Wondering if you still have to report payroll even if you don’t pay yourself? The answer is yes, if you are included for coverage on your policy.
Business owners and officers—especially in today’s economy or those with startup businesses—may not draw a salary from their business. But for workers’ compensation insurance purposes, they must report payroll for themselves if they are included for coverage. (See the Coverage section below.)
Why
If business owners and officers are included for coverage, they need to report the required owner/officer payroll amount as discussed below. One reason this is necessary is because workers compensation premium is calculated based on payroll. Included business owners need to report the required payroll amounts for themselves for the premium to accurately reflect the exposure. Another reason to report the required payroll is because injured employees' payroll amounts are used to calculate eligible benefits payments.
How
The Missouri Department of Insurance, Financial Institutions and Professionals Registration (DIFP) adopted changes recommended by the National Council on Compensation Insurance (NCCI) to sole proprietor/partner, LLC member and executive officer payroll amounts in 2007.
Since 2007, the required payroll amount for business owners and officers has increased yearly by approximately 20 percent and will continue to increase until it has reached 90 percent of the State Average Weekly Wage (SAWW) as determined annually by the Missouri Department of Labor and Industrial Relations. It is estimated that the transition period will be complete by 2011, and thereafter the payroll basis will be indexed to the same 90 percent of the SAWW and revised annually.
As of July 1, 2010, the payroll amount to be used by all owners is $31,400.
Coverage
Corporate officers are required to be included and have the same status as employees under Missouri workers compensation statute. LLC members are also included under the statute unless they elect in writing to be excluded. Sole proprietors or partners are not included under the Missour workers compensation statute, but may elect to be included for coverage.
Questions? Contact Customer Service at custsrv@mem-ins.com or 1.800.442.0593.