As everyone in the business world knows, things can change in a heartbeat. Because of this, it’s better not to be locked into something for a full year. That’s where the concept of “pay as you go” worker’s compensation comes into place, protecting your business and employees alike with an added measure of convenience.
What is Worker’s Compensation?
Workers’ compensation, oftentimes referred to as simply workers’ comp, is a way for the state to make certain that your business is covered if an employee gets sick or hurt while actively performing job-related tasks. Essentially, it is a trade between the employer and the employee in the event that the employee gets sick or hurt on the job: the employee receives financial compensation to cover medical costs and regular wages while they are physically unable to work in exchange for not suing the employer for the pain and suffering incurred.
The Benefits of Pay as You Go Workers Comp
In many cases, workers’ compensation is calculated once per year. But in these cases, the burden of calculating a lump sum payment can be taxing on your corporate budget, and it can even become downright frustrating at times. On the other hand, dividing up an annual workers’ comp bill into small increments to be paid out each time you run payroll- and then automating these tasks- can be highly beneficial to your business in a variety of ways.
For one thing, pay as you go workers’ comp spares you from the disruption of your business’s cash flow that an annual lump sum payment could create. Not having to account for workers’ comp at all for most of the year but then suddenly being faced with one sizable bill at the end of the year could put a dent into your budget if you are not accounting for the impending expense the whole year. Avoiding this potential pitfall requires high levels of year-round financial care- and financial security.
Another benefit of pay as you go workers’ comp is that all the guesswork is effectively removed from the equation. Oftentimes, when calculated annually, the amount of money allotted to workers’ compensation is an approximation. With pay as you go workers’ compensation, you set yourself up to pay precisely the amount of money you owe each payroll. In the event that you face an audit, that audit process will now be much simpler as a result of this.
Lastly, the automation of this process shrinks your list of work tasks. With countless other work-related orders of business to attend to on a routine basis, it could be very easy to let something like workers’ comp slip between the cracks. With pay as you go workers’ comp, the task is automated, taking it out of your hands and placing it in the hands of your policy provider, which will then debit your bank account with each payroll.