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Ask any business owner what one of the top challenges they have in running their business and, by far, HR or people will be in the top of responses you get. Business owners say that doing the work of their business is the easy part but people, and dealing with all the things that surround people as employees, is difficult. That being said, if you can master the following five HR terms, understand and utilize them, you might find the challenges a little less stressful.

By no means are these terms inclusive of everything you need to know and take care of as an employer. However, if you master these five, your business will reap some great benefits.

  1. Employee vs. Contractor

Classification of workers is one of the biggest errors an employer can make. An audit by the IRS or Dept. of Labor can uncover misclassification that can be very costly for businesses of all sizes. So know the difference and abide by the regulations for each type.

An employee is someone who performs services for a company following guidelines for when, where, and how to do the work. The company is responsible for withholding income taxes, withhold, report, and make deposits for Social Security and Medicare taxes, as well as pay unemployment taxes on the wages paid to an employee. There are strict reporting and deposit requirements.

A contractor is a person or organization that provides services or goods to a business under a contractual agreement. None of the withholding, reporting, or deposit requirements apply to a contractor.

There may be financial and reporting benefits to working with contractors, but it really depends on the kind of work and the way you want it done whether or not an employee or a contractor is the right sort of arrangement for your company. Misclassifying workers, especially for financial gain, is highly frowned upon and the penalties and fines are substantial.

  1. Exempt and Non-exempt Employees

The difference between the two types of employees is critical for small business owners.

Exempt employees are excluded from minimum wage, overtime regulations, and other protections under the Fair Labor Standards Act.

A non-exempt employee is required to be paid minimum wage and overtime pay for any time worked in excess of 40 hours per week. There are other guidelines in accordance with the Fair Labor Standards Act as well.

A claim against your business for non-payment of overtime can be a significant disruption. In some cases, it might lead to the need for legal representation and court appearances, and, can result in costs that can become a financial burden. You would be dealing with legal ramifications in these cases, so knowing the difference between the two types of employees, and paying them according, including overtime, is recommended.

  1. Background Check

Some, especially beginning small business owners, might think a background check is a silly thing to undertake when hiring people. But consider that you are putting your business – your livelihood – at risk each time you include someone new into your organization. And you don’t have to have an HR department to make it a practice of running a background check.

While not 100% effective (nothing is that effective) you will probably be able to identify problem areas or past behavior that might not be aligned with your business values. The old adage, you can’t tell a book by its cover, comes to mind. No one hires a person believing they would embezzle funds, steal from the warehouse, drive company vehicles recklessly, or assault co-workers or clients. A background check might have brought to light red flags that might prevent you from inviting problems into your business.

  1. At-will Employment

 At-will employment means that an employee can be fired at any time for any reason. Likewise, employees can leave at any time for any reason. Generally, all states recognize at-will employment (except Montana, at this writing), but some states put limitations or qualifications on it.

For instance, Indiana does not consider employment an implied contract. This comes into play in wrongful termination claims. In an article from the Bureau of Labor Statistics (BLS), the following explains the basic of implied contract in regards to employment:

“Another widely recognized exception prohibits terminations after an implied contract for employment has been established; such a contract can be created through employer representations of continued employment, in the form of either oral assurances or expectations created by employer handbooks, policies, or other written assurances.”

  1. Employee Handbook

It might seem ridiculous to have an employee handbook if you have only one or two employees and no real HR department. There are no laws or regulations requiring employee handbooks but it might be one of the best things you can do for your business and your employees.

An employee handbook should outline all benefits and policies for employees. There are many rules and regulations regarding benefits offered to employees, issues about discrimination, and harassment. You can lay out all the policies and how they are handled in your business to prevent claims of preferential treatment or discrimination. In addition, written policies in handbooks document what is, and is not, acceptable in your workplace as well as the repercussions for non-compliance.

In other words, a handbook lays down the rules. Be aware, however, that your compliance with the document is required as well, so make sure you can live with the consequences of a key employee breaking the rules.

These five HR terms are more than just words. They are important to the health of your business in a variety of ways as mentioned above. People are always going to surprise, disappoint, enrage, and touch us. That’s the humanity of it. But armed with knowledge you can cope with it all.

Many of these terms have to do with payroll, which is one of the most important elements of your business if you have employees. Have a problem with your payroll and you have upset employees and we all know upset employees cause problems in performance and the work environment.

Because payroll is such an important task, the clients atThe Payroll Department tell us, payroll is best left to professionals and experts. For more than 20 years we have processed payroll for small businesses in several states. It’s our job to provide accuracy, help our clients to stay in compliance with laws and regulations, and keep employees paid on time pay period after pay period.

We do our part to keep your employees happy! Contact us today to find out more about how we can help you take care of the people in your business.

-Elaine of The Payroll Department Blog Team

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Knowing how to stay ahead of the curve and keep your business successful often comes down to a few simple rules. Once you understand that business competition isn’t inherently a bad thing for your company, it’s a lot easier to adjust your tactics so you not only feel better at the end of the day, but that your bottom-line shows improvement, too.

In that sense, running your own small business can feel a lot like playing sports. You’re competing with others in your same industry, just like your high school team did on the football field. The difference, though, is that this type of game is closely tied to “real life.” The actions you take in your business directly impact the months and years ahead of you. Maintain a healthy attitude and perspective, and you’ll be able to grow your small businesslike a real pro.

  1. You Can’t Do It Alone.

Teamwork makes the dream work, right? This rule applies to every small business, just like any group sport. Clear communication and getting your best players (or employees) in a position where their natural skills can shine is a big part of making sure your operation runs smoothly every day.

Another part of enjoying the game is to put yourself in a role that matches your core competencies, too. If you aren’t a fan of micro-managing your company’s hiring process, employee benefits, or your bookkeeping records, then it’s best to delegate. Knowing when to outsource these important aspects of your business ensures that you get an all-star team in every department. When in doubt, it’s best to go to the experts. Having capable professionals behind the scenes makes all the difference when you go head-to-head with your business competition. Make sure every member on your team is in a position to do their very best work.

  1. Faster Isn’t Always Better.

Sure, efficiency is great, but don’t get it confused with being reckless. Speed isn’t everything—even when it comes to getting paid quickly! A construction job that beats its deadline might make everyone happy for the short-term, but that only lasts if there weren’t any mistakes. A lot of small companies succeed because they deliver quality over their business competition, not just fast results.

Putting the emphasis on quality also helps position your company as an industry leader. Assuming their rate is the same, would you rather hire the accountant that can finish your taxes in 60 minutes, or the one who makes an effort to talk with you about your past year, future goals, and financial concerns? For something that high-stress, the second option is usually the way to go. (And it’s worth noting that your customers probably feel the same about your products and services!) Taking the time to build relationships and trust may take longer upfront, but it’s a smart way to have a loyal customer base for years to come.

  1. Winning Isn’t Everything.

Probably the biggest take-away from sports for small business owners is this: Competition helps you grow.Knowing that your customers can pick and choose from a variety of options is what motivates you to do better from every angle of your business. So, is that really a bad thing?

If you can accept that mentality, then you might be ready to graduate to the big leagues and start building healthy relationships with your competitors. Sound controversial? Business competition exists because one company alone isn’t able to serve every single customer in your service area. It doesn’t mean that you have to join forces with them or beat them out-right. Instead, consider the option of creating working relationships so if you ever get booked solid, you can refer your clients to another trusted peer. In that sense, you’re not exactly losing business—you’re just working to build relationships and hopefully earn the respect of your customers and competitors for the long-term.

Got another great sports-business lesson? Feel free to leave a comment below to share your insights! The Payroll Department values your input, so please don’t be shy about continuing the conversation. We’d also love to hear from you if you have any questions about payroll processing or outsourcing any of your bookkeeping or human resources needs. We’re always here to support you and your business!

-Paige of The Payroll Department Blog Team

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Hiring for small business owners is a huge step. Adding one more expense, and one that is a high responsibility to another person or family, is a step that is not taken lightly by business owners. Often there are months of deliberation, thoughts, and prayers that go into the final decision to hire a new employee. With that high level of seriousness, what steps can a business owner take to ensure they place the best person in the role that best suits them and the company? Here are 3 Steps to making sure you on the right track in hiring your next new employee.

Step 1 – Identify the Role and Clarify Duties

The first step a business owner must take is to identify the role and clarify the duties and responsibilities the person in that role will have. For many small businesses, this is difficult because they, and their employees, often take on a variety of tasks across different areas of the business. For example, an employee might be part of the HR area when they collect timecards and calculate hours worked. That same employee might also be responsible for tracking inventory and placing materials orders. IN addition, that person might also share the responsibility for answering phones and providing customer service.

Questions to ask:

  • Why is another employee needed?
  • What are the jobs or tasks that need to be completed by this person?
  • What is the level at which this person will work?
  • Will they manage other people?
  • Will they be responsible for critical elements of the business, such as financial reports or HR information?

At this point, it is wise to look at the current allocation of jobs and duties in the existing structure of the business. Do any other jobs or job responsibilities need to be shifted from one position to another? If so, how?

Keep two things in mind:

  1. Move toward a logical pattern to responsibilities assigned to each position so that everyone in the organization does not wear the “Jack (or Jane)-of-all-trades” hat. Although it might be difficult in a small business, try to keep like duties assigned to each position. And, except in checks and balances, allow one position to complete as much of a responsibility.
  2. Prevent confusion and the potential for gaps and “that’s not my job” situations. You will want to be sure that all functions are covered in assigning job responsibilities. Look at the established processes and review who is responsible for every step.
Step 2 – Identify the Skills Needed for the Position

Now that you are clear on what you will be hiring someone to do, you have to decide what they need to know and bring to the position. Here you have a couple of choices and what you are looking for in a prospective candidate will be different depending on the choice you make. .

  1. Hire to train

In this instance, you might not be looking for a highly skilled person, but one who has the potential to move into greater skills and responsibility. In this case, you will look for the potential to learn and perform. These people will need to be trained, tested, and have progress monitored. This generally requires a lot of attention, time, and effort from you or someone else in your business.

  1. Hire to slot in without additional training

These people will already come with proven skills and can step into the position and perform without much more than time to familiarize themselves with the processes and perhaps the industry of your business. After an initial period of adjustment, people in this category should be able to perform without daily oversight as far as task completion.

Obviously, hiring to train requires less as far as compensation, but might not be in your best interest. Hiring a skilled employee might cost more, but provides greater relief in getting the work done quicker. Budget is always a consideration, but it the cost of the employee needs to be weighed against the ROI each will provide the business. Will you grow faster by hiring someone with the skills and do you have the time to train and monitor the progress of a less skilled person?

Step 3 – Consider the Culture and Who Will Fit into It

As a business owner, you have created a culture in your business, whether you have done so consciously or not. When hiring, you want to add personnel who fit in with the culture.

For instance, if your business is filled with people who dress in formal business attire; suits and ties, dresses; then someone who considers khakis and Hawaiian shirts or capris and t-shirts appropriate work attire might have a different view of the workplace. If your business atmosphere is light-hearted, bustling, and noisy, a quiet, serious person might be challenged to perform their best.

It’s not just appearance and personality, either. The best person for your business is one who shares the same work values, ethics, and even personal beliefs. Ask questions to get to know what candidates value and see if you get a visceral response to any of the answers you get. If so, delve deeper, because that difference might be just what creates a chasm between people after the hire.

All you have to do is look at the staffing of nonprofits to understand the importance of the culture and beliefs. Many nonprofit organizations pay much less than for-profit organizations, but often, employees stay longer and work harder simply because they have a belief in the organization and what the organization does. You want that same level of commitment and dedication to your company.

Hire for Retention and Growth

For sure one of the constants in a small business is that nothing stays the same. The business evolves and the people in the business have to evolve with it. That could mean adjustments to job responsibilities, growth into more responsible positions, or simply new opportunities that open with pursuit of new niches, products, or services. It could also mean new roles open up in the company as it grows.

With that in mind, look for people that demonstrate potential to grow in those directions. Likewise, look for candidates who bring talents and skills that can help your business grow. Sometimes those special attributes come to light after the employee has been with the company for some time. For instance, a new receptionist and phone operator might display a tremendous customer service or business development talent. She is at her best when talking with customers and prospects. That might open up an opportunity for her, and you, by putting her into a new position where she can shine doing what she does best while growing the business. It is a win-win for everyone.

When employees are allowed to do what they do best, in an environment where they are valued and appreciated, they are happy and stay. Likewise, your business benefits by their contribution.

The decision to hire new employees is always a difficult one for small business owners. Take the time to prepare and be patient to find the best candidate. Turnover is definitely more costly, and disruptive, to a business than taking the time to prepare, intensely interview, and patiently search for just the right candidate.

As a payroll provider, we hear the complaints from employers about employees who don’t fit in, or don’t show up, or don’t do the job. We see the turnover and the struggles business owners have as a result. It’s not a pretty sight, nor is it pleasant for the business owner.

As a matter of fact, it is because of that issue business owners outsource payroll to The Payroll Department. Some also find it a good reason to outsource their bookkeeping as well as payroll to us, as well. It is not just finding someone to do the job accurately and well, it is knowing that we are experts in the industry. They don’t have to worry about compliance with labor and payroll tax laws, because we will help to keep them in compliance. If you have payroll processing or bookkeeping concerns, contact Teresa Ray, the owner of The Payroll Department, at 317-852-2568. Perhaps payroll and bookkeeping aren’t the jobs you should be hiring for in your business, we can take care of it for you.

-Elaine of The Payroll Department Blog Team

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Here’s a stumper for you: What do Arsenio Hall, Lady Gaga, Britney Spears, and Lars Ulrich all have in common? If you don’t know Lars Ulrich, he is the drummer for the band, Metallica. Now, go ahead, what’s your guess about them all? Give up? The answer is that they have all been sued for violations of the Fair Labor Standards Act (FLSA), primarily for failing to pay appropriate, or accurate, overtime wages. What does that mean for you?

No one is exempt – celebrities, large or small businesses, everyone must comply

Any person, business, or organization that pays employees must comply with the Fair Labor Standards Act. That is the piece of legislation that regulates and guides many of the interactions in the workplace and between employee and employer.

The costs to litigate along with penalties and fines can be stiff for anyone on the defending end of a lawsuit. This is one of the reasons why so many of The Payroll Department clients rely on us to process their payroll. We make sure that the wages are paid in accordance with the time reported as worked. It’s that simple.

Some states also have additional rules and we keep on top of the requirements in each state where we have clients. You might not think it would be so tough to “do it right” when it comes to paying employees. And, in theory, you are correct. But then when you identify all the little variations and special cases, it muddies the water – and the pay!

Let’s take a look:

How do you determine what is overtime?

The first step to ensure your business is in compliance is to be sure employees are properly classified as exempt or non-exempt.

Exempt Employees –A general rule of thumb is that wages are paid on a salary basis and the employee must perform executive, administrative, or professional duties. Exempt employees do not qualify for overtime compensation.

Non-exempt Employees –Wages are generally paid on an hourly basis. Non-exempt employees are entitled to overtime pay at a rate of 1.5 times the regular rate of pay for that employee for time worked over 40 hours in a given pay week.

Next, overtime is based on actual time WORKED. This means it does not include:

  • Holiday
  • Vacation
  • PTO
  • Gifts
  • Discretionary bonuses
  • Benefit plan contributions
  • Certain premium payments
  • Stock-related income
  • Work expense reimbursements

However, it does include:

  • Regular wages
  • Compensable time or hours worked
  • Commissions
  • Non-discretionary bonuses,
  • Shift differentials
  • Some on-call payments

One of the most common errors in calculating overtime has to do with bonuses and determining how to actually define a discretionary or non-discretionary bonus. That’s a complex issue that even the Department of Labor (DOL) gives examples to explain.

Another problem area is defining the workday. Sounds simple, but it’s not all that black and white. East Coast Risk Management says, “The FLSA has a continuous workday principle where all hours between the beginning and the end of the workday must be paid. This includes, donning and doffing (the putting on and taking off protective gear, clothing, uniforms), preliminary and postliminary activities, travel time, waiting or on-call time, training, and testing.”

Whew. Oh yes, all non-exempt employees must clock in and clock out, too, every shift, every day worked and sign these time records.

The workweek is defined by “a fixed, regularly occurring, 7-day period (or 168 hours). That means there is no “averaging” over a two-week pay period allowed.

Now, if every employee is paid only a set rate for a set number of hours, it would be simple. But then you add in all the differences in the kinds of rates – shift differentials, commissions, bonuses, expense reimbursements, etc. and it gets all kinds of complicated. And you are required to know it all and calculate it all accurately. If you don’t, you are liable …

What’s an employer to do?

Well, when you hear that the DOL was allocated additional funds to crackdown on wage and hour violations, the first thought should be “outsource to the experts.” Or at least, that’s what many smart business owners are doing. Things likepayrolland bookkeeping are often things that business owners know the least about, and like doing the least. When that is the case, they don’t put the necessary effort into learning everything they need to know to keep themselves and their businesses safe and protected.

If you are a business owner who worries that you don’t have the information, expertise, or energy to take care of your payroll, payroll taxes, bookkeeping, and records, stop. Just stop and call Teresa Ray at The Payroll Department. She’s the owner here at The Payroll Departmentand she makes sure that we stay on top of all those things so you don’t have to! One call to 317-852-2568 and you will sleep easier – and have more energy to devote to those parts of your business that you love.

-Elaine of The Payroll Department Blog Team

 

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No doubt about it, expenses always seem to be going up. Employers know that their employees are tightening belts and are looking for ways to help even if significant pay raises aren’t in the current budget. For employees with families and dependent care expenses, there is a benefit some employers can offer, at least for the moment, and that is the Dependent Care Flexible Spending Account (FSA).

The Dependent Care Flexible Spending Account is different from a Dependent Care Assistance Program (DCAP). Under a DCAP, employers reimburse employees for dependent care expenses, makes payments to third-parties for dependent care, or provides a dependent care facility for employees. The program must be documented in a written plan and offered exclusively to all employees of the company. DCAPs must comply with requirements of the IRS Code Section 129.

DCAPS that are included as part of a Sec. 125 cafeteria benefit plan often meet the Sec. 129 written plan requirements. A DCAP is not right for every business because every DCAP is subject to specific criteria and nondiscrimination testing (NDT) testing.

How is a Dependent Care FSA is different from an employer-provided DCAP?

Although the IRS views a Dependent Care FSA as a DCAP, which means it must generally comply with the requirements applicable to an employer-provided DCAP, there are several differences of significant note.

First, DCAPs are not group health plans, which means the federal rules that apply to health plans do not apply to DCAPs that are FSA programs.

Second, the Dependent Care FSA is funded by participating employees with pre-tax dollars up to a maximum of $5,000 ($2,500 for married individuals filing separately), and funds can be used only for dependent care.

In addition, funds available for reimbursement are limited to the funds that have been contributed to the account to that point. In other words, even if $4,000 in expenses have been incurred, only the amount contributed to date can be reimbursed.

What else do you need to know about Dependent Care FSA benefits?

There are a few other important points to mention:

  • The employee designates the amount (up to the maximum allowable) to be contributed from each paycheck.
  • Unless the plan provides for (up to a 2 ½ month) grace period at the end of the year, employees will forfeit any funds remaining in the Dependent Care FSA at the end of the year. If there is a grace period, any remaining funds are forfeited at the end of the grace period.
  • Employees must be furnished, on or before January 31, a written statement about DCAP contributions. This requirement is usually met by accurate reporting on the Form W-2.

Bear in mind that this type of an account is not strictly for childcare. You could have employees who are also caring for elderly parents or adult children with disabilities.

Whether or not a Dependent Care FSA is right for your business and your employees, takes some expert review, so contact your accountant and tax attorney to help you make that determination.

But once you have made the decision to pursue this benefit for your employees, the easy part is done. Taking deductions, making deposits, and accurately tracking them requires an experienced hand, too. That’s one of the reasons so many small business owners outsource and rely on The Payroll Department. With more than two decades of payroll processing experience in dealing with the rules and regulations of state and federal tax laws and the IRS, we know how to track and manage the records to keep your company in compliance.

Don’t ever take chances with laws, taxes, or your employees’ payroll. Get expert advice, expert help, and with that, peace of mind that you are doing good by your workers and what you need to do to stay in line with the government.

Call Teresa Ray, the owner of The Payroll Department, at 317-852-2568 to get linked to the resources you need and the services you deserve.

-Elaine of The Payroll Department Blog Team

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If your small business employs workers, you must have a reliable payroll system. If your company only has a few employees, you may be able to get by with a manual payroll process. However, once your business starts to grow, you may decide to use payroll software to handle your payroll tasks.

Payroll software can provide your business with many benefits, such as greater efficiency, a reduction in the likelihood of errors, and less stress related to your employee reporting obligations. But, using a payroll software system isn’t all rosy either. If you’re considering purchasing payroll software for your business, you need know about the well-documented shortcomings of payroll software, too.

Payroll Software Can Be Expensive

 You must purchase and maintain your software, which can be costly. The amount you pay depends on the type of plan you purchase – monthly subscription, per-user-pricing, quote-based pricing where you only pay for the features you need, one-time licensing, or a software bundle. Plus, you’ll likely need to purchase regular upgrades to your system. Not purchasing these upgrades could result in incorrect payroll reporting when new tax laws are implemented.

You May Need to Hire Staff to Process Your Payroll

When you purchase payroll software, you may need to hire and train someone to take on the responsibilities of using it. An added employee comes with the additional cost of salary and benefits. Additionally, if you ever have any software glitches, you may incur technical support costs, too.

You Must Constantly Backup Your Payroll Data

Payroll processing creates mountains of data with each payroll cycle. Per federal law, this data must be retained for all current and former employees for a certain length of time depending on the statute the information pertains. Therefore, you must have a system in place to constantly archive this data. You or an employee must set aside the time each day to perform this backup.

Access to Payroll Software May Be Limited

In most cases, when you buy payroll software, it’s loaded on to one computer. This means the software can only be accessed using that one machine. If that computer goes on the fritz, you won’t be able to process your payroll using your software. This can lead to a lot of stress for you, your payroll administrator, and your employees.

Your Payroll Software May Lead to Withholding Errors

 According to the Internal Revenue Service, some payroll software systems can’t tell the difference between additional voluntary withholding amounts and regular withholding amounts when it calculates catch-up withholding for a current tax year. Not all payroll software programs have this problem. Therefore, you need to identify if your program has this glitch and account for it in your payroll processing. Otherwise, your business could be fined for under-withholding.

You Are Still Responsible for Handling Your Payroll Taxes

You or your payroll employee must compute payroll taxes and make sure all forms are completed accurately and payments are made on time. Paperwork mistakes and forgotten payroll tax payments can lead to hefty fines.

Instead of Buying Payroll Software, Consider Outsourcing Your Payroll

While technology can make your payroll easier, payroll software limitations can create other issues for your business. Therefore, a better option may be outsourcing your payroll to a payroll services provider like The Payroll Department.

Let’s face it, payroll processing is a time-consuming process.  The staff at The Payroll Department are experts in payroll. When you outsource your payroll, it enables you and your employees to focus on your core business and more important strategic tasks affecting your bottom line. Additionally, The Payroll Department stays on top of constantly changing regulations, withholding rates, and government forms. Therefore, we’re far less likely to make a costly error than you or your staff. By keeping up to date on payroll changes, we can ensure your business stays compliant.

For more information on why you should outsource your company’s payroll processing with The Payroll Department, contact Teresa Ray at 317-852-2568. She will be happy to learn about your company’s payroll needs and explain how The Payroll Department can help your streamline your payroll processing.

– Ariane of The Payroll Department Blog Team

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We all look forward to summer, don’t we? Longer, warm days filled with sunshine and the prospect of fun draw us into a state of reverie with the prospect of letting things slip by. That doesn’t often fly with small business owners, and certainly not when it comes to payroll. In fact, summer is one of the most challenging seasons for payroll. Let me explain why.

The summer, seemingly laid paid, is packed for payroll processors

There are a variety of reasons for the volume of adjustments or changes in payroll rosters to increase in summer. Here are the top 3:

No. 1 Reason for Summer Payroll Changes – New or seasonal employees. Many businesses see a large influx in the number of employees on the payroll roster. Most often, not only do these employees need to be added at the beginning of the season, they must be removed (or made inactive) at the end of the season. Additional employees means more paychecks or direct deposits, too, in addition to the paperwork and process of adding and removing employees.

No. 2 Reason for Summer Payroll Changes – Vacations, PTO, and other days away. Vacations are part of just about every week when it comes to payroll processing in the summer. It is not just getting the pay right, but tracking days off, the classification of each, and making sure everyone is one the same page for time used.

No. 3 Reason for Summer Payroll Changes – Holidays. Everyone is happy to get that holiday day off to spend with family and friends. Maybe fun at the beach or park, or even a backyard gathering to grill dogs and burgers. For payroll processors, a holiday coming up means some else, too. It means making sure that employees are paid properly and on time. It means tracking holiday days off, or, for those working holidays, it could mean changes for special pay rates. There are no laws saying that employees have to be paid early if a payday falls on a holiday, but many employers see it as paying employees late – after they expect to be paid. In addition, with holidays that close banks and other government and financial institutions, the timing of direct deposits are effected as well as tax reporting and deposits. By the time the holiday arrives, your payroll service provider needs a day off!

Changes and adjustments increase the complexity of payroll processing

The fourth reason for payroll changes is changes in wages. That can occur at any time during the year, not more so in the summer months unless that is the cycle established by the employer.  An increase in pay is always a happy time for workers, but there are a variety of adjustments that must be made prior to receiving the first check reflecting the increase.

Many deductions are calculations based on gross pay. Especially now, with the most recent tax law changes, employees are well advised to review and potentially adjust the deductions they claim in order that the appropriate amount of income tax is being withheld to prevent a surprise at the end of the year.

Don’t stress over your payroll, outsource it to professionals

At The Payroll Department, we review each payroll we process to ensure accuracy and compliance with labor laws. Some deductions are altered once an employee reaches a certain level of deposit or income. Our professional team has systems in place to ensure those benchmarks are identified and addressed as they come up for each individual on the roster.

While we all love summer and dream of long, lazy days, here in the payroll processing world, we know that we have to keep a keen eye open and stay on task each day. We enjoy the lazy summer days after the office is closed and the payrolls are all processed. It’s our promise to each of our clients – in summer, in winter, in every season of the year.

Call The Payroll Department at 317-852-2568 to eliminate the worry and stress of processing payroll at your desk. We know payroll and we will take care of yours just like your employees are our employees.

-Elaine of The Payroll Department Blog Team

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If you have been a business owner for even a day or two you know how complicated all the rules and regulations can be about almost every aspect of business. There are laws and forms and records and it seems there is no consistency between any of it – right? Well, let’s not get too far down the rabbit hole and try to solve every issue here. But let’s take a moment and look at payroll and employee information and records.

First of all, just accept the fact that there are few hard and fast rules or regulations when it comes to employee records. With the exception of a few like the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) requiring that medical records be stored SEPARATELY from other personnel records, there is little guidance as to what, how, and where records should be kept. That being said, it does not matter if you are a small business owner or a large corporate enterprise, all employee information should be confidential and kept secure.

The overriding umbrella is that all personal employee information should be kept SAFE. Now what does that mean? From my reading and discussions with attorneys, it generally means that information should be protected from any unauthorized people. By that I mean that your personal information should not be available to the general public, other employees, or to other organizations or businesses without employee authorization.

Laws and regulations vary between states, even when it comes to records retention. Then there are federal laws from agencies such as the Department of Labor and the Internal Revenue Code to manage. That means that every business owner has to understand the laws in their state and as they pertain to their industry.

Employee information storage Physical files

The rule of thumb, according to several attorneys, is that while there may be no guidance as to where or how far apart files should be kept, every person responsible for employee information should ask themselves, ‘Can anyone other than those with a need to know get to the good stuff?’ If the answer is yes, the situation should be reviewed and changed. Here are some examples about physical files:

Employee records, including tax forms, applications, social security and other identification numbers, and personnel reviews should not be openly accessible.

Some solutions:

  • Keep records in locked file cabinets
  • Keep records in locked cabinets or rooms
  • Keep medical records in one location and other data in another location

Since there are no specific guidelines, some businesses and organizations actually store permanent records in off-site locations under lock and key. Whatever decision you make about confidential employee records, none of the information should be readily accessible to anyone ‘just walking by.’

Electronic files

Special note: When files are stored electronically, it is time to bring in the tech specialists to be sure that proper protection in the way of firewalls and backups are not just in place, but continuously protected from hacking and intrusions.

Data and system backups might be scheduled daily in some areas of a business, with complete organizational back-ups on a different schedule, such as weekly, monthly, or even quarterly. This often depends on the business and the size of the business.

If you have been talking with technology security specialists, you know that the recommendation many of them make is to store back-ups offsite. Some suggest services that store your data ‘in the cloud’ while others might suggest physical drives stored in off-site locations that could range from the business owner’s home or even safe deposit boxes.

The idea behind most back-up storage is to retain the data in a safe location in case of emergency, destruction, or damage at the primary business location. The important element behind some of those decisions is to be able to recover from any computer network loss, not primarily to keep the data safe and secure from outside eyes. Bear in mind the difference when making decisions about how and where to store confidential employee information.

Payroll outsourcing as an element of your solution

Here at The Payroll Department we routinely help our clients organize and establish their employee records. We know exactly the forms that need to be completed and retained and with our set up process, employee information is quickly and easily managed from beginning of employment to end, and even for issuance of tax data for the final reporting tax year.

While outsourcing payroll to a service like The Payroll Department will not eliminate your need to store employee files, it would allow you to lock up the files in a secure location. With The Payroll Department processing payroll, it reduces the need for anyone to access the files on a routine basis at your business location.

Everyone is concerned with the security of their personal information today. That’s why it is crucial for business owners to work with professionals who understand the importance of maintaining the security of data. The Payroll Department has been processing payroll for almost three decades. We have seen the changes in data security and retention from well before the technology age came into being and we have changed and developed along the way to keep pace with the laws, regulations, and dangers.

Since we regularly communicate and transmit to state and federal agencies, our systems are compliant and secure within their standards.

Find out how outsourcing your payroll can change your business. It not only simplifies your business life, but reduces the worries, too. Call us at 317-852-2568 to learn more.

-Elaine of The Payroll Department Blog Team

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The daily operations for any small business can be hectic, but there are a few key responsibilities that often prove to be especially challenging. Small business owners who know how to navigate these common pitfalls are better equipped to keep their company operating in the green.

It’s normal for a lot of small business owners to want to do the bulk of work on their own. But once you start managing a team of employees, you might need to get some items off your plate. Sometimes that means outsourcing to other qualified professionals. Knowing when to lean on another person’s expertise allows you to focus on the money-making aspects of your business. (Plus, sticking to what you know best is great for keeping your stress level nice and low!)

  1. Employee Health Insurance

    Since 1982, the National Federation of Independent Business (NFIB) has published a report on Small Business Problems and Priorities. Its ninth edition ranked a list of 75 different problems for business owners. At the top of the list, coming in with 52 percent of the poll, was “Cost of Health Insurance.” Managing employee benefits is a constant stressor for many companies. So, if it’s an issue for you, know that you aren’t alone. Talking with a benefits advisor can help make sure you have a good plan in place for your employees, as well as your bottom-line.

  1. Accurate Bookkeeping

Maintaining accurate accounts helps companies understand their cash flow. Yet all too often, it’s easy to let these tasks slide from week to week—or even month to month. Running regular bookkeeping reports for your business doesn’t just make it easier to navigate tax season, though. Keepings tabs on your expenses and profits also gives business owners valuable insight on how to grow their company. If you aren’t reviewing your reports on a monthly basis, it might be time to outsource your bookkeeping. The benefits of having clean, organized books are well worth the investment!

  1. Business Tax Filing

A lot of small business owners are responsible for making quarterly estimated tax payments. Staying on top of these deadlines isn’t too bad when your bookkeeping records are in order. In that sense, overcoming that problem, can also help you streamline your business taxes. Working with a CPA can take away a lot of that stress. Let them manage the paperwork your company needs to file throughout the year, so you can focus on the other money-making aspects of your business. There’s usually little sense in working on tasks that are better left to other professionals.

  1. Locating Good Staff

Hiring qualified employees can really take your business to the next level. But how do you locate new talent—and how will you know who’s dependable for the job at hand? Sifting through dozens of resumes and conducting a detailed interview isn’t always a strong suit for small business owners. Sometimes, even getting enough applications for consideration is a struggle of its own. There’s a lot to consider before you hire employees. Rather than make the mistake of hiring a sub-par team member, a lot of companies will call on a HR company to screen candidates for them. That way, you can spend your time talking with truly top-notch people.

  1. New Hire Paperwork

Once you’re ready to onboard your new employees, there’s a lot of paperwork to get in order. New hire paperwork can be time-consuming and confusing. Fortunately, it’s really simple to outsource that work to an experienced team—like at The Payroll Department! We’ve helped plenty of companies of all shapes and sizes complete their new hire paperwork. Instead of struggling through the process, let us help you out. Then you can completely eliminate this task from your list of challenges.

From getting your new hires set up for payroll, to helping them complete their necessary tax documents, The Payroll Department can become an extension of your company, acting as both your outsourced HR department and trusted business advisor. Let us know if you’d like to schedule a consultation, or give our office a call at (317) 852-2568. There are already plenty of other tasks you need to do on your own as a small business owner. Let us help you shrink your to-do list so you company can thrive!

-Paige of The Payroll Department Blog Team

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Way back at the end of February we wrote about the new payroll tax withholding guidelinesissued by the IRS. Since that time, the IRS has issued a new Form W-4, more information, and calculators that can help in determining payroll tax amounts to be withheld. Because of the sweeping changes in other parts of the tax law, the IRS is encouraging employees to be proactive – and are even providing some tools to do that.

There’s a new Form W-4 in town

First, and probably of note to employers, employees are not required to complete and submit the new Form W-4 to employers. The IRS revised the withholding tables to accommodate the old Form W-4 for the 2018 tax year. That comes with a BIG BUT! Employees are urged to use the new withholding calculator at IRS.govand suggest that employees who do submit a new Form W-4 may have a more accurate amount of tax withheld from their pay.

In fact, the new Form W-4 instructions state that if you use the withholding calculator, you don’t need to complete any of the worksheets for Form W-4. Experts are taking this as an indication that the calculator may be the most reliable method to match payroll tax withholding amounts to actual tax liability.

As an employer, small business owners might want to encourage employees to use the calculator and submit a new Form W-4 during the calendar year to prevent surprises when their employees file their 2018 tax returns.     

Some employees might find no need to make a change in their payroll tax withholding, but other employees might determine that too little, or too much, is being deducted from their paychecks. According to the Society for Human Resource Management (SHRM), employees to which any of the following apply should definitely review their withholding status:

  • Have two incomes or are in two-income families.
  • Work only part of the year.
  • Have dividends of capital gains from securities held in taxable accounts.
  • Claim the Child Tax Credit, the Earned Income Tax Credit or other credits.
  • Itemized deductions in 2017.
  • Have high incomes and more complex tax returns.
It’s not going to be a once-and-done calculation

In order to use the calculator, employees will need to have their most recent paystub available, because they will be asked to enter the amount of federal income tax withheld for the pay period and the year-to-date amount of federal income tax withheld.

Some employees might want to seek professional tax and financial advice from an accountant. Don’t forget that a mid-year adjustment to your payroll tax withholding might need to be re-evaluated at the beginning of the calendar 2019 year. This is because an adjustment for 2018 withholding will result in a full-year’s application in 2019.

The bottom line is that employees are going to have to play a more active role in determining the most accurate amount of money to be withheld from their wages for taxes.This is because each family’s tax situation is going to be unique to them. The best thing an employer can do is encourage workers to make use of the calculator and information on the new Form W-4, or to avail themselves of the guidance of a professional financial advisor.

Payroll processing has taken on a new complexity

Employers might be well advised to seek the guidance of professionals and experts, too. Payroll and payroll taxes have always been a complicated process, rife with potential for problems for employers. More small business owners are outsourcing payroll to professional payroll processing firms like The Payroll Department. Because we stay on top of the changes and have experience in dealing with the government agencies, you don’t have to worry about making a mistake and then having to pay for it.

Don’t take chances with your business. Call me, Teresa Ray, at 317-852-2568. I have been processing payroll and dealing with the IRS for almost three decades and I will be happy to put my expertise to work for you!

-Teresa Ray, owner of The Payroll Department

 

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.

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