A small business may, on occasion, receive an official request from a state or federal agency to review the company’s books. But one agency that is often overlooked when it comes to audits is the insurance agency.
Your workers’ compensation provider will likely request a payroll audit upon each annual renewal or new premium application. In addition to the basics, such as the total gross payroll and number of employees, copies of quarterly payroll reports will need to be provided. The missing documents that often send the preparer of an audit scrambling are certificates of insurance from subcontractors.
To stay ahead of the game, request and receive certificates from subs prior to the start of a job. Track policy expiration dates of all subcontractors if their services are used repeatedly. Including certificates of insurance from outside service providers in your audit will save your company a considerable amount of money.
Preparing for a payroll audit doesn’t need to be a source of stress. Keeping a filing system throughout the year to document all labor disbursements, employee and non-employee alike, will help you sail through a smooth audit. And before you know it, you’ll complete the next one without a hitch!