In Nevada, workers' comp is required for almost every employee (NRS 616B). Your premium is an estimate based on projected payroll when the policy starts. At year-end (or policy end), the carrier does an audit to true it up. You either owe more, or get money back.
Most owners we meet have never gotten money back. That's almost always because of three fixable mistakes.
Mistake 1: Wrong class codes
Nevada uses NCCI class codes. Each code has a rate per $100 of payroll. "Plumbing — commercial" is way different from "Plumbing — residential" which is different from "Clerical office."
- Most shops get lumped into one high-risk code by default.
- Your office manager, dispatcher, and bookkeeper should be class 8810 (clerical) — pennies per $100.
- Outside salespeople should be 8742.
- Split payroll properly and the audit refunds you for the over-classified wages.
Mistake 2: Including the wrong wages
Premium is calculated on payroll — but not all payroll counts the same:
- Overtime premium (the extra half on time-and-a-half) is excluded. Only the straight-time portion counts. DIY auditors include the full OT and overpay.
- Tips reported by employees are excluded in Nevada in most policies.
- Section 125 / health insurance deductions — check whether they're excluded under your carrier's manual.
- Bonuses tied to safety or attendance — sometimes excluded, sometimes not. Document them.
- Owner / officer payroll caps — Nevada caps included payroll for executive officers (currently around $54,600 minimum / $218,400 max annualized). If you paid yourself $300k as the S-corp owner, only the cap counts.
Mistake 3: 1099s that are actually employees
Auditors will demand certificates of insurance for every 1099 you paid. No COI? That 1099 gets added to your payroll at yourhighest class rate. We've seen $40k surprise bills from this alone.
- Collect a current COI from every sub before they swing a hammer.
- Re-read our classification guide — Nevada uses an ABC-style test for many roles.
The audit itself — what they'll ask for
- 941s, W-3, and state quarterly returns (NUCS-4072) for the audit period.
- General ledger / payroll register broken out by employee.
- 1099 list with COIs.
- Job descriptions for anyone you're claiming as clerical or outside sales.
Pre-audit, we reconcile all of this and assemble a clean packet. The auditor's job becomes "verify the numbers" instead of "go fishing." That's the difference between a refund and a bill.
How to set yourself up for a refund
- Set class codes correctly from day one — not at audit time.
- Run payroll so OT premium, tips, and Section 125 are tagged separately.
- File COIs for every sub in one shared folder.
- Use a Tax / Insurance bucket (Profit First style) so the audit number — refund or bill — never wrecks cash flow.
WC audit coming up — or just got a scary bill? Send us the policy and the audit worksheet. We'll tell you within a day whether you should dispute it, and exactly how.
