health insurance benefits (which means zero compliance costs), no more auditing of your workers' compensation program to ensure that it's compliant with state laws and regulations—and most importantly—no more policy changes!
In a Pay-as-you-go solution, your payroll processor completes this work on your behalf - filing your payroll reports, doing your year-end audit, as well as handle any questions you have when a potential claim arises. Most businesses have to have workers comp insurance, but many don't realize the amount of paperwork that goes along with it. Avoid the paperwork altogether by implementing pay-as-you-go.
No More Year End Premium Surprises
No more year-end premium surprises. If you’re a small business owner, chances are the last thing you want to think about at tax time is how much you owe for workers compensation insurance. If you're a seasonal business, you don't want to overpay an estimate of your workers comp at the beginning of the year, only to be way overpaid because you didn't hire as many seasonal staff as the year prior. Pay-as-you-go Workers Compensation keeps things simple by charging a monthly fee with no annual renewal required—so there are no surprises at the end of the year!
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No more waiting until the end of the year to pay your worker's comp premium. With traditional WC plans, paying by installment means waiting until December 31st or January 1st before your premiums become due and payable in full — sometimes resulting in large lump sum payments due at once if taxes have not been paid yet on those earnings received during that time period. No one likes getting hit with unexpected large bills!
No more guessing how much you will be charged each month. Paying your insurance every payroll process means you will pay based on the exact amount of gross payroll you've paid year to date. You can also manage expectations based on what has already been paid so far this year rather than having something happen unexpectedly out-of-pocket like an unexpected bill from an illness (or worse!).
Helps Reduce Your Availability of Capital
In the same way, paying a premium on total gross payroll paid each pay period will increase your amount of working capital each month. Paying out a small premium every month ensures that your available capital is increased, rather than reduced.
Take Advantage of Monthly Payments
One of the biggest advantages of pay-as-you-go is that you can start with a small monthly, semi-monthly, or bi-weekly payment, and then later increase it as much as you want.
This means that if you don’t have a lot of cash on hand at first, but still want to protect yourself from workers comp claims, this option is perfect for you.
And if in the future something happens that would cause your business to go under (like an injury or lawsuit), it doesn't matter because the insurance company will pay out everything owed! This saves employers from having to worry about losing their money when they need it most.
Offers You Complete Flexibility
Let's face it: the unpredictable nature of your business may make you want to consider pay-as-you-go workers compensation. If you're a small startup, or if you don't know how many employees are going to work for you in the near future, this can be a great option for protecting them as they perform their duties.
If your company is seasonal, and experiences high turnover during certain times of year, then PAYGO can keep costs low while providing protection when needed. You won't have to worry about paying premiums that might not be necessary at those times.
If your business is growing rapidly and hiring new employees every month (or even weekly) PAYGO allows companies like yours to lock down rates so that they aren't paying more than what they need at any given time.
Pay-as-You-Go Workers Compensation is a huge benefit for companies
Pay-as-You-Go Workers Compensation is an excellent option for businesses of all sizes, especially those with an ever-changing work environment. It can be beneficial for companies to work with a payroll company that provides workers comp insurance because they have the expertise and experience required to find the best possible policy at an affordable price AND manager the administrative burden of workers comp. For example, they can help you choose between a traditional or well-known brand name policy and a niche provider who offers a more comprehensive plan at an attractive rate.
While Pay-as-You-Go Workers Compensation may not be right for your business, we hope this information was helpful!
Conclusion
We’ve seen that Pay-as-You-Go Workers Compensation can be a huge benefit for companies. It offers benefits like simplifying administration, no upfront deposits required, eliminating yearly premium surprises and providing complete flexibility. In addition to these benefits, it also helps you save time by not having to worry about filing claims or sending in paperwork every month or quarter. The bottom line is that if your company is looking for an alternative solution to its workers compensation insurance needs then this may be the right option for you!