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Intuit
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Manual Workers' Compensation in QuickBooks Desktop

Learn how to set up your Workers’ Compensation in QuickBooks Desktop.

If you have a payroll service subscription, you can manage and track your Workers' Compensation premiums manually. We’ll show you how.

Note: If you want to automatically pay Workers' Compensation premiums every time you run payroll, check the Pay As You Go service.

Get started with Workers Compensation

You need to set up the workers compensation before you pay your employees so your reports won’t be incorrect or incomplete.

Step 1: Turn on Workers Comp

  1. Go to the Edit menu, then select Preferences.
  2. Select Payroll & Employees, then Company Preferences.
  3. Select Workers Compensation.
  4. Select the Track Workers Comp checkbox, as well as the following checkboxes:
    • Display message to assign codes to display the Workers Comp messaging in QuickBooks.
    • Exclude overtime premium from Workers Comp calculation to show overtime premium as a separate item on your report.
  5. Select OK, then OK.

Step 2: Set up Workers Comp

  1. Go to the Employees menu, then select Workers Compensation.
  2. Select Manually Track Existing Workers’ Comp Policy.
  3. Make sure you have the requirements listed in the Workers Compensation Setup Wizard window.
  4. Select Next.
  5. Enter the needed info of your workers’ comp insurance provider, where you pay your premium to.
  6. Select Next.

Step 3: Set up code for your employees

If you assigned a job classification code to your employee, QuickBooks automatically assigns that code to the employee's earning items. So when you write a paycheck, it adds to their Workers' Compensation premiums for each earnings item.

Note: If an employee is exempt from Workers' Compensation insurance, such as the owner, assign them the Exempt code.

  1. From the Workers Comp Code ▼ dropdown menu, select Add New to create a new code.
  2. Create different Workers Compensation codes for the same jobs in different states. This allows you to assign state-specific rates to each code, as different states sometimes have different rates for the same job.
  3. Select Next.

Step 4: Add an experience modification factor

Experience Modification factor is the rates assigned by insurance companies to calculate your Workers' Compensation premiums. This is based on your company's record of Workers' Compensation claims. The better your track record, the lower your rate (or at least the fewer increases), which sometimes results in a discount on your Workers' Compensation premiums. The more claims you have, the higher your rate, which sometimes results in a higher premium.

Select the radio button if you use an experience modification factor or not.

  • If you select Yes, make sure to enter the rate and date for tracking.
  • If you select No, QuickBooks will set the rate to 100%.

Step 5: Consider overtime rates

  1. Do you pay your employees who worked overtime?
    • If you select Yes, you need to determine if you’ll include or exclude the overtime premiums from your calculations.
    • Select No if you don’t.

    Note: Get in touch with your insurance company if you’re unsure.

  2. Enter a name for your workers compensation payroll item.
  3. Review the information, then select Finish.

Record a weekly timesheet

To include the timesheet data in your paychecks, you have to create a weekly timesheet.

Add a code to the paycheck

You can manually add a code when you create a paycheck. Here’s how.

If an employee needs an additional Workers Compensation code assigned to hours worked, you can manually add the code to the paycheck when you create it.

  1. Open the Preview Paycheck window.
  2. In the Earnings section, select the item you want to assign a Workers Compensation code to.
  3. Select the WC Code ▼ dropdown, then select the correct code. If the code isn't set up in QuickBooks yet, select Add New to create the new code.
  4. Once you applied the correct code and all payment info, select Save & Close.

Exclude overtime premium from Workers' Compensation calculations

Some insurance companies base their insurance premium calculations on your employees' base wages. This means that they don't charge you extra when an employee works overtime.

Note: You must set the overtime premium preference before you begin running your payroll. Otherwise, your Workers' Compensation reports might be inaccurate.

  1. Go to the Edit menu, then select Preferences.
  2. Select Payroll & Employees, then the Company Preferences tab.
  3. Select Workers Compensation.
  4. Select the Track Workers Comp and Exclude overtime premium from Workers Comp calculation checkboxes.
  5. Select OK, then OK.

Additional steps

Workers' Compensation insurance companies usually change the rates they charge for each code yearly. Once you get the new rates from your insurance company, enter them in QuickBooks.

  1. Go to the Employees menu, then select Workers Compensation.
  2. Select Workers Comp List, then the code you want to update.
  3. Select Workers Comp Code ▼ dropdown menu, then Edit Workers Comp Code.
  4. In the New rate for this code field, enter the new rate.
  5. In the Start using rate on field, enter the date you want QuickBooks to start using the new rate.

    Note: If the date is after the payroll, QuickBooks Workers Comp reports automatically updates the numbers. However, it won't update individual paycheck info and you may need to make manual payroll liability adjustments.

  6. Select OK.

  1. Go to the Employees menu, then select Workers Compensation.
  2. Select Workers Comp List.
  3. Select Experience Modification ▼ dropdown menu, then Edit.
  4. In the New Experience Modification Factor field, enter the new rate.
    • If the Experience Modification factor is 1.25, the rate should be 125%. This is a 25% increase in the Workers' Compensation premium. If the factor is .81, then the rate should be 81%. This is a 19% decrease in the Workers' Compensation premium.
    • Entering a previous date for the Experience Modification factor has no effect on the payroll that’s dated earlier than the current date.
    • QuickBooks can't track more than 1 Experience Modification factor at a time.
  5. In the Start using rate on field, enter the date you want QuickBooks to start using the new rate. Set the date before the first payroll.

    Note: If the date is after the payroll, QuickBooks Workers Compensation reports will automatically update the numbers. However, it won't update individual paycheck info and you may need to make manual payroll liability adjustments.

  6. Select OK.

Pay your Workers’ Compensation premiums

Now that you’re all set, you may need to pay your workers’ compensation premiums.

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