Let us first understand what is the meaning of workers’ compensation. workers compensation is an insurance arrangement mandated by the government which pays the employee in case of injury while working or during the course of employment. It pays wage replacement as well as medical benefits to the employees.
In the below write up we will try to understand the procedure of setting up of worker compensation account in QuickBooks.
Action 1.Turning on the worker’s compensation in QuickBooks Desktop
- First of all, you need to go to the Edit > choose Preferences > Payroll & Employees > Company Preferences.
- Now in the second step, choose Worker’s compensation > tick on Track Workers comp checkbox.
- After that, you need to tick on the “Display message to assign codes” checkbox and also on the “Exclude overtime premium from Workers comp calculation” and then click on OK.
Action 2.Setting up of Workers compensation in QuickBooks Desktop
For setting up the Worker’s compensation in QuickBooks Desktop, you will have to follow the below steps in the QuickBooks:
- First, you need to go to the Employee menu > choose Worker’s compensation > choose manually track existing worker’s comp policy.
- Now you need to ensure that your system has all the requirements listed in the setup wizard window. After that click on Next
- Now in this step, enter the details of the worker’s compensation insurer provider and click on Next.
Action 3. Setting up of code for your employees
For assigning job classification code to your employees for workers compensation, you need to follow the below steps:
- First of all, from the worker’s comp code dropdown > click on add new and create a new code.
- Now you need to create different worker’s compensation codes for the same job in different states to help you in assigning the state-specific rate to each code and click on Next.
Action 4. For the creation of Workers compensation payroll item
- First of all, choose List > Payroll item list > Payroll item dropdown> and New.
- Now from the Payroll item Type screen > choose other tax > and click on Next > Select the option “Tax is paid by the company” > click on Next.
- Now you need to enter the name of the item and click on Next on Name used in paychecks and payroll reports.
- Now from the “Agency for company-paid liability” screen > enter the name of the agency to which liability is paid and also choose the appropriate supplier. After that, you can select default choices for the account or choose a separate account for tracking the worker’s compensation and click on Next.
- Now from the “Tax tracking type” screen choose none and click on Next and from the Default rate and limit screen, specify the rate and click on Next again.
- Now after ensuring that there is a checkmark against all the payroll items on the taxable compensation screen, which you want as a basis of calculation of your workers’ compensation, click on finish.
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