Even one mistake resulting from payroll and Workplace Safety Insurance (WSI) myths can cost a small business hundreds of thousands of dollars. After an audit you have to pay the underpaid remittance discovered and applicable penalties and interest (P&I). Having never been audited, and caught, you may wrongfully believe all is well. Your situation should be analyzed and mistakes fixed before an audit. Consequently you may be paying higher remittances but no P&I. Mistake-free filings may also reduce chances of your audit, which if encompasses prior periods could cause severe damages, unless you now fix mistakes of the past also. Following unravels some dangerous myths.
Myth 1: It is employer’s choice to hire a worker as an employee or a contractor. WRONG! Hiring employees as contractors does reduce your payroll/WSI costs. However worker status is determined using specified criteria, not your criteria, which may be just an opinion. The criteria are different for payroll and WSI—a worker may be a contractor for payroll but not for WSI. Myth 2: A business owner can pay any work compensation to family members. WRONG! They are paid partly to save family’s personal taxes. However, members who actually work for the business can be paid, but only the market price of the work. Myth 3: WSI is optional at worker’s choice. WRONG! It is so only for business Officers and Owners. Myth 4: WSI premium is not payable on wages to relatives. WRONG! Premiums are optional, but only for relatives who are Officers or Partners. Myth 5: The WSI Rate Group (RG) once assigned your business need not be changed. WRONG! As your products/services change, you must inform the WSI Board–they then amend your RG and premium. Contact us if you need more information on the subject.