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bbpropmaint
03-07-2007, 11:45 AM
My insurance company sent me a letter stating that i have an upcoming audit on my workers comp policy..They want to see my payroll records..i do not have a payroll!!!! the only reason for my comp policy is it is required to bid on certain projects...what do i do??What will they want to see..my business is a partnership ...if i need help its usually a friend i pay under the table, which isnt often..any advice??

jsf343
03-07-2007, 11:55 AM
I am being audited soon too. I ran a thread the other day (look farther down and you will find it) and a few responded saying it is no big deal at all. However, I am curious why in the world you have workers comp if you don't have employees on payroll. You need to square that away somehow. read the thread and feel free to ask questions, there are others who have gone through this before and they can help. I wish I could help more but I am in a similar boat.

MarcSmith
03-07-2007, 12:21 PM
The reason for the Audit...WC premiums are based mostly on premiums. and as owners generaly are not covered under the policy for solo ops, it seems fairly pointless, unless youwant to bid on commercial props.

I always paid myself a "stipend" like 1000 a month to cover the WC so that way if i was audited I had a paper trail of payroll.

Icould never understan the audit, you are paying for the WC, but youare not covered...so...the insurance company is making money for doing nothing. You'd think they'd be happy and not greedy SOBS....

Mjh Excavating
03-07-2007, 12:58 PM
My insurance company sent me a letter stating that i have an upcoming audit on my workers comp policy..They want to see my payroll records..i do not have a payroll!!!! the only reason for my comp policy is it is required to bid on certain projects...what do i do??What will they want to see..my business is a partnership ...if i need help its usually a friend i pay under the table, which isnt often..any advice??

They are going to want to see if you hired and paid any subs, they will look at your books for checks made out to cash or large cash withdrawals(under the table money) if you had any subs make sure you have a WC certificate from them or you will be paying it. Have your ducks in a row and there won't be any problems.

mslawn
03-07-2007, 09:18 PM
I always paid myself a "stipend" like 1000 a month to cover the WC so that way if i was audited I had a paper trail of payroll....
That does not fly. There are minumum payroll obligations for the owner,I think this year it was 30something thousand, no matter what you paid yourself. He will need an owner exclusion endorsement to not owe anything else.

mattfromNY
03-07-2007, 10:07 PM
I just had an audit... no big deal. At least in NY, if you recently got the comp. and this is your first audit, it will be no big deal. The guy came to my house (home office), made sure I had my 'notice of compliance' employee poster hanging where an employee could see it (It comes with the paperwork they sent you when you got your policy), made sure I got all the paperwork they had sent me, went over my billing schedule and where to send payments, etc., and basically just described the whole process (why I pay what I do, what to do if we have a claim, where to send payments, how to get a refund if we dont use the whole amount we've paid in, etc.)
It is basically just a meet and greet with your contact person, it took about 1/2 hour.
Your monthly payment is based on a salary you dont have, it is just a flat minimum $26000 per year in NY state. It is this way the first year, b/c they dont have any other payroll to go off of, then the next year it will be based on the prior years' payroll, etc.,
I screwed up when I applied for comp., and told my agent I would be hiring a part-time worker this summer, with payroll approx. 5000.00 this year. Workers Comp. upped my price, even though I havent hired anyone, still dont have payroll, or anything. You will always be billed ahead of time, they base it on what you anticipate doing, then supposedly you will get some of it back at tax time if you dont use it all. I'm not holding my breath!!!

mattfromNY
03-07-2007, 10:12 PM
Oh, yeah. They will Drill into your head that you MUST pay on time, or you will pay dearly in interest, fines, etc.
I loved it when the comp. guy told me they could fine me if I didn't return a phone call, or reply to a letter within a certain time frame. I was SO PI$$ED, b/c when I called to confirm my audit, the receptionist couldn't give me an exact time the audit guy would be coming to see me. It would be between 8 and 12. I told her if he wasnt here, I was going to fine them!!!! She didn't find any humor in that.

jsf343
03-07-2007, 11:34 PM
Oh, yeah. They will Drill into your head that you MUST pay on time, or you will pay dearly in interest, fines, etc.
I loved it when the comp. guy told me they could fine me if I didn't return a phone call, or reply to a letter within a certain time frame. I was SO PI$$ED, b/c when I called to confirm my audit, the receptionist couldn't give me an exact time the audit guy would be coming to see me. It would be between 8 and 12. I told her if he wasnt here, I was going to fine them!!!! She didn't find any humor in that.


:laugh: :laugh: :laugh: :laugh: I love that! you would fine them! hahahaha
I will have to remember that because that really gets under my skin as well. (as if you had nowhere else to be) I learned a lot reading your post, (I am about to be audited also) 1 question though... did they want to see your shop or tools? mowers, anything like that? You would think they would want to see everything like that to make sure you are safe (no claims) Also, what do you mean by your billing? Customer billing?! why in the sam H would they want to see that? surely thats not what it is. I am curious to hear more.

MarcSmith
03-08-2007, 06:30 AM
That does not fly. There are minumum payroll obligations for the owner,I think this year it was 30something thousand, no matter what you paid yourself. He will need an owner exclusion endorsement to not owe anything else.

It was fine when I was solo, but once I got employee's I did Paychex, and they rolled taxes, and WC into the fold for me. no fuss no muss...

supercuts
03-10-2007, 07:07 AM
i was audited last year a few months after i canceled my policy. they sent me different forms and i didnt really read them since i had canceled my policy. after months of getting them i stopped throwing them away and read them. my rates went up $500 since i didnt respond and it was a PITA to straighten it.

haybaler
03-10-2007, 09:07 AM
I'm surprised there coming to your office. normally (as long as there's no claims) it's just a phone call and they ask you what your payroll was for the previous year. Like what was said before you pay a year in advance and then they adjust it at the end of the year. it's better to overpay then underpay.

jsf343
03-10-2007, 12:46 PM
i was audited last year a few months after i canceled my policy. they sent me different forms and i didnt really read them since i had canceled my policy. after months of getting them i stopped throwing them away and read them. my rates went up $500 since i didnt respond and it was a PITA to straighten it.

wow! really? that is crazy, after you canceled? How could they have the authority to do that? These people have just a bit too much power or at least they think they do.

mattfromNY
03-10-2007, 04:30 PM
jsf343, I am referring to the bill they send to you each month.

Once again, they screwed my bills up!!! Just last night I get a bill, they overcharged me last month by $53.00, they adjust this months bill to reflect the refund, I will pay less this month. On their bill, it shows me a payment schedule for the next 6 payments, now it is different from what last month showed. I ask how the HE!! a guy is supposed to keep within a budget if the damn gov't. cant even keep their paperwork straight!!! I'm not complaining about the refund, that was certainly nice, but whats going to change next month???!!!! I'll probably owe them more!!!!

Tahoe1889
03-10-2007, 06:11 PM
I have been audited every year for the past couple no big deal. They come to me and they want to look at my check book and any payroll that I have paid out. I have Quickbooks so the reports are easy to provide them and they are gone in 10 Mins. They wanna see any Payroll Tax forms you have send in and any $$ you have paid out to Sub Contractors. If you have paid out to sub contractors you better hope you got a certificate of insurance from them and they are paying workman's Comp. if not you will pay their workman's comp on any money you have paid them including materials. I don't have any payroll so it's pretty simple.

VBsnow
03-19-2007, 11:33 AM
Provide all of your tax returns and check register. Actually, just provide what they ask for; do not volunteer info. You already stated that you pay people under the table so that is your biggest worry.

The owners payroll is not considered by actual pay. Here in VA there is a range of 5200 to 26,300. It depends on your structure and the amount actually paid out.

As for having fun w/ the auditer telling them you would "fine" them; that should work out for you real well. Let's see, same guy calls next year and for some reason your late(or he is) to audit. He sees his notes on the computer about you sense of humor. He then reports you as non-compliant. NCCI is notified and you are blackballed until it is resolved. You kick and scream about how unfair it is! While you do this(over 8 weeks sometimes), your competitors chip away at your book of business. Good thinking! Flys and honey, baby, flies and honey.

colestat
03-19-2007, 01:02 PM
Last year was my husband's first year in business. He just received a form to fill out from the insurance company. It asks for last year's payroll (gross income), number of employees and last year's sales. My husband is a sole proprietor. He has no employees or subs and doesn't receive any payroll from the business.
I asked the insurance agent what to use for owner's payroll. She said to use gross income. I asked if this meant gross sales - she said no - just use $16,200 that will be fine.
My husband didn't make 16,200 his first year. Should I put down the business' net income? I am very confused.

VBsnow
03-19-2007, 01:30 PM
You may need to provide both. For payroll you provide GROSS payroll. You list one item for owners/officers, and another for employees.

The company may invoke a minimum, but they will always invoke a maximum. For example, here in VA, the officer is charged a MAX of 26,300 and Sole Props are charged 15,600 for workers compensation.

For general liability most companies use a set amount of 26,300.

Let the companies figure out their minimums and you provide what you actually have. When you receive your copy of the audit, you should review it for mistakes. If your agent is competent, you could ask them for help. If they can't or won't, find a new agent.