It’s that time of year again – the payroll true-up period has begun for private employers in Ohio. By August 15th, all private employers in the state are required to report their actual payroll for the previous policy year to the Ohio Bureau of Workers’ Compensation.
This process, known as the “payroll true-up,” determines if you paid the proper amount in workers’ compensation premiums over the last year based on your real payroll totals.
How does the payroll true-up work?
Let’s start with the basics. The Ohio Bureau of Workers’ Compensation (BWC) determines your premiums based on your payroll amount, which they refer to as ‘exposure’. This is multiplied by a specific rate to calculate your estimated premium.
But here’s the catch – this is just an estimate. At the end of each policy year, you, as an employer, must file a true-up report that reflects your actual payroll for that year. This is what we call ‘true-up’. It’s when you report the actual payroll, not the estimated one.
Completing the true-up involves two key steps: reporting your actual payroll and making any due payments if your payroll was underestimated. Think of it as a reconciliation process, ensuring that what you’ve paid in premiums matches your actual payroll.
Now, let’s talk about deadlines. For private employers, the payroll true-up period kicks off on July 1 and runs until August 15. It’s crucial to complete this process before the deadline to avoid any fines, penalties, and the risk of being dropped from discount and rebate programs.
New Employers vs. Existing Employers
What if you’re a new employer? Or an existing employer who had coverage before this policy period? Well, your estimated annual premium is established differently. For new employers, it’s based on the 12-month payroll estimate you submitted on your application for workers’ compensation coverage. For existing employers, it’s based on the estimated payroll from the previous policy year.
Here’s where Harper & Company steps in. We take the hassle out of the process by filing the payroll true-up report for our clients. If your true-up payroll exceeds the estimated payroll, you’ll owe additional premium. On the flip side, if your true-up payroll is less than your estimated payroll, you’ll receive a premium credit.
Even if you have zero payroll, you must still submit a payroll true-up report.
The payroll true-up might seem like a daunting task, but with a clear understanding and a little help from Harper & Company, you can navigate it like a pro. Mark your calendars to make sure you have all documentation submitted to us by 8/1, and let’s get ready to true-up!