Manual Workers’ Compensation In QuickBooks Desktop

In this article, we will be providing you the process to set up your workers’ compensation in QuickBooks Desktop.

If you have purchased a payroll service subscription, you will be able to manually manage and record Workers’ Compensation premiums.

Get started with Workers Compensation

You have to set up worker’s compensation prior to paying your employees to ensure that your reports won’t be wrong or incomplete.

Step 1: Turn on Workers Comp

• From the main menu, go to Edit > Preferences.
• Choose Payroll & Employees and then go to Company Preferences
• Choose Workers Compensation and then put a checkmark on Track Workers Comp
• Mark following checkboxes as well:
  • Display message to assign codes to show the Workers Comp messaging in QuickBooks.
  • Exclude overtime premium from Workers Comp calculation to display overtime premium as a different item on your report.
• Click on OK

Step 2: Set up Workers Comp

• From the Employees menu, choose Workers Compensation.
• Click on Manually Track Existing Workers’ Comp Policy.
• You need to validate whether the requirements are listed under the Workers Compensation Setup Wizard screen and then click on Next.
• Provide required details of your workers’ comp insurance provider, where the premium is paid as well.
• Click on Next.

Step 3: Set up code for your employees

If a job classification code is assigned to your employee, QuickBooks assigns a code to the employee’s earning items automatically. If you write a paycheck, it includes to your employee’s Workers Compensation premiums for all earning items.

Note: If one of your employee is exempt from Workers’ Compensation insurance, like the owner, you have to assign an Exempt code to that employee.

• Select Add New from the Workers Comp Code ▼ dropdown options to create a new code.
• Create separate Workers Compensation codes for one job in different states. This will help you in assigning state-specific rates for all the codes your created, as separate states sometimes may have varied rates for a single job.
• Click on Next.

Step 4: Add an experience modification factor

The rates assigned by insurance companies for calculating Workers’ Compensation premiums is known as the Experience Modification factor. It depends on the claims of your company’s record of Workers’ Compensation. The rate will be lower if your track record is better (or just a minimal increase), that can be resulted on the Compensation premiums of your Workers. More claims results in higher rate that can result in higher premiums.

If you use an experience modification factor, click on the radio button.

• If Yes, ensure that you have entered the rate and date to track.
• If No, QuickBooks will set the rate to 100%.

Step 5: Consider overtime rates

• If you pay your employees who worked overtime:
  • Click on Yes, you have to clarify whether the overtime premiums will be included or excluded.
  • Click on No if you don’t.

Note: Contact your insurance company if you are not sure about what option to choose.

• Provide a name to your workers compensation payroll item.
• Recheck the information you entered and then click on Finish.

Add a code to the paycheck

QuickBooks allows you to add a code manually while creating a paycheck through the following steps:

If one of your employee requires additional Workers Compensation code assigned to hours worked, the code can be added manually to the paycheck while creating it.

• Run the Preview Paycheck window and from the Earnings section, choose items that you wish to assign a Workers Compensation codes to.
• From the WC Code ▼ dropdown options, choose appropriate code. In case you haven’t set up code in QuickBooks, click on Add New to create the new code.
• Once the correct code is applied and all the payment information are provided, click on Save & Close.

Exclude overtime premium from Workers’ Compensation calculations

Few of the insurance companies depends upon their insurance premium records on your employees’ base wages. This basically indicates that no extra charges are applied when an employee works overtime.

Note: You have to set overtime premium preference prior to start running your payroll. If you don’t set, your Workers’ Compensation reports will be inaccurate.

• From the Edit menu, go to Preferences.
• Choose Payroll & Employees and then go to the Company Preferences
• Click on Workers Compensation.
• Put a checkmark on the Track Workers Comp and Exclude overtime premium from Workers Comp calculation
• Click on OK

Reach Us For QuickBooks Assistance

This article should be helpful for you in setting up manual workers’ compensation in QuickBooks Desktop. However, if you are facing any kind of difficulty while setting up workers’ compensation, you can connect with our highly qualified team of ProAdvisors by dialing toll-free QuickBooks Support Phone Number +1-866-701-7446 for instant QuickBooks support.