Endless amounts of coffee.
Lots of patience.
How’d you get through year-end at your small business?
It’s no secret that all the headaches associated with year-end functions are not only prominent, but necessary to remain compliant and successful.
What if there was something you could do now, as we near the second quarter of the year, to ensure a successful and headache-free 2018 and beyond?
This payroll checklist will help.
Step-by-step payroll compliance guide:
Review your payroll.
As a small business owner, you have a lot of numbers keep track of that could affect your organization. That’s why, every year (or more if you make employee changes often), an audit of your payroll setup is critical to ensuring timely payroll distribution, accurate Forms W-2, tax payment and reporting. It will help you maintain accuracy and identify any potential issues or problems.
This review should include:
- Verification of all pertinent information (including: spelling of names correct addresses, and Social Security numbers).
- Fringe benefits.
- Pay rates.
Avoid misclassifying employees.
Employee misclassification can be costly for your small business. The problem is, knowing the difference between an independent contractor and a W-2 employee can be complicated.
According to the IRS, generally speaking – you’re required to withhold income taxes, withhold and pay Social Security and Medicare taxes as well as pay unemployment taxes on wages paid for an employee. For independent contractors, you generally aren’t required to withhold or pay any of those taxes.
Employee misclassification also affects basic worker safeguards, such as minimum wage, health and safety laws, overtime, discrimination protections, workers' compensation and more.
Educating yourself on proper classification of your employees will help you avoid a range of penalties, including possible back wages, litigation and interest. Additionally, workers’ compensation may also be affected.
Pay and file taxes timely.
It is your responsibility to ensure taxes are being paid timely, accurately and to the correct federal, state, or local government entity. Requirements may differ from state to state and you, the employer, should be aware of these requirements based on where your business is located, where your employees live and where they work.
Curious about how to calculate payroll taxes? We have a guide for you that explains what a payroll tax is, current rates, and a link to resources like actual paycheck and FICA calculators.
Track hours properly.
Do you have employees who stay late to help you finish stocking shelves? What about part-time waiters or minimum wage workers that you have to be careful with the number of hours worked?
As an employer, you must keep accurate track of hours worked for hourly, non-exempt employees. Most employees are classified as either exempt or non-exempt, depending on their salary and the type of work they do. An automated time and attendance platform can help you with this important function. Not to mention, it can save you time and money by eliminating inaccuracies such as buddy punching or manual timekeeping.
Stay up-to-date on regulations.
As a small business owner, your time is very precious. But time educating yourself on legislation and trends that could affect your organization is time well spent. Here are some things to consider.
- Take time to verify that you’re meeting wage requirements of your state, city and county.
- Wage hikes affect labor costs for all businesses, including the competition.
- Emphasize hiring and retaining productive employees.
- With the recent changes to U.S. tax laws, it’s important that you are aware of what this means for your business and your employees.
Got all that? We don’t expect you to. That’s why we’re here to help you with your payroll functions. Fill out the form below to learn more about how our payroll solutions can ensure compliance for your small business year-round.