One of the requirements for most businesses is that they have workers’ compensation coverage on employees. The premiums for these policies are based on classification and payroll costs, and it is usually estimated at the start of the year. If that results in a cash flow problem for your business, it may be time to consider a pay-as-you-go workers comp policy instead.
Premiums Are Based on Actual Payroll Costs
Instead of estimating your payroll and basing premiums on that amount, a pay-as-you-go plan uses the actual payroll figures incurred by a business. That allows it to adjust according to changes in payroll costs. For businesses with large seasonal fluctuations, that can be a lifeline in slower times. Since your premium is based on payroll, you won’t have to make a sizeable upfront investment in a pay-as-you-go policy.
Automatic Payments for Convenience
The convenience of automatic payments takes one extra task off your plate. Pay-as-you-go premium payments will be deducted from your bank account along with other payroll costs so you don’t have to worry about them.
Audits Are Easier
Pay-as-you-go policies generally require fewer adjustments than estimated ones after annual audits, which mean smaller surprise bills or overpayments for your business.
Most states require businesses to provide workers compensation insurance for employees. While you have many choices for the right policy for your business, the research indicates there are many benefits of pay-as-you-go workers comp for your small business that make it worth a more thorough investigation.