Accounting Firm Workers' Comp and Seasonal Staff

Workers' compensation at an accounting or tax firm is priced on payroll, and two things can surprise a new owner: a premium audit bill after a busy season, and an ownership change report that is easy to miss. The class code is state specific, and the insurer and rating bureau assign it, not the owner. This guide is for the new owner of an accounting, tax or bookkeeping practice who inherited a policy and wants to check the class, the payroll estimate, the seasonal staff and the ownership change report.

The short answer

Premium is generally a rate per $100 of payroll for each class code, times the payroll in that class, times any experience mod. Small firms may have no mod at all.
The class code for an accounting or tax firm varies by state and by rating bureau. Do not rely on a code from another state's material, and let the insurer confirm the class in writing.
Seasonal preparers paid as independent contractors may be added to the premium base at the premium audit (the insurer's check of actual payroll) if the policy test is not met.
Under National Council on Compensation Insurance (NCCI) rules and many state versions, a change in ownership must be reported to the insurer within 90 days, and the seller's experience usually follows the business.
Texas lets most private employers opt out. North Dakota, Ohio, Washington and Wyoming sell coverage through a state fund, so check your state's rules before you assume either.

How is workers' comp priced for an accounting or tax firm?

The general formula is a state-approved rate per $100 of payroll for each class code, multiplied by the payroll in that class, with the experience modification (mod) applied. The mod compares a firm's past losses with what is expected for its class. A small firm may have no mod, because a business has to reach a state-set minimum premium over its experience period before one applies.

The hazard is modest. The Bureau of Labor Statistics (BLS) reported 0.2 recordable injury and illness cases per 100 full-time workers in 2024 for accounting, tax preparation, bookkeeping and payroll services, against 2.3 for all private industry. That does not set your premium, which depends on class, payroll, state and mod.

The Occupational Safety and Health Administration (OSHA) also treats accounting, tax preparation, bookkeeping and payroll services as partially exempt from routine injury and illness recordkeeping, though employers must still report a fatality, in-patient hospitalization, amputation or loss of an eye. State plans can differ. That is an OSHA paperwork rule, not a workers' compensation discount.

Where you operate changes the rules. Most states use NCCI, eleven have independent bureaus (including California, Massachusetts, New Jersey, New York and Pennsylvania), North Dakota, Ohio, Washington and Wyoming sell coverage through a state fund, and Texas is the one state where most private employers may choose not to carry it. Wyoming requires state fund coverage mainly for listed hazardous industries, so ask whether an office firm there must carry it. State fund policies do not include employers liability, so employers there usually add stop gap coverage. See the workers' compensation page and the workers' comp insurance cost guide for the broader picture.

Which class code applies to an accounting or tax firm?

Short answer: there is no single code for every firm. The insurer picks it from your state's rulebook, and it classifies the business, not each person's job. The table shows one state's wording (Massachusetts) as an example, so confirm yours.

An example of how one state's rulebook (Massachusetts) sorts accounting work
Work	What the bureau wording says	Caveat
Firm that provides auditing or accounting services for others	Massachusetts class 8803 is titled for traveling accountants and auditors and is applied to an employer in the business of providing accounting services for others. It does not include clerical staff	Other states use different codes and wording
Clerical staff who keep records, handle correspondence and answer phones	Massachusetts class 8810 covers clerical office employees, if the clerical area is physically separate from work exposed to the firm's hazards	In the NCCI Basic Manual (North Carolina edition checked), 8810 is a standard exception used alongside the main class only if the main class does not already include clerical employees
Staff who sell or collect away from the office	Massachusetts class 8742 covers outside salespersons and collectors, and does not apply to auditors	Applies only if duties match the class definition
Remote bookkeepers or preparers	Some states have a separate class for clerical staff who work from home	Ask whether your state has one and whether it fits your staff
Tax preparation storefront or payroll service	The Massachusetts wording does not name tax preparation storefronts or payroll services. Whether such a business is classified like a certified public accountant (CPA) firm or differently varies by state	Ask the insurer which class it used and why. A third-party cross reference shows different codes by state, which is a reason to ask, not a ruling

Two related rules matter. Massachusetts and several other states use their own bureau and manual (including California, New Jersey, New York and Pennsylvania), so a code or rule from NCCI material may not apply. And one employee's pay can be split between two classes only if records show the actual time and pay in each. Without records, all of it generally goes into the highest rated class involved (NCCI Basic Manual as published for North Carolina, so confirm for your state). Standard exception classes such as clerical cannot be split this way, so ask the insurer where an employee with mixed duties belongs. See the workers' comp class code definition and how to correct a workers' comp class code.

How should I estimate payroll when staffing swells in filing season?

The premium on the policy is an estimate. After the term ends, the insurer runs a premium audit of actual payroll and class codes, and the firm pays any balance or receives a refund. The standard NCCI policy lets the insurer audit during the policy period and for up to three years after it ends, so a low estimate can produce a bill long after tax season. Payroll for premium purposes generally includes wages, bonuses and paid leave, and the extra portion of overtime pay is excluded only if records show it separately for each employee (NCCI manual as published for North Carolina, so state rules vary).

Build the estimate from the full year, including both peaks (April 15 and the extension wave around October 15), not from the lean months. Keep records that an auditor can follow:

Payroll registers by employee, with start and end dates for seasonal staff.
Overtime and bonus detail shown separately.
Contractor agreements and any workers' compensation certificates they gave you.
Records that show owner and officer pay.

If seasonal or remote preparers work from other states, tell the broker which states, because state rules and classes can differ.

Owners and officers: whether their pay is included, excluded or elective depends on the state and the entity type. A solo CPA, a partnership and a multi-member limited liability company (LLC) can each be treated differently, so ask the broker to confirm in writing how your state treats the owners of your practice.

See the premium audit definition and workers' comp payroll estimates and audit bills for an acquired company.

What if I pay seasonal preparers as independent contractors?

The policy's premium base covers pay to your own employees and pay to "all other persons engaged in work that could make us liable" under the policy. If a contractor lawfully secured their own workers' compensation coverage and gives you a certificate, the pay can often be left out with proof. Otherwise an auditor can add it, and with no payroll records the auditor may apply a stated percentage of the contract price. A sole proprietor preparer with no policy of their own is the usual pressure point, because whether the auditor treats that pay as premium base depends on state law and the facts. The Internal Revenue Service (IRS) and each state use their own tests for who is an employee.

A hypothetical example. A firm pays ten seasonal preparers as 1099 contractors, $15,000 each, $150,000 in total. They work in the firm's office, on its software and its schedule. One preparer files a workers' compensation claim, and the next premium audit may add the $150,000 to the premium base. Whether the preparers are employees depends on state law and the facts. The lesson is to decide the classification on purpose, before the season, and keep the records.

Worker classification also affects overtime, which is a separate question from workers' compensation. Under federal rules CPAs generally meet the duties test for the learned professional exemption, but the exemption also requires pay on a salary basis at or above the required level, states can set stricter tests, and bookkeepers, clerks and others whose work is mostly routine generally do not qualify. Whether any of your staff are exempt is a legal question, so ask employment counsel. See 1099 contractors and workers' comp audits for a new owner and inherited wage and hour exposure.

What do I report when I buy the firm?

Short version: report the ownership change to the insurer within 90 days, and expect the seller's claims history to come with you.

Under NCCI rules the seller's past payroll and claims history usually follows the business, whether you bought the stock or the assets and kept the operations going, and an asset purchase into a new company generally does not give a fresh 1.00 mod. The policy requires the employer to report an ownership change to its insurer within 90 days, whether or not a mod applies, and the rating organization decides the result. Independent bureau states such as New York, California and Pennsylvania have their own tests and timing, so ask how your bureau treats a late report.

For an accounting practice, four points matter:

If the selling CPA stays on after closing, ask how their pay is treated (employee, owner or officer, or contractor), because it changes the premium base.
If you are adding the firm to a platform, businesses with more than 50 percent common ownership are generally combined into one mod, so an add-on's history can affect the others.
In an asset deal the seller's policy does not move to you without the insurer's written consent, so your own policy must be in force at closing. In a stock deal the company keeps its policy and any audit balance, and the purchase agreement decides who bears the cost.
Joining or leaving a professional employer organization (PEO) is not an ownership change for experience rating. In an asset purchase, the PEO's coverage is unlikely to reach your new entity on its own, so confirm with the PEO what covers your staff on closing day. In a stock purchase, the PEO agreement's change of control terms decide.

State fund states have their own successor rules. In Washington, a buyer can become liable for the seller's unpaid state fund amounts. The statute (Revised Code of Washington (RCW) 51.16.200) protects a buyer only if it gives the Department of Labor and Industries written notice and no assessment is issued within 180 days of that notice, and it requires the buyer to withhold enough of the price to cover amounts owed until the seller shows nothing is due. In Ohio, the Bureau of Workers' Compensation can transfer a predecessor's experience and obligations in listed situations (Ohio Administrative Code 4123-17-02). Ask counsel and the state fund before closing.

Read how to review an experience mod for errors, changing payroll providers without a workers' comp gap and the core coverage guide. If you send Morrow the latest premium audit (the insurer's check of actual payroll) and the class code page, it can help prepare ownership information for the insurer, but it cannot decide the result.

Keep reading

Frequently asked questions

What workers' comp class code does an accounting firm use?

It varies by state and by rating bureau, and the insurer assigns it. Massachusetts, for example, has class wording for accounting services employers and a separate clerical class, while other states use different numbers. Ask your insurer to confirm the class in writing for your state.

Can I put all my staff in the clerical class to lower premium?

Not by choice. Class codes classify the business, and the clerical standard exception applies only to employees whose duties fit the definition and only where the main class does not already include clerical staff. Misclassification can be corrected at the premium audit.

Do I have to carry workers' comp if I bought a small firm in Texas?

Texas is the one state where most private employers may choose not to carry it, but that choice has consequences and some reporting duties. Check with the Texas Department of Insurance, your lender and deal counsel before relying on it.

Does the seller's experience mod really follow me?

Under NCCI rules, usually yes. Both stock purchases and asset purchases where the buyer takes over the operations are ownership changes, and the seller's experience generally transfers. Report the change to the insurer within 90 days.

Are seasonal tax preparers on my payroll for workers' comp?

If they are employees, yes. If they are paid as contractors, the auditor may still add their pay unless they secured their own coverage. State law decides who counts as an employee, so classify them deliberately and ask your broker.

References

Just bought a business? Get your insurance reviewed.

Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.

Request a review Check a contract

Morrow · 25 New Chardon Street, 4th Floor, Boston, MA 02114

This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.

Workers' Comp, Payroll and Class Codes for an Accounting and Tax Firm