Implications of Workers' Comp.
The states that require workers' compensation participation (every state except Texas and New Jersey, which have voluntary programs) will require participation in one of the following:
Speaking of risks, if you don't participate in the workers' compensation program in a state where participation is mandatory, you face fines, possible imprisonment, and denial of the right to conduct business in your state.
Primary tax implication. You can deduct workers' compensation premiums and benefit payments as ordinary and necessary business expenses.
Primary salary implication. You don't have any obligation for
withholding or FICA on any workers' compensation benefits you pay.