Our HR professionals get a lot of payroll questions. Why? Because it’s both complex and a crucial aspect of an employer’s relationship with their people. In other words, you don’t want to get it wrong. In fact, 49% of employees said they would start looking for a new job after just two issues with their paycheck. To help run your business smoothly and foster good relationships with your employees, here are the most common questions our HR advisors hear about payroll and employee compensation.
What happens when someone leaves the organization and you divide up the responsibilities among one or more people?
This situation is quite common. Start by looking at the individual’s compensation as well as the responsibilities they are taking on and the decisions they will need to make. Start from scratch when splitting up the job for other team members.
Sometimes the role and responsibilities are very different in terms of value and importance to the organization that employers may want to consider compensating the two roles differently.
What happens when you have multiple pay rates within the same pay period?
This is one of our most common payroll questions. Total the amount of hours worked and add up the rates of pay for a regular rate of pay. Use this average when calculating overtime pay. It’s also important not to go below the minimum wage for state or local requirements.
How often should you pay your employees?
Employee payment schedules are not regulated at the federal level. However, each state has their own law. It’s very important to understand what your state regulations are. States have specific rules based on the timing of payments.
For example, when you pay an employee in Arizona, you have five business days to disperse payment to the employee after the pay period ends. Check with your state to find out what your employer requirements are.
What happens if employees are not paid on time?
You might have a few disgruntled employees. Everyone counts on receiving a check for each pay period. The employer can also face fines or penalties if an employee reports you to the state Department of Labor. It’s important to pay correctly and on time to avoid negative repercussions.
With Halloween behind us, it’s officially the holiday season! Some will love it, others cringe at the thought of Jingle Bells blasting from every retail store they walk into. But one fail-proof way to bring the holiday spirit to your office is offering volunteering time off and of course, hosting office charity drives!
There are several office charity drives you can host that are creative, easy and fun. Whether you plan to spread some holiday cheer with a toy drive, food donation, or volunteering your time with some office mates, we’ve got you covered. Check out these 5 creative charity drives to spark inspiration for your office.
1. Feeding America
“No one can thrive on an empty stomach,” says Feeding America. The non-profit partners with a nationwide network of food banks in the fight to end hunger. With Thanksgiving fast approaching, you can help families in need enjoy a meal.
To get involved, identify a food bank partner in your area. Options for creating a workplace giving campaign are available on their website. The Feeding American team will work with your organization to develop a campaign that includes promotional materials, employee engagement ideas, and donation options.
A holiday gift card or an extra day of vacation can motivate employees to get in on the spirit of giving.
Every year on the Tuesday after Thanksgiving, #GivingTuesday encourages community members to support a local cause. Help those in need by giving a gift, donation, or volunteering your time.
The simple concept of #GivingTuesday makes organizing office charity drives appealing. Sign up your organization online to get started. You’ll receive a toolkit, office ideas, case studies, and additional resources to launch your drive successfully.
3. Coats for Kids
As temperatures fall this holiday season, we can’t forget about those struggling to stay warm. Each year Coats for Kids strives to collect 50,000 winter coats for families in need. This creative charity drive partners with local non-profits, social service agencies, schools, and businesses to reach their goal.
The organization offers companies the opportunity to get involved by hosting a coat drive in their town. Coats for Kids supplies all of the materials needed to make your drive a success, and it doesn’t require spending money on the part of your employees. Have them part with old jackets or the coats that their children may have grown out of. Register your company online to become a collection partner this year.
Coats for Kids supplies all of the materials needed to make your drive a success, and it doesn’t require spending money on the part of your employees.
4. Toys For Tots
Toys For Tots offers many ways for businesses to get involved. The charity’s website will help you locate a drive closest to you. To launch a Toys For Tots fundraiser at your company, start by promoting the event around the office. Encourage employees to donate toys to kids in need.
To make Toys For Tots one of your office charity drives, designate a drop off location in the building for all donations. Once all contributions are accounted for, employers send the gifts to a Toys For Tots location. Encourage some friendly competition among your team by offering a prize to the individuals who donate the most, or the team that donates more than the rest of the company. A holiday gift card or an extra day of vacation can motivate employees to get in on the spirit of giving.
5. Penny Wars
A great way to raise money fast is to host a penny war. These friendly competitions are often held to donate funds to a school, non-profit, or social cause. Hosting an office penny war is quick and easy.
To get started read through the rules and regulations. Next, distribute empty containers around the office, ideally divided up by teams. These will be used to collect pennies from teammates. Choose a start and end date. Penny wars typically last between one and two weeks, and the goal is to end up with the most point; points are calculated by the amount of pennies a team collects. To sabotage other teams, drop a silver coin into their buckets– a nickel will detract 5 points from their container, a dime will subtract 10 and so on. Once the fundraiser ends, all of the cash collected in each jar is donated to a cause of choice.
Penny wars first became popular in schools to raise money for new supplies and encourage students to embrace the gift of giving in a fun atmosphere. Today, these creative charity drives are prevalent in all types of organizations to make an impact on those in need. And you don’t have to stop here– there are all kinds of office charity drives to offer throughout the year or at once!
Small business owners juggle a lot of responsibilities and wear a lot of different hats. Getting your company off the ground, and making sure it stays there, requires a lot of decisions. One of which should be how you are compensated– how do small business owners get paid? Although it’s often the last thing people think of when starting a small company, it should be carefully considered early in the process to make sure you and your business can grow.
Will you wait for the business to show profits before you take any wages, or will you need to make sure you’re bringing in an income as the business grows? The way small business owners get paid can vary, depending on the needs of the business and the owner, and the tax implications the owner wants to incur. Depending on the structure of the organization, other factors may also come into play. It’s important to plan ahead to reap the best possible wage and tax benefits.
Understanding the different types of small business models and how they can be compensated can make it easier to choose the structure that works best for the owner and the business.
Small businesses often start as one-person enterprises. These sole proprietorships can vary; there are independent contractors, entrepreneurs, and more. Many sole proprietors don’t take a traditional salary, with taxes and FICA withdrawals made on a routine basis. Sole proprietors often take money out of the business as it becomes available: often on an intermittent basis rather than a routine paycheck. There are different ways they can take funds from the company.
Many sole proprietors don’t take a traditional salary, with taxes and FICA withdrawals made on a routine basis.
Taking Earnings as a Draw
Small business owners and sole proprietorships generally take what is called a “draw.” Owners draw funds from the business’ profits or assets, initially to reimburse them for any capital invested in the business. A small business owner who performs dog grooming services, for example, may invest in equipment, advertising, a website, and more to market their business. The draw reimburses them for that investment as the business begins to create revenue.
Once the initial investment is repaid, sole proprietors are still entitled to take a draw as their salary. Your business is most likely considered the same legal entity as you: if this is the case, you may take out as much of the business’ profits as you like.
Sole proprietors who take their wages in the form of a draw are taxed at the personal level. These small business owners and their companies are considered the same legal entity: owners report business income or losses from on their personal tax return. The IRS categorizes these businesses as “pass-through” entities because profits pass through the business and are taxed on a personal return.
In a partnership, more than one person invests in and/or works to keep the business afloat. Each partner may draw against the earnings and profits the business gains, but not necessarily in the same amount. A 50/50 partnership should see small business owners sharing profits equally, but a 70/30 partnership will see a larger share of the profits go to the owner who had the larger initial investment.
Partners that take a draw from the business are also taxed at a personal level because the partnership is considered a pass-through business.
LLC versus Sole Proprietorship
Many small business owners make the decision to become a corporation, often as an LLC, or Limited Liability Company. One of the main benefits of becoming an LLC is to protect the owner’s personal assets. The LLC separates the business assets (and potential risk, losses and/or damages) from the owner’s personal assets. If an LLC goes into bankruptcy, for example, creditors cannot assign the owner’s personal assets to be repaid.
The LLC separates the business assets from the owner’s personal assets. If an LLC goes into bankruptcy, for example, creditors cannot assign the owner’s personal assets to be repaid.
An LLC is structured similar to a corporation, but for tax purposes, works more like a sole proprietorship. Similar to a sole proprietor, owners generally take a draw from the company’s profits rather than a traditional paycheck.
Owners that take a draw from the LLC are taxed at a personal level as they would any other pass-through entity. If they opt for a salary, they will be responsible for all payroll taxes that would normally be due.
What is a dividend?
Dividends are another way small business owners can pay themselves. Dividends can be cash dispersals or can be paid in stocks or other assets. Dividends are not taxed if they are a repayment of capital to the owner of the business. For example, startup costs incurred to get the business rolling, or investments later on for equipment are all eligible to be reimbursed as a dividend that is non-taxable.
Owners can also take dividend payments as non-repayments on investment. These dividends may be taxable and business owners should consult with a qualified tax professional to assure they are reported and taxes are paid correctly for them.
For tax reasons, most small businesses, like LLCs, partnerships and sole proprietorships may be considered S Corporations (S Corps). This designation lowers tax liability considerably. Instead of filing a corporate tax return and paying tax on net profit or loss, S Corps don’t pay tax on the business profit, as it is reimbursed to the partner or owner, taxed at the income tax level. For small businesses that want to incorporate, and remain a pass-through entity, with all its tax benefits, becoming an S Corporation is a wise choice.
There are a variety of ways small business owners can earn wages from their company. The wisest choice is to consult a tax professional who can help you structure your company to the best possible tax advantage.
This article is for informational purposes and is not meant to provide legal, regulatory, accounting, or tax advice.
If you run a business or head up payroll for an organization, you may be wondering how to streamline payroll tracking and analytics. It’s critical for companies to monitor payroll details, labor reports, tax liability, and deduction information to effectively manage cash flow. What’s the best way for payroll professionals to do so? Payroll reports.
Which payroll reports are best for my business?
The first step to figuring out which payroll reports will help you stay organized is to understand how your business operates. Do you hire W2 workers? If so, here are a few payroll reports you’ll need.
Wage and Tax Summary Report
These reports show federal, state, and local withholding requirements for each employee. Understanding these numbers help payroll specialists pinpoint correct paycheck figures for W2 employees.
Employee Details Report
When payroll needs to compile individual employee data, including payment information, tax information, and Social Security numbers, employee details reports are most effective. This information is often necessary when putting together detailed comparisons of a company’s workforce.
Tax Liability Report
A tax liability breakdown shows the employer all payroll taxes that have been withheld, paid, and owed. These are especially important during tax season when employers are submitting end of year returns.
Tax Payment Report
A tax payment report will show all payroll tax payments that have been made by the company. This payroll report can be broken down by different time periods based on the employee’s compensation history.
Deductions and Contributions Report
Deductions and contributions are also helpful during tax season when payroll specialists are compiling company and employee information for returns.
These payroll reports are typically helpful for businesses who employ standard W2 workers. However, if your organization only works with 1099 independent contractors many of these reports are unnecessary.
Independent contractors are responsible for their tax obligations. Therefore, companies don’t usually need to track this data.
Which payroll reports should I be running quarterly?
Regardless of your business structure and the type of workers you employ, most payroll departments run several payroll reports. Here are a few you may want to bookmark.
Payroll Summary Report
A payroll summary is typically used at least once per quarter to monitor gross pay, net pay, and tax information for each employee.
Payroll Detail Report
If an employer needs to drill down the paycheck specifics for a single employee, they might use a detailed report. A detailed description gives access to pay and deduction information for each paycheck.
History Summary Report
As the name implies, a history summary details pay and tax history of each employee. This information is often helpful when deciding on raises or compensation changes for staff members.
Labor Distribution Report
Labor distribution reports show overviews of hours worked, payments distributed, and benefits used by team members. Labor reports are helpful when making budgetary decisions, such as adding or reducing staff.
These payroll reports are a few essential tools to help your business streamline cash flow management. If your organization is looking for an all-in-one payroll management solution, Zenefits can help. Just download our payroll report templates below!
It’s that time of year again—the holidays are just around the corner and, as any small business owner knows, that means Small Business Saturday, this year on November 24th, is near.
There are all kinds of ways that small business owners can promote their business, but fewer talk about how small business owners can support one another on Small Business Saturday. The community, collaboration, and camaraderie that exists between small businesses are a few of the ways they are different from larger corporations to begin with.
Of course, there’s the central way that most people show support on Small Business Saturday, and that’s by shopping at other small businesses. Of course, you can—and should!—do that, but if you’re looking for more creative, or perhaps budget-friendly, ways to support your fellow local business people, here are five more creative ways to support Small Business Saturday.
1. Donate to other small businesses that are fundraising
This is one way to support small businesses get their feet in the door. Have a look through Kickstarter or Indiegogo to see if anyone is looking for funds to launch their business. If you find some, consider tossing a few bucks their way—every little bit helps and anything that comes in on Small Business Saturday will mean just a little bit more.
2. Leave a positive review for another business on Small Business Saturday
Think of all of the other small businesses, from hole-in-the-wall restaurants to tiny corner boutiques, that you love. If you haven’t taken the time to let the world know how great they are, consider dropping them a positive review on Yelp, Facebook, or any other forum where people go for suggestions. It’s free, easy, simple, and makes a huge difference to the business owner who receives the positive review, especially if it comes from a fellow local business owner.
3. Post positively about other businesses on your social media
Instead of—or in addition to—leaving a positive review, considering using your own business’s social media to promote other small businesses. Whether you buy their products and love them, think that their storefront is out of this world, or you’re simply grateful to have them as neighbors, share your positive thoughts about them on your social media or website and give them a boost that way. Also free, easy, and deeply appreciated.
4. Swap Black Friday for Small Business Saturday
Yes, Black Friday can be quite enticing. All those mega deals on big-ticket items only come around once a year, but every dollar you spend at a giant chain store is a dollar that isn’t spent at a small business that much more directly feeds the local economy. Even if you’re a diehard Black Friday shopper, consider skipping it this year and opting for Small Business Saturday instead. While you might not end up with a $20 flat screen TV at the end of the day, you can rest assured knowing that you spent your money where it matters.
5. Network with other small business owners
If you’re not much of a shopper, you can still make the most of Small Business Saturday by being out and about and networking with other small business owners. Not only can you create connections that will serve your business in the future, but you might be able to easily help out another business owner who you didn’t know needed it. Let’s say that you have tons of extra disposable cups from a party and another business owner has a celebration coming up. You could sell your leftovers to them at a steep discount or even for free—and that’s the beauty of networks and connections.
One of Fireclay Tile’s goals is to offer the best, most beneficial and comprehensive benefits package in the design industry to our 150+ team members. That’s challenging, especially given we are still a relatively small company with many financial needs across each and every department. We do have a few things going for us that help ensure that our small business benefits package and our team members are front and center including:
We are a B(enefit) Corp, meaning we hold ourselves to a higher standard
We are privately owned, and our majority owners (Paul and me) and outside investors fully support our mission and our investment in our people
We employ modern and mobile HR software to ensure our benefits administration is seamless (Disclaimer: Fireclay Tile is a customer of Zenefits.)
We have a strong Manager of People who helps ensure our team is set up for success
As we entered our Open Enrollment 2018 period, we knew we wanted to go big, but we didn’t know how to make decisions and what budget we had to spend. For any small business, this is a very common feeling. We also knew that we had some big cost increases headed our way in 2019, as both our healthcare and workers comp would likely increase, and we were worried that we may not be able to afford other benefits we wanted to offer.
We developed a four-step methodology to “Rock Our Benefit Offering”, which we believe is broadly applicable to any small business.
1. Identify the True Costs of Your Benefits
If we were a big company (which we are not), we would probably have a team or a person dedicated solely to benefits. But for small companies like Fireclay, i.e. the 99% of businesses out there, we needed a different approach that we could handle within our limited available time.
First, we sat down and crunched the numbers. And when I say numbers, I mean all the numbers. We created a large spreadsheet to take into account each and every benefit we offer, the total cost that both we and our employees bear, as well as the newly proposed costs for the upcoming 2018-2019 benefit period. We got very detailed, looking at not just the benefits people normally think of (healthcare, dental, etc.) but also the many others that have a significant cost such as paid time off and workers compensation that many consider standard or may even be required by law. While I had thought we were strong in our financial understanding of our business and our expenses, never in my ten years at Fireclay had we ever gotten to such detail and seen the true amount we were investing in our team members.
Here is how our analysis looked when it was all said and done in summary format:
2. Use Ratios — Not Dollar Values — to Determine Spend
To give some context, we have a roughly $6.5 million annual payroll, and it turned out we spent about $1 million on benefits in 2018, or roughly $6,800 per employee. Given our average employee earns about $43,000 per year, that’s 16%, a significant investment on top of their salary.
But what was more interesting was that as we looked at the information, then compared what we would pay in the upcoming year vs last year. Then we looked at the additional new benefits we wanted to offer, we were no longer intimidated at the idea of both improving certain benefits and also rolling out entirely new ones. Yes, the additional new benefits were costly, but the additional cost was minor next to the existing spend.
We estimated new benefits would cost us an additional 5%, or $55,000 in addition to cost increases from existing benefits we estimated to be $170,000. That said, when we looked at these dollar amounts in total along with our existing benefits as a percentage of sales, we realized that we would stay consistent from this year to next year, at 6-7% of revenues. The additional spend would be about $225,000, and we were able to gain comfort with that additional spend because of our confidence in increasing sales and profitability. We knew our benefit spend would be in line with the previous year as a ratio rather than as a dollar amount.
3. Consider Inexpensive Benefits With Huge Paybacks
Healthcare is our biggest investment. Yet sadly (and at the same time, fortunately), it’s hardly used by our team members. Yes, there are the annual physicals and occasional needs, but it’s actually pretty rare that someone needs a significant amount of medical attention. However, if something were to go wrong and one of our employees needed medical attention, we always want them to feel supported; therefore, healthcare continues to be worthwhile and necessary.
But let’s look at other fringe benefits that are highly valued by our team but cost far less than healthcare benefits:
Our loan policy is very inexpensive and it has helped save them tens of thousands in interest payments.
Life Insurance: This is a very inexpensive benefit, but it offers a huge benefit when needed most.
No Interest Loan Policy: Over 5 years, we have provided over $130,000 in no interest loans to our team members, all in increments of $1,000 or less. What’s most amazing is that we have a 99.5% repayment rate, and at any given time we only have $3,000-$8,000 loaned out. The benefit is very, very inexpensive, but the impact on our team members is huge; it has helped save them tens of thousands in interest payments.
Maternity and Paternity Leave: Let’s face it, this is actually a very inexpensive benefit. It took us way too long to design a plan that would make our mothers and fathers whole while they were out due to maternity or paternity leave. Our goal was to encourage our new parents to take time to care for and bond with their newborns — not stressing about finances.
Wellness Benefits: This is a new one for us this year. We are giving folks $25/month reimbursement for wellness programs, whether that is gym membership, yoga, meditation, or whatever, as long as it is wellness related. We estimate about ⅓ of our team members will take advantage, so it will cost about $15,000 per year. That’s 3% of what we spend on healthcare insurance, but this will be used all the time by those who use it.
Flu Vaccine Clinic: This is a new one for us. We will spend about $2,000-3,000 on this benefit. Yes, it’s expensive, but if we can prevent just a few cases of the flu, that will have a huge ROI on our organization and our teams’ families.
Software for Benefits Administration: We can’t stress enough how important it is for any organization of any size to have a great People Management Software system. We use Zenefits and love it. We spend about $5/FTE/month, and that $60 per employee for the year ensures that benefits administration is easy and empowers us to offer all these perks without pain.
Many of these “fringe” benefits cost anywhere from $2,000-30,000 per year. When simply looking at the dollar values, it can be easy to say “no.” But when you consider the significant amount you are already spending, the additional marginal spend for benefits that our team will find truly fantastic is not actually that large. We considered that high fixed cost in benefits to be set, so we looked at this marginal investment as being a high value-add for our team.
4. Market Your Benefits Internally and Externally…All Of Them
It’s critical to market your benefits internally and externally, and to make sure folks truly know the options they have. We have gotten better about this each year, and each year we have more people taking advantage and expressing interest and giving feedback.
A big part of this is having a strong People department who can help organize and manage open enrollment and market these benefits to our team. Don’t be afraid to talk about all the benefits you offer, even the most basic ones. Ensuring people truly see the investment you are making in them goes a long way.
This year our People Department actually partnered with our Marketing department to ensure that our Benefits Guide was branded and looked and felt like Fireclay, and the result is demonstrably better. If you want to see a copy, just let me know. We are big fans of “beg, borrow, and steal,” and when it comes to benefits, if we can help others improve their benefits offerings, we are all in!
In summary, providing great benefits for you and your team is critical. You can’t do everything in year one, but each year you can gradually add more and more, and within a few years you’ll be shocked at how much you are able to do. By seeing the numbers fully and clearly, we were able to make smart decisions and dramatically improve our benefits package, and we hope you consider doing the same for your team.
Our Benefits Offerings:
Here is our comprehensive small business benefits for the 2018-2019 period:
Medical – Fireclay covers 85% for employees and 25% for dependents
Dental – Fireclay covers 50% for employees
Vision – Fireclay covers 50% for employees (NEW)
401k – Fireclay matches employee contributions up to 4% of income
Paid Time Off and Holidays – 15 days PTO plus 7 paid holidays
Health Savings Accounts (HSAs) — Fireclay contributes $75/month for Kaiser Permanente Bronze 60 HMO 4800-40 HDHP employee participants
Employee Life Insurance – Fireclay covers 1x salary life insurance for all employees
Short (NEW) and Long-term disability (LTD) coverage – Fireclay provides benefits both short- and long-term disability coverage for employees.
Maternity/Paternity Benefits – 12 weeks full pay for Maternity (NEW) and 4 weeks for Paternity plus Fireclay pays for all diapers and wipes for the first month (NEW) and Fireclay will pay for Milk Stork to support breastfeeding while traveling (NEW)
Employee Leave Management Assistance – Fireclay covers assistance for employees on leave of absence (NEW)
Flu vaccine program at our factory location (NEW)
No Interest Loan Policy – Fireclay provides loans up to $1,000 to employees, interest-free
Khai Lam Fireclay Tile Family Fund – Fireclay provides $150 per employee and family member for extracurricular activities
Tuition Reimbursement – Fireclay will reimburse up to $2,000 per year for employees for continued education related to their role
Wellness Benefits – Fireclay will reimburse $25/month for wellness activities (NEW)
Bonus Plan – All Fireclay Team members are enrolled in a company-wide Bonus Plan paid out quarterly
Stock Option Plan – All Fireclay Team members receive stock options to purchase ownership of Fireclay Tile, managed through Carta.
Workers Compensation Coverage – All employees are covered by Workers Compensation to ensure that any accidents that happen on the job are covered. This is mandated in California, but not necessarily in every state, and it’s an important investment that protects our team members.
Support for Benefits – Fireclay offers extensive support for benefits through Zenefits and its online portal and mobile app
Broker Support for Medical, Dental, and Vision – One Digital, our healthcare broker, has extensive resources to support any needs you might have for medical, dental, or vision purposes
If you have questions about any of these, please do not hesitate to reach out to me or our team at Fireclay Tile!
FSA enrollment can be a stressful period for both employers and employees, especially when it comes to changes in eligibility. The good news is that, with a little information and knowledge, employers can be readily prepared for FSA enrollment. Here, we answer the most important questions regarding this topic.
Can You Sign up for an FSA Mid-Year?
Normally, employees must enroll in an FSA during the open enrollment period. This is because it ensures that employers know how much to allocate for these accounts at the beginning of the year, as they play an important role in overall employee accounting.
However, certain life events might enable someone for FSA enrollment outside of the normal enrollment period. Getting married, experiencing the loss of a spouse to death or illness, or going through a divorce all qualify as changes in marital status. Moreover, having a baby might change the number of dependents that you have, which is also a significant change to your healthcare eligibility. Most things that can change someone’s health care eligibility allow them to enroll in an FSA mid-year, with a few exceptions.
How Does a Flexible Spending Account Work?
A flexible spending account is another way that employers can assist employees with healthcare, without enrolling them in a traditional group healthcare plan. An FSA helps pay for things that are essential to someone’s overall health and wellbeing. You can also use certain FSAs for dependent care.
What Items are Eligible for a Flex Spending Account?
Most general healthcare accessories and tools are covered by the FSA. For example, things required for vision such as eye exams, glasses, and contact lenses will always be covered. Seeing eye dogs, hearing aids, braille books, and items for the sight and hearing-impaired are also crucial. If you have experienced an accident or a surgery, you can use an FSA to cover crutches, wheelchairs, bandages, children’s first aid, bandages, heat wraps, walking aids and more. Certain over the counter medications may also be eligible with a prescription. These include antacids, allergy medicines, cough medicine, nasal spray, sleep aids and more– check out our 49 surprisingly eligible healthcare expenses.
What About the Employer vs Employee Contribution?
Standalone FSAs, such as those that aren’t accompanied by a major health plan, can only provide limited vision and dental benefits to employees. Moreover, employers are allowed to contribute $500 to the FSA as a limit. Or, regarding the employee’s salary reduction contribution, they can offer a dollar-for-dollar match.
Can You Lose the Money in a Flexible Spending Account?
Many people wonder whether or not signing up for an FSA plan will cause them to lose money. Here’s the thing: new FSA rules allow employees to set aside up to $2,600 per year for their FSA, yet they don’t have to meet this requirement fully. Moreover, only $500 of leftover money can be rolled over to the next year. If you have $1000 left in your FSA, for example, you’ll lose half of that because you can only carry over the $500. This is why it’s so important to calculate your contributions correctly at the beginning of the year.
According to a number of studies and payroll states, every year the IRS penalizes small businesses billions of dollars for payroll errors– a burden that’s time-consuming, costly, and potentially hurtful in terms of attrition. But, who can blame the small business? US tax codes and the nuanced detail of payroll compliance are overwhelming at a minimum.
For starters, depending on which tabloid-like web search result you look at, there are between 2,000 pages and 70,000 pages of tax codes in the United States. That’s a 68,000-page discrepancy. So, where to begin and who to trust?
On top of that, there are regional regulations for things like overtime, bonuses, and minimum wage, which small business owners are supposed to somehow keep up with.
For example, the meaning of “overtime” varies depending on your location and will be different for businesses in Los Angeles and Palm Springs, Florida. In California, if an employee works 9 hours in one day not a minute for the rest of the week, the business must pay the employee overtime for that extra hour worked (the 9th hour). This is not the case in any other state.
It’s no wonder 40% of small business owners say bookkeeping and taxes are the worst part of owning a business (and the most time-consuming). In fact, payroll stats say that companies that outsource payroll save 18% over businesses that tackle it themselves.
This stuff is hard.
82 million U.S. employees — or 54% of the American workforce — are affected by payroll problems.
To help make sense of the information, we’ve compiled some of the more interesting statistics regarding small business payroll, broken down into four categories. We encourage you to skim the stats, and take what you need in hopes that this clarifies the complexities of payroll.
The Effect of Your Paycheck on Your Employee: More Than Just Cash Money — Stats to help you understand how important reliable payment is to your employees.
Issues Stemming from Payroll: Penalties & Impacts of Mistakes — Stats that help you understand the consequences and magnitude of inaccurate pay and payroll reporting
Whoa, Really?: The Time and Cost of Doing Payroll — Stats that help business owners gain some perspective about how much time and money payroll really takes
Leaders and Learnings: Aspirational Stats from Smart Companies — Stats from leaders in the industry who are doing payroll well, and to whom we all aspire to be.
The Effect of Your Paycheck on Your Employee: More Than Just Cash Money
82 million U.S. employees — or 54% of the American workforce — are affected by payroll problems.
49% of workers would begin a new job search after only two issues with their paycheck.
66% of Americans would experience financial difficulty if their paychecks were delayed by one week. (Source: National Payroll Week)
Payroll mistakes occur twice as often in homegrown payroll solutions as compared to third-party solutions, 11.4% vs 6.1% respectively.
30% of organizations surveyed said they would strongly consider switching to a new provider for a better user experience
TAKEAWAY: Payroll problems are rampant. Consider getting a payroll provider that’s known to have limited mistakes and errors.
Issues Stemming from Payroll: Penalties & Impacts of Mistakes
54% of employers state there is room for improvement in their current payroll policies and practices.
40% of small to mid-sized businesses incur IRS penalties related to incorrect payroll filings? The average penalty is $845.
Integration of automated timekeeping payroll reduces the error rate by nearly 2/3 over those organization simply automating.
Research has shown that 78% of full-time workers live paycheck to paycheck, including 1 in 10 people making $100,000 or more.
Integration of automated timekeeping payroll reduces the error rate by nearly 2/3 over those organization simply automating.
Across the US, over 5 million employers were assessed over $7 billion in civil penalties in 2017.
TAKEAWAY: Your ability to reliably deliver employee paychecks is an immediate representation of our your brand, and it signifies your ability to maintain high employee retention. Make sure “PAYROLL” is at the top of your list for things to do– and to do well. This might include looking into efficient ways of completing payroll reporting and managing payroll data.
The average payroll clerk spends 7 minutes per time card each pay period:
Preparing and handling time cards
Computing time card totals
Verifying time card totals
Computing shift and department totals
Recreating lost or damaged time cards
The Cost: Manually preparing 100 time cards will take an estimated 11.67 hours to complete. Therefore, at an average clerical wage of $15 per hour, time card preparation would cost $175.05 per pay period.
A majority of small businesses spend $1,000 or more on annual costs on the administration of taxes, internal costs, legal fees, etc, with specific breakdowns looking like this:
23% spend $1,000 or less
31% spend $1,000 to $5,000
18% spend $5,000 to $10,000
12% spend $10,000 to $20,000
16% spend $20,000 or more
TAKEAWAY: Payroll takes a lot of time and money, regardless of whether it’s in-house or outsourced. Consider where your time is most valuable for your business, and develop a payroll strategy that supports your time.
Leaders and Learnings: Aspirational Stats from Smart Companies
Organizations with integrated Payroll and HCM are 44% more likely to utilize business intelligence or data query tools to mine their payroll data.
Organizations with integrated Payroll and HCM are 38% more likely to use dashboards and reporting tools to combine workforce and business data.
Organizations with integrated Payroll and HCM are turning data into insight, and are 37% more likely to use predictive analytics solutions to help with forecasting workforce planning.
Organizations that automate and integrate payroll, benefits administration, absence and leave, and compliance reporting 7% less likely to have payroll errors; and 36% more likely to report improved employee productivity.
TAKEAWAY: Some people have payroll dialed. They’re even getting insights from there data. If your systems are already working well, think about the business insights and forecasting a powerful payroll report could deliver.
Officially, Employee Appreciation Day is celebrated each year on the first Friday in March. But we know that employee retention and job satisfaction improve when your workers feel the love all year long.
Employee attrition and retention are major problems in just about every industry. According to the Bureau of Labor Statistics, over 3 million people quit their jobs every month in this country. That’s about 2.4 percent of all workers. Does this mean that Americans are dissatisfied with their jobs? Maybe. A recent study from The Conference Board found that 51% of Americans feel satisfied with their jobs. This figure is actually the highest job satisfaction rate in recent years, and still, only a little more than half of the American workforce is satisfied with their jobs.
What Causes Employee Dissatisfaction?
According to that same Conference Board study, the aspects of employees’ jobs that give them the most satisfaction are the people they work with, their commute, their own level of interest in their work, and their supervisors. But a number of HR-related issues received a much lower satisfaction rating. Only 43.5 percent of workers are satisfied with their health plans, and 43 percent are satisfied with wages. There was also substantial dissatisfaction with opportunities for flexible time, family leave, communication, career growth, and performance reviews. Only 37 percent of employees reported satisfaction with recognition for a job well done, and 32.6 percent said they were satisfied with the educational and job training programs available to them.
In some cases, employees feel dissatisfied with their salaries or advancement opportunities, and that causes them to look for new jobs. A Gallup poll found that 44 percent of employees would leave their jobs for a salary bump of 20 percent or less. And a Glassdoor survey found that 35 percent of workers planned to start searching for new jobs if they didn’t receive a pay raise in the next year.
Only 37 percent of employees reported satisfaction with recognition for a job well done.
But the biggest factor that drives employee satisfaction (or lack thereof)? Culture. A positive company culture makes employees feel appreciated, motivated, and engaged. Companies who do a great job recognizing employee contributions have higher employee satisfaction and lower turnover rates. It even improves performance. Companies that encourage employees to help each other, work together, and recognize achievements, and promote employee appreciation are often the most successful. Whereas employers who try to “drive results” without regard to tact or morale often don’t perform as well.
How to Show Employee Appreciation and Create a Positive Company Culture
So how do you show your employees appreciation? It’s not enough to purchase a gift or host a lunch once a year in March. If you want your employees to feel appreciated all year round, as well as drive performance and improve your overall company culture, here are eight steps you can take.
Recognize and Reward Specific Behaviors and Results
Go beyond meaningless employee of the month awards and recognize your staff for specific achievements. People often feel the recognition means more if it’s tied to a specific behavior.
Implement Peer-to-Peer Recognition
Many employees feel more satisfaction when they receive praise from a same-level colleague than they do when they hear it from the CEO. They know that their co-workers see their contributions every day, and it means more to hear those close observers say that they appreciate their work. Some companies have systems in place that allow employees to award points or “dollars” to each other for a job well-done. The points are displayed prominently, so everyone can see the appreciation for their hard work.
Make the Recognition Public
Don’t just give your employee a plaque or a letter for a job well done. Write it up and put it in the company newsletter. Share it in a company-wide email. Do something to let everyone know that someone on your staff had a major accomplishment.
Offer Leadership Opportunities
One of the number one reasons that people give for leaving their jobs is that they didn’t feel like they had opportunities to advance. They believed that in order to move their careers forward, they’d have to move on to another company. On the other hand, employees who believe that their employers offer opportunities that will allow them to grow professionally are 10 percent less likely to quit. So make sure you are looking out for your employees’ career development goals. Discuss these goals at performance reviews, and make sure you are doing whatever you can to help your employees succeed.
Offer Professional Training and Development
On a related note, you must provide opportunities to learn new skills if you want your staff to feel like their careers can advance in your company. If you can’t conduct the trainings at your place of business, consider offering small amounts of tuition reimbursement to allow your employees to register for outside trainings for a learning and development program.
Companies that support remote work have a 25 percent higher retention rate than those that don’t.
Allow Remote Work Opportunities
Companies that support remote work have a 25 percent higher retention rate than those that don’t. Since people often report that they choose to work remotely in order to support a better work-life balance, this isn’t surprising.
Identify Employees Who Are at High Risk for Leaving and Offer Them Incentives to Stay
Turnover is expensive. The price tag for replacing a highly trained employee can set you back over 200 percent of their annual salary. So be sure to talk to your staff, especially those in highly trained positions. Ask them if they are satisfied with their jobs, and what you can do improve upon that satisfaction.
Encourage Employees to Use Paid Time Off
What’s that saying about “all work and no play”? While your office probably won’t turn into a Stephen King novel, it might be a pretty miserable place to work if the employees never take any time off. People need rest. It helps us recharge and distress. And employees who take their PTO are 13 percent less likely to resign.
Instead of waiting until March, why not make every day Employee Appreciation Day? If you show employee appreciation and value their career growth, they are much more likely to reward you with a long tenure at your company.
In today’s fast-paced work environment, it’s more important than ever to foster employee development. Employers who encourage learning and growth among employees have high-performing, happier teams as well as lower turnover rates. Supporting employee development is shown to improve job satisfaction, morale, employee motivation, and job performance. What are the best ways to encourage professional growth and development within your organization? Here are 4 tried and true employee development suggestions.
1. Implement A Financial Wellness Program
Financial wellness programs are designed to educate employees on money management topics, such as investing, retirement planning, debt control, and more. Each program should be customized to the needs of staff as workforces have different priorities.
Studies show that millennials want resources to help them plan their financial futures. With the burden of student loans and other fiscal responsibilities, millennials are eager to succeed. Although younger generations lead the demand for these programs, employees over 55 also welcome the perk as they near retirement age. Financial wellness programs are a great way to attract younger talent and improve employee well-being.
2. Offer Learning Incentives
Now more than ever, it’s critical for employees to keep their skillsets relevant. Embracing a learning mindset helps employees grow and avoid burnout by helping them constantly develop and update their role responsibilities.
That’s why one of our top employee development suggestions is to offer a learning stipend. Companies can allocate a small budget toward educational books, online courses, seminars, and events to help team members flourish. Putting the power in their hands gives each person the freedom to learn in a way that’s best for them.
If the budget doesn’t allow for a stipend, employers can choose to promote company-wide learning incentives. Sponsoring monthly or quarterly development opportunities are a cost-effective way to support employee development.
“Lunch and learns” or team seminars are great options to consider. Some employers even recommend podcasts depending on learning objectives. Start by gathering input from your team to effectively tailor learning initiatives to staff interests.
3. Create a Healthy Environment
It’s no surprise that healthy employees are happy and more productive. Not to mention, they cost less. Health development opportunities are a win for employers and staff. Many employees are interested in living healthier lives but have a hard time reaching their goals in the workplace.
Leading businesses are taking strides by offering healthy snacks and meal options in the breakroom. Office yoga, massage, and exercise classes are also increasing in popularity. A simple gym membership reimbursement program is another way to help team members get healthy. When employees recognize your investment in their health, they invest in you.
4. Build a Team Culture
Developing a highly skilled and motivated workforce requires teamwork– that’s why it’s no surprise that one of the top employee development suggestions is improving your team culture. Organizations who perform well as a team tend to have extremely strong, and usually unique, company cultures. Fostering an environment that individuals want to be a part of requires a consistent effort from leadership.
Culture building activities, such as team dinners, fun days, and even softball leagues are a great way to help employees develop leadership skills and work better together. Introducing fun initiatives not only promote team bonding but creates excitement to go to work. Staff who enjoy working together report higher levels of job satisfaction. Retain top talent by keeping your people happy.