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Why Your Employee Onboarding Process Is Extremely Important from A Payroll Standpoint for Your Small Business

Fri, 09 Jun 2023 16:00:01 GMT

As a small business owner, are you wondering why you're losing employees too soon? Are payroll inaccuracies causing you headaches, or perhaps compliance issues seem like a minefield too complex to navigate? Could these issues be impacting the overall growth and profitability of your business? If your answer is “yes” to any of these questions, you might want to look closely at your employee onboarding process.

Being a small business owner is akin to being a master juggler. You're constantly balancing strategic planning, marketing initiatives, customer service, and, importantly, human resource management. However, amidst all these hats you wear, two areas of HR management often tend to take the backseat – employee onboarding and payroll management. But, what if these overlooked areas are the missing pieces of the puzzle to your small business success?

In this article, we will unlock the underestimated power of an effective onboarding process and its striking influence on payroll management. Join us as we dive into the significance of these processes and discover how, with the right approach, they can transform your small business's journey.

1. The Value of Effective Onboarding: Key Statistics

The onboarding process is a strategic approach that impacts your small business's productivity, employee satisfaction, and retention rates. Understanding this connection can help redefine your onboarding strategy.

Let's dissect some insightful research findings to appreciate the profound effects of a well-executed onboarding process:

Employee Turnover and Onboarding: The correlation between employee turnover and onboarding cannot be ignored. A study conducted by the SHRM Foundation presents compelling data, showing that businesses with a comprehensive onboarding process can reduce their employee turnover by a staggering 50%. The consequence of high employee turnover is not merely a number; it reflects on increased recruiting costs, lost productivity, lower morale among existing staff, and the critical loss of company-specific skills and knowledge.
New Hire Retention: Onboarding is also a key determinant in new hire retention. Glassdoor's research reveals that organizations that invest time and effort in an effective onboarding process enjoy an 82% retention rate among new hires. This is crucial for small businesses, as losing a newly hired employee can significantly set back progress and growth plans.
Boost in Productivity: Furthermore, the same Glassdoor study also highlights that a robust onboarding process can lead to an over 70% increase in productivity. When new hires understand their roles, responsibilities, and the company culture from the get-go, they are likely to be more engaged, motivated, and productive.

In a nutshell, the impact of a robust onboarding process stretches beyond the first day or week of an employee's journey. It has long-lasting effects on employee turnover, retention, and productivity, making it an area of strategic importance for your small business.

2. The Onboarding-Payroll Connection

To appreciate the inherent connection between onboarding and payroll, we need to consider the range of information and procedures that both these processes encompass. The onboarding process is the first step in creating a comprehensive payroll profile for each employee. Let's delve deeper into how this integration takes place:

Collection of Personal Information: During the onboarding process, you collect personal details such as name, address, contact information, and social security number. This data is not only crucial for your HR records but also forms the primary identification for payroll processing.
Job Role and Salary: The onboarding process solidifies the new hire's role, title, department, and agreed-upon salary. This information directly feeds into the payroll system to ensure that each employee is compensated accurately for their specific role.
Tax Withholdings: During onboarding, new hires complete necessary tax forms , such as the W-4 form in the U.S., which dictates how much federal income tax should be withheld from their paychecks. This critical tax information is instrumental in maintaining payroll accuracy and tax compliance.
Benefits Enrollment: Onboarding is also the stage where employees enroll in company-sponsored benefits like health insurance, retirement plans, and more. The costs of these benefits can affect an employee's taxable income and net pay, so it's vital this data is correctly integrated into the payroll system.

In essence, the onboarding process sets the stage for efficient and accurate payroll management. Every piece of information collected, every form completed, and every agreement made during onboarding has a direct impact on payroll. Therefore, the significance of a well-executed onboarding process in relation to payroll cannot be underestimated.

3. Onboarding and Compliance: Navigating the Regulatory Landscape

When it comes to ensuring compliance with numerous regulations related to tax laws, labor standards, and employee rights, onboarding plays a significant role. Let's break down how onboarding and compliance intertwine and why they matter to your small business:

Tax Laws: During the onboarding process, employees fill out critical tax documents that determine the amount of tax to be withheld from their paycheck. In the U.S., this includes forms like the W-4 and I-9 . Any errors or omissions in these forms can lead to non-compliance with IRS regulations. For instance, an incorrect W-4 can result in under-withholding of taxes, leaving the employee with a hefty tax bill at the end of the year and potentially exposing your business to penalties.
Labor Regulations: Onboarding is also the time when employees acknowledge and accept labor regulations such as overtime pay, minimum wage rules, and working hours. Failure to educate employees about these regulations during the onboarding process can lead to misunderstanding and non-compliance, potentially leading to labor disputes or penalties.
Employee Rights: The onboarding process is the perfect time to educate employees about their rights regarding anti-discrimination policies, privacy, and workplace safety. Compliance in these areas is critical, and non-compliance can lead to legal issues, reputational damage, and loss of employee trust.
The Financial Impact: Non-compliance with these regulations comes with financial implications. The IRS reported that in 2020, small businesses in the US paid an average penalty of $845 for late or incorrect payroll tax filings. This figure underscores the importance of getting payroll right from the start, which begins with an accurate onboarding process.

Therefore, accurate onboarding doesn't only lead to efficient payroll management, it also ensures compliance with a multitude of regulatory requirements. By making the onboarding process a priority, you set your small business up for successful compliance management.

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4. Employee Engagement, Retention, and Payroll

An effective onboarding process impacts more than just an employee's initial experience; it directly influences employee engagement and retention and, in turn, the overall payroll management. Here's how these elements interact:

Boosting Engagement through Onboarding: A well-orchestrated onboarding process engages employees from the start. It sets clear expectations, introduces them to company culture, and empowers them with the tools necessary to succeed in their roles. Engaged employees are more productive, more likely to be satisfied with their jobs, and less likely to seek opportunities elsewhere.
Retention and the Cost Factor: The onboarding process can significantly affect your company's retention rates. The process gives employees a solid foundation in their new role and makes them feel valued and included, reducing the likelihood of early exit. The impact on payroll is indirect but substantial - higher retention translates to lower turnover.
The Financial Implications of Turnover: Frequent turnover can strain your payroll budget. Every time an employee leaves, businesses incur costs related to offboarding, recruiting, hiring, and training a new employee. According to the Center for American Progress , these costs can range from 16% of the annual salary for low-paying jobs up to 213% for executive positions.
Long-Term Savings through Effective Onboarding: By reducing turnover through an engaging onboarding process, businesses can save significant costs in the long run. These savings can then be reinvested into the business - for growth, employee benefits, or improving the existing onboarding process further.

Investing in an effective onboarding process can have a far-reaching impact on employee engagement, retention rates, and, indirectly, payroll management. It's a cycle where each factor influences the other, contributing to the long-term sustainability and growth of your small business.

5. Leveraging Technology for Onboarding and Payroll

As a small business owner, staying abreast with technological advancements and integrating them into your HR processes can significantly streamline operations. This holds particularly true for onboarding and payroll management. Here's an in-depth look into how technology can enhance these crucial aspects of your business:

Streamlining the Onboarding Process: HR technologies can transform a traditionally paper-heavy and time-consuming onboarding process into a seamless, efficient, and engaging experience. New hires can complete necessary forms, view orientation materials, and familiarize themselves with company policies even before their first day at work. This not only saves time but also improves the accuracy of information collected.
Ensuring Payroll Accuracy: Payroll software can automate several complex tasks such as calculating taxes, overtime pay, and benefits deductions, reducing the risk of manual errors. Such accuracy is crucial in maintaining compliance and fostering trust between the company and its employees.
Centralized Data Management: A centralized HR platform can serve as a single source of truth for all employee-related information. It ensures that the data is consistently updated across all systems and is accessible for auditing or reporting purposes, minimizing potential legal issues.
Improved Efficiency and Performance: Adopting HR technology is not just about ease and convenience; it's also about performance. A survey by Deloitte indicates that organizations with a high adoption rate of HR technology are twice as likely to be “high-performing”. By automating repetitive tasks, these systems allow HR professionals to focus on strategic initiatives, like employee engagement and development.
Scalability: HR technology is easily scalable, making it a smart investment for growing businesses. As your workforce expands, these systems can effortlessly accommodate the growing number of employees and the associated increase in payroll processing.

To sum up, leveraging technology for onboarding and payroll management can have a profound impact on your small business, improving efficiency, accuracy, and performance. It's a future-forward approach that can give your business a competitive edge in the marketplace.

Conclusion

In the whirlwind of small business management, it's easy for certain processes to get lost in the shuffle. However, as we've highlighted throughout this article, the significance of a comprehensive and effective onboarding process and its role in payroll management cannot be sidelined.

Remember, your onboarding process is not just a new hire’s first impression of your business; it's the foundation of their journey in your organization, directly influencing their engagement, productivity, and long-term retention. Simultaneously, it's the seed from which your payroll management system grows, collecting essential information that ensures your business remains compliant with regulations, accurate in financial responsibilities, and efficient in operations.

Moreover, in today's digital era, technology can be your invaluable ally in streamlining these processes. Leveraging HR technology can transform your onboarding and payroll management, freeing you to focus on growth strategies, employee development, and creating a workplace culture that fosters innovation and collaboration.

Every small business owner strives to reduce costs, increase productivity, and maintain a content and committed workforce. And as counterintuitive as it might sound, these objectives trace back to the humble beginnings of your employees' journey – the onboarding process. So, ask yourself: is your current onboarding strategy helping you unlock your small business's true potential?

Remember, investing time and effort in establishing a comprehensive onboarding now will pay dividends in the long run. Schedule a free consultation today and we’ll help you grow and nurture your business for years!

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How Do I Set Up Payroll for the First Time

Fri, 12 May 2023 16:00:00 GMT

Taking the leap and setting up payroll for the first time can feel daunting for small business owners. The numerous considerations and legal requirements might make your heart race, overwhelming you. But don't worry! This vital step ensures that your hardworking employees receive well-deserved pay, keeping your business compliant with government regulations. Our comprehensive guide is here to hold your hand through every step of the payroll setup process. Once you've mastered it, you and your passionate team can turn your focus to the heart of your small business: nurturing its growth and making your dreams a reality.

1. Obtain an Employer Identification Number (EIN)

Before embarking on the payroll journey for your small business, you must first acquire an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Key EIN facts:

Over 1.5 million new EINs were issued by the IRS in 2020
Businesses can obtain an EIN for free through the IRS website
The online EIN application process typically takes less than 15 minutes
An EIN is needed not only for payroll but also to open a business bank account and apply for various licenses and permits
Non-US residents can also apply for an EIN for their US-based businesses

This distinctive number serves as your business's tax ID and is crucial for submitting taxes and other necessary documents to the IRS. The process of applying for an EIN on the IRS website is generally simple and efficient.

2. Register with Your State's Labor Department

After registering with the IRS, you must also register with your state's labor department . This critical step ensures compliance with each state's specific regulations concerning unemployment insurance, workers' compensation, and various employment-related matters. By registering, you can avoid potential pitfalls and adhere to your state's unique requirements.

Essential state labor department registration statistics:

The United States has 50 state labor departments, each with its specific regulations
Unemployment insurance tax rates vary by state, with rates ranging from 0.2% to 13.5% in 2021
As of 2021, the national average for workers' compensation insurance premiums was $1.63 per $100 of payroll
Most states require employers to carry workers' compensation insurance, with Texas being a notable exception
There are over 180,000 state and local employment-related laws in the United States
Employers are required to display state-specific labor law posters to inform employees of their rights
State labor departments often provide free resources and guidance to help employers navigate regulations and compliance requirements

3. Choose a Payroll Schedule

An essential step in setting up payroll is determining how frequently you'll pay your employees. There are multiple payroll schedules available, such as weekly, biweekly, semimonthly, and monthly. When selecting a schedule, consider the needs of your business, the preferences of your employees, and potential state regulations dictating how often employees must be paid.

Informative statistics and facts on payroll schedules:

Approximately 36% of U.S. businesses use a biweekly payroll schedule, making it the most popular choice
Weekly payroll schedules are utilized by roughly 32% of U.S. companies, followed by semimonthly at 20% and monthly at 12%
Payroll frequency can impact your business's cash flow, with more frequent payroll schedules typically requiring more cash on hand
Employees often prefer more frequent paychecks to help manage their personal finances and expenses
Some states, like California and New York, have specific regulations regarding minimum payroll frequency for different types of workers, such as non-exempt and exempt employees
Switching payroll schedules can be a complex process, so it's essential to carefully consider the needs of your business and employees before making a decision
A survey by the American Payroll Association found that 92.5% of employees are satisfied with their current payroll schedule, emphasizing the importance of selecting a schedule that works for both your business and your workforce

4. Set Up Employee Records

Details to consider when setting up employee records:

Information collection: Collect each employee's full name, address, Social Security number, and a completed Form W-4 . Form W-4 is used to determine federal income tax withholding based on an employee's allowances and filing status.
Additional documentation: Depending on your state and industry, you may need to collect additional documents, such as state withholding forms, I-9 forms for verifying employment eligibility, and direct deposit authorization forms.
Record organization: Maintain a well-organized filing system, whether digital or physical, to ensure easy access to employee records when needed. Organize records by employee or category (e.g., tax forms, hiring documents) based on your preference and business requirements.
Record security: Keep employee records secure by implementing proper access controls, such as password protection for digital files or locked cabinets for physical records. This ensures the privacy and confidentiality of sensitive employee information.
Retention requirements: Familiarize yourself with federal and state record retention requirements. For instance, the IRS recommends retaining Form W-4 for at least four years after an employee's last payroll period. Each state may have its specific guidelines for retaining various employment-related records.
Regular updates: Encourage employees to update their information as needed, especially if they experience life events that could impact their tax withholdings, such as marriage, divorce, or the birth of a child. Regularly updating records helps ensure accurate payroll and tax reporting.
Compliance audits: Periodically review your employee records for accuracy and completeness. Regular audits can help identify potential issues, such as missing documents or outdated information, and ensure compliance with relevant laws and regulations.

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5. Determine Employee Classification

Employees can be classified as either exempt or non-exempt , with different rules and regulations applicable to each category. To avoid penalties and fines due to misclassification, familiarize yourself with the Department of Labor guidelines and ensure the correct classification of your employees.

Key aspects of employee classification:

Exempt employees:
Typically receive a salary instead of hourly wages
Not eligible for overtime pay under the Fair Labor Standards Act (FLSA)
Must meet specific criteria concerning job duties, responsibilities, and minimum salary thresholds (as of 2021, the minimum salary is $684 per week or $35,568 per year)
Often hold executive, administrative, professional, or outside sales positions
Non-exempt employees:
Usually paid hourly wages
Eligible for overtime pay (generally, 1.5 times their regular pay rate) for hours worked beyond 40 hours per week under the FLSA
Not required to meet specific job duty or salary criteria
Can include a variety of roles, such as clerical, manual labor, or technical positions
State-specific regulations:
Some states have their overtime laws and regulations that may differ from the FLSA
Employers must adhere to both federal and state regulations, ensuring compliance with the more stringent of the two
Independent contractors:
In addition to exempt and non-exempt classifications, some workers may be classified as independent contractors
Generally, not considered employees and not subject to the same labor laws or tax withholding requirements
Misclassification of employees as independent contractors can result in penalties, fines, and back payment of taxes and wages
Regular review and updates:
Periodically review your employees' classifications to ensure ongoing accuracy and compliance, particularly if job duties or responsibilities change
Keep abreast of changes in federal and state labor laws, as regulations and thresholds may change over time
Training and resources:
Train your human resources and management teams on employee classification guidelines to ensure consistency and compliance throughout your organization
Utilize resources provided by the Department of Labor, such as fact sheets and guidance on employee classification under the FLSA

6. Calculate and Withhold Taxes

Withholding taxes is a critical component of payroll management. You'll need to withhold federal income tax, Social Security tax, and Medicare tax from your employees' paychecks. Additionally, some states require the withholding of state income tax. Consult the IRS website and your state's revenue department for current tax rates and guidance on calculating withholdings.

7. Track Employee Time and Attendance

To accurately pay your employees, you'll need to track their work hours , including any overtime. There are many time and attendance systems available, ranging from traditional time clocks to digital solutions. Choose a method that works best for your business and ensure that it's consistently used by all employees.

Traditional time clocks:
Analog or digital wall-mounted clocks that use time cards, badges, or biometric data (e.g., fingerprints) for clocking in and out
Easy to use and understand, but can be less accurate due to rounding, buddy punching, or human error
Examples: Acroprint Time Recorder, Lathem Heavy-Duty Time Clock
Digital time and attendance software:
Cloud-based or on-premise solutions for tracking employee work hours
Allows employees to clock in and out using computers, mobile devices, or designated time clocks
Automatically calculates hours worked, overtime, and breaks, reducing the risk of human error
Examples: TSheets, TimeClock Plus, When I Work
Mobile applications:
Track employee hours using smartphones or tablets, ideal for remote or field-based workers
Often equipped with GPS tracking, ensuring accurate location data and preventing time fraud
Examples: ClockShark, QuickBooks Time, HoursTracker
Biometric time and attendance systems:
Use unique biological data, such as fingerprints, facial recognition, or iris scans, to clock employees in and out
Reduce the risk of time fraud and unauthorized access to sensitive areas
Examples: uAttend BN6500, TimeClock Plus, AMGtime

When choosing a time and attendance system, consider factors such as the size of your workforce, your industry, budget, and the level of integration needed with your existing systems. Engage employees in the selection process to ensure user-friendly and effective solutions that meet their needs.

8. Process Payroll

Once you've gathered all the necessary information and have calculated the appropriate withholdings, it's time to process payroll. Many small business owners choose to use payroll software to streamline this process, while others prefer to work with a payroll service provider . Whichever option you choose, ensure that it meets your business's needs and complies with all relevant tax and labor regulations.

9. Submit Payroll Taxes and Reports

After you've processed payroll, you'll need to submit payroll taxes and reports to the appropriate government agencies.

Key components of submitting payroll taxes and reports:

Federal payroll taxes:
Includes Social Security tax, Medicare tax, and federal income tax withholding
Deposited to the IRS using the Electronic Federal Tax Payment System (EFTPS)
Reported on Form 941 (Employer's Quarterly Federal Tax Return) or Form 944 (Employer's Annual Federal Tax Return) depending on the size and tax liability of your business
State payroll taxes:
Vary by state and may include state income tax withholding, unemployment insurance tax, and other employment-related taxes
Typically submitted to the state revenue department or state unemployment agency
Reporting requirements and deadlines differ between states, so it's crucial to familiarize yourself with your state's specific guidelines
Local payroll taxes:
Some cities and counties impose additional payroll taxes, such as local income taxes or local services taxes
Submission requirements and deadlines vary by jurisdiction, so consult your local tax office for details
Filing Form W-2 and Form 1099:
At the end of the calendar year, provide Form W-2 (Wage and Tax Statement) to employees and Form 1099-NEC (Nonemployee Compensation) to independent contractors
File copies of these forms with the Social Security Administration (for W-2) and the IRS (for 1099-NEC) by the annual deadline, usually January 31
Recordkeeping:
Maintain accurate records of your payroll tax deposits, reports, and employee wage information for a minimum of four years, as recommended by the IRS
Regularly review your records to ensure accuracy and compliance with tax and reporting requirements
Outsourcing and software solutions:
Consider using payroll software or outsourcing your payroll tax and reporting obligations to a payroll service provider to streamline the process and ensure compliance
Examples: ADP, Paychex, Gusto

By staying up to date with payroll tax and reporting requirements, you can avoid costly penalties and fines, maintain compliance, and protect your business's reputation.

Conclusion

Setting up payroll for the first time is a significant milestone for any small business. It demonstrates growth and commitment to supporting your employees. By following the steps outlined above, you can create a seamless and efficient payroll process.

By staying informed, organized, and compliant with relevant regulations, you'll not only foster a healthy work environment but also safeguard your business's reputation and financial stability.

Remember, investing time and effort in establishing a robust payroll system now will pay dividends in the long run. Schedule a free consultation today and we’ll help you grow and nurture your business for years!

Is payroll a thorn in your side? Let us handle all the stress related to payroll so you don't have to...

What Does Payroll Software Do

Fri, 14 Apr 2023 16:00:00 GMT

Have you ever wondered how businesses manage their employee salaries, deductions, and taxes without going haywire? It's all thanks to payroll software. In this comprehensive guide, we'll dive into the world of payroll software and discover how it can revolutionize your business operations. From calculating salaries to generating payslips, payroll software has got you covered. So, let's dive in and find out what payroll software does and how it can make your life a whole lot easier.

Automated Salary Calculations: Say Goodbye to Manual Errors

One of the most significant advantages of payroll software is its ability to automate salary calculations. By inputting essential employee information, such as hours worked, hourly wages, or salaries, the software can effortlessly compute the pay for each employee. This not only saves time and effort but also reduces the likelihood of human errors in calculations.

Payroll software is designed to handle a wide range of calculations, including regular pay, overtime, bonuses, commissions, and other types of compensation. By setting up predefined rules and formulas, the software can accurately compute these different forms of pay based on employee data, work schedules, and performance metrics. This ensures that each employee is paid correctly according to their individual compensation agreements, without the need for manual calculations and adjustments.

Automated salary calculations also help maintain consistency and compliance with applicable labor laws and regulations. By automating salary calculations, payroll software frees up valuable time for your HR and payroll staff, allowing them to focus on other important tasks and responsibilities.

Deductions Management: Stay Compliant and Accurate

Effectively managing deductions is a crucial aspect of payroll processing. With various deductions such as taxes, insurance premiums, retirement contributions, and garnishments to consider, maintaining accuracy and compliance can be challenging. Payroll software simplifies this process by automating deductions management, ensuring that your business remains compliant with local, state, and federal tax laws while avoiding penalties and ensuring accurate financial reporting.

Payroll software is designed to stay up-to-date with ever-changing tax laws and regulations. It can automatically calculate and withhold the correct amount of federal, state, and local taxes based on employee information and the latest tax tables. The software can also accommodate different tax filing statuses and exemptions, ensuring that each employee's tax withholding is accurate and compliant.

Payroll software simplifies this process by automatically calculating and withholding the appropriate amounts from employees' paychecks, based on their elected contribution rates and employer matching policies. This automation ensures that retirement contributions are consistently and accurately managed, promoting long-term financial security for your employees.

Managing deductions for employee benefits, such as health, dental, and vision insurance, can be complex, particularly when considering factors like tiered coverage levels and dependent coverage. Payroll software can easily manage these deductions by integrating with your benefits administration system. By doing so, the software can automatically calculate and apply the correct premium deductions based on each employee's benefit selections, ensuring accuracy and simplifying benefits management.

In certain situations, employers may be required to withhold and remit a portion of an employee's wages to satisfy legal obligations, such as child support, alimony, or tax levies. Payroll software can manage these garnishments and wage attachments by calculating the correct deduction amounts based on court orders or other legal documents.

Customizable Payslip Generation: Empower Your Employees

A clear, detailed payslip is essential for employees to understand their earnings and deductions. With payroll software, generating payslips becomes a breeze. These software solutions often come with customizable templates, allowing you to create professional and informative payslips that cater to your organization's unique requirements. Additionally, many payroll software systems offer digital payslips, making it easy to distribute them to employees via email or an online portal.

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Time and Attendance Tracking: A Seamless Integration

Payroll software can also integrate with your organization's time and attendance systems , providing an accurate record of employee hours worked. This integration allows the software to automatically calculate overtime, leave, and other time-based variables that impact an employee's pay. By streamlining the time tracking process, payroll software ensures accurate payments and simplifies administrative tasks for HR and management.

Tax Filing and Compliance: Leave the Paperwork to the Pros

Filing taxes can be a daunting task for any business owner. With constantly changing tax laws and regulations, staying compliant can seem like an uphill battle. Fortunately, payroll software can make tax filing a breeze. These systems can automatically generate tax forms, calculate liabilities, and even submit filings to the appropriate tax agencies. By automating this process, businesses can reduce the risk of errors and late filings, saving time and money in the long run.

Reporting and Analytics: Unlock the Power of Your Payroll Data

Payroll software doesn't just help you manage your payroll; it can also provide valuable insights into your business's financial health. Robust reporting and analytics tools within payroll software can help you identify trends, monitor expenses, and optimize your payroll processes. By leveraging this data, businesses can make informed decisions to improve their bottom line and stay competitive in the marketplace.

Scalability and Adaptability: Growing with Your Business

As your business expands, your payroll needs may change. The beauty of payroll software is its ability to scale and adapt to your organization's evolving requirements. Whether you're adding new employees, changing compensation structures, or expanding into new locations, payroll software can accommodate these changes with ease. This flexibility ensures that your payroll system remains efficient and effective, regardless of how your business grows.

Conclusion

Payroll software is an indispensable tool for businesses of all sizes, offering a plethora of benefits that streamline payroll processes, reduce errors, and ensure compliance with tax laws. By automating salary calculations, deductions management, payslip generation, time and attendance tracking, tax filing, and providing valuable reporting and analytics tools, payroll software simplifies the complex world of payroll management.

As your business grows and evolves, payroll software's scalability and adaptability make it a reliable partner in your organization's success. So why wait? Embrace the future of payroll management today and discover how payroll software can revolutionize your business operations. Schedule a free consultation today!

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What Is Payroll Compliance And Why Is It So Important

Fri, 10 Mar 2023 17:00:02 GMT

Have you ever wondered why businesses must comply with payroll regulations? Payroll compliance may not be the most exciting topic to discuss, but it is undoubtedly one of the most crucial aspects of running a successful business.

Failing to comply with payroll regulations can lead to hefty fines, lawsuits, and even criminal charges. Yet, despite its importance, many businesses struggle to maintain payroll compliance, leading to numerous legal issues and reputation damage.

In this article, we will explore why payroll compliance is so critical and discuss some of the key regulations that businesses must follow to avoid legal and financial consequences. So, let's dive into the world of payroll compliance and learn why it's not something you can afford to overlook.

What Is Payroll Compliance?

Payroll compliance refers to following the laws and regulations related to paying employees, including properly classifying them, withholding taxes, and ensuring compliance with minimum wage, overtime, and record-keeping requirements. It's critical for businesses of all sizes to maintain payroll compliance to avoid penalties, lawsuits, and reputational damage.

Small businesses may struggle with payroll compliance because they may not have the resources or expertise to stay up-to-date with changing regulations. But non-compliance can lead to heavy fines, audits, and even legal consequences, which can be devastating for small businesses. To avoid these consequences, small businesses can use software that automates payroll and tax calculations, ensure proper employee classification, and keep accurate records. Outsourcing payroll to a trusted provider can help ensure compliance and allow small business owners to focus on growing their businesses.

Why Is Payroll Compliance Important?

Legal Compliance

According to the IRS, the average penalty for failure to file Form W-2s or filing incorrect information is $270 per form, which can add up quickly for businesses with multiple employees.

Moreover, the U.S. Department of Labor (DOL) can conduct audits on businesses to ensure compliance with payroll regulations. According to the DOL, in 2020, it collected more than $2.5 billion in back wages for more than 275,000 workers. These workers were either misclassified as exempt or not paid overtime pay for working more than 40 hours per week, among other payroll violations. These audits can be expensive and time-consuming for businesses, leading to a significant financial impact.

In addition to financial penalties, non-compliance can also lead to legal consequences. In 2020, the DOL's Wage and Hour Division reported a total of 4,050 investigations, resulting in more than $1.4 billion in back wages and liquidated damages for workers. Moreover, in 2019, the Equal Employment Opportunity Commission (EEOC) collected a total of $486 million for victims of discrimination in the workplace. These legal actions can lead to reputational damage, loss of customers, and a decrease in employee morale.

It is essential for businesses to stay up-to-date with the latest payroll compliance regulations and ensure compliance to avoid legal and financial consequences. Resources such as the DOL's website and the IRS's payroll tax compliance website can provide valuable information on payroll compliance regulations, forms, and deadlines. Seeking the assistance of a payroll specialist or outsourcing payroll processing can also help ensure compliance with regulations and avoid costly mistakes.

Maintaining Employee Trust

According to a survey by the American Payroll Association , 68% of employees said they would lose trust in their employer if they experienced issues with their paycheck. Moreover, a study by National Payroll Week revealed that 70% of employees believe their employer is responsible for ensuring their paycheck is accurate.

Failing to comply with payroll regulations can lead to mistrust and low employee morale, negatively affecting workplace culture, productivity, and retention rates. A study by the Society for Human Resource Management found that 30% of employees would look for another job if they experienced just two payroll errors, indicating that payroll mistakes can impact employee loyalty and retention.

Furthermore, payroll compliance issues can result in legal action by employees, which can further damage trust and morale. In 2019, the EEOC reported that it received 72,675 charges of workplace discrimination, with retaliation being the most frequently filed charge. If employees believe they are being retaliated against due to payroll issues, they may file a discrimination charge, leading to costly legal action for the employer.

Ensuring payroll compliance is crucial for building and maintaining employee trust in a company. By providing accurate and timely paychecks and complying with regulations, employers can foster a positive work environment and increase employee loyalty and retention.

Avoiding Reputation Damage

Payroll compliance violations can result in negative publicity that can harm a company's reputation. Customers, investors, and potential employees may view a business as untrustworthy and avoid doing business with them. A study by the American Payroll Association found that 32% of employees would look for a new job after just one payroll error, indicating that payroll mistakes can have a significant impact on employee loyalty and retention.

Payroll compliance issues can lead to legal action and costly settlements, further damaging a company's reputation. In 2020, the DOL's Wage and Hour Division reported that it recovered $1.4 billion in back wages and liquidated damages for workers, indicating the prevalence of payroll compliance violations. These lawsuits can be publicized and damage a company's reputation, leading to decreased customer trust and negatively impacting the bottom line.

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Key Payroll Compliance Regulations

Fair Labor Standards Act (FLSA)

The FLSA establishes minimum wage, overtime pay, record-keeping, and child labor standards for covered employees. Employers must pay non-exempt employees at least the federal minimum wage, currently $7.25 per hour, and overtime pay at a rate of at least one and a half times their regular pay rate for any hours worked over 40 in a workweek. Employers must also keep accurate records of hours worked, wages paid, and other employment-related data.

Social Security, Medicare, and Federal Income Tax Withholding

Employers must withhold social security, Medicare, and federal income taxes from employees' wages and report and pay these taxes to the appropriate government agencies. Employers must also provide employees with Form W-2, Wage and Tax Statement, which reports their wages, tips, and other compensation, and the taxes withheld from their paychecks.

State and Local Tax Withholding

In addition to federal taxes, employers must comply with state and local tax withholding requirements. Employers must withhold state income taxes from employee paychecks in states that impose an income tax, and in some states, local income taxes may also be required.

Employee Classification

Employers must correctly classify employees as either exempt or non-exempt under the FLSA. Exempt employees are not entitled to overtime pay, while non-exempt employees are entitled to overtime pay for hours worked over 40 in a workweek. Misclassifying employees can result in costly lawsuits and penalties.

Workers' Compensation Insurance

Employers must carry workers' compensation insurance to provide medical and wage replacement benefits to employees who are injured or become ill due to their job. Employers must comply with state-specific workers' compensation laws, which may vary regarding coverage requirements, benefits, and reporting.

Family and Medical Leave Act (FMLA)

The FMLA requires covered employers to provide eligible employees with unpaid, job-protected leave for specific family and medical reasons, such as the birth or adoption of a child, caring for a family member with a serious health condition, or the employee's own serious health condition. Employers must also continue to provide health insurance to employees on FMLA leave.

Affordable Care Act (ACA)

The Affordable Care Act (ACA) , also known as Obamacare, is a federal law that requires certain employers to offer affordable health insurance coverage to their full-time employees. Specifically, the ACA applies to businesses with 50 or more full-time equivalent employees. These businesses must offer health insurance coverage to their full-time employees that meet certain standards, such as minimum essential coverage, affordability, and minimum value.

To determine whether a business is subject to the ACA, it must count its full-time equivalent employees. A full-time equivalent employee is an employee who works an average of 30 or more hours per week. If a business has 50 or more full-time equivalent employees, they must offer affordable health insurance coverage to their full-time employees or face penalties.

The penalties for not complying with the ACA can be substantial. In 2021, the penalty for failing to offer affordable health insurance coverage to full-time employees was $2,700 per employee per year. If the business offers coverage, but the coverage is not affordable or does not meet minimum value standards, the penalty is $4,060 per employee per year. These penalties can add up quickly and have a significant impact on a business's bottom line.

Conclusion

If you're overwhelmed, don't worry, we are here to help. Our payroll experts can assist you in ensuring compliance and handling your year-end payroll process efficiently and accurately. Take control of your year-end payroll process by scheduling a free consultation today. Don't let payroll compliance be a headache for your business, partner with us and experience peace of mind.

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The Most Common Questions About Year-End Payroll

Fri, 10 Feb 2023 17:00:06 GMT

Year-end payroll can be a major source of stress and frustration. With so many different payroll tax forms to file, reports to run, and information to verify, it's easy to get overwhelmed. But with the right preparation and understanding, you can make sure your payroll processes run smoothly and avoid any compliance issues. The biggest challenge for small business owners is ensuring they have all the necessary information and reports ready before the year-end deadline.

So, are you tired of feeling stressed and unprepared when it comes to year-end payroll? Are you looking for a comprehensive solution to simplify the process? If so, you've come to the right place. In this article, we'll answer the most common questions about year-end payroll so you through the most important steps of year-end payroll and provide you with a checklist to make can make sure nothing falls through the cracks. Whether you're a small business owner who's new to payroll or just need a refresher, this article is designed to help you succeed. So, let's get started and take control of your year-end payroll!

What is Year-End Payroll?

Year-end payroll is a critical aspect of financial management for any business, large or small. It involves a comprehensive

calculation of employee salaries, bonuses, and other forms of compensation earned over the course of the year. Furthermore, it also involves the preparation and distribution of necessary tax forms, such as W-2 , W-3 , 1099-NEC , 1096 , 940 , 941 , 944 , and 1095-B . The importance of accurate and timely year-end payroll processes cannot be overstated, as it helps ensure that employees receive their fair compensation and that the proper taxes are withheld and paid to the relevant agencies.

According to the Small Business Administration (SBA) , there are approximately 30.7 million small businesses in the United States, representing 99.9% of all U.S. businesses. It's crucial for these businesses to stay on top of their year-end payroll processes to maintain compliance with federal, state, and local tax laws.

What Information is Needed and Why to Complete Year-End Payroll?

Here’s the list of the most important information that small business owners need to gather and consider when completing their year-end payroll:

Employee names and Social Security Numbers (SSNs) - Employee names and SSNs are used to accurately identify employees and link their payroll records to their tax records. It's important to verify that this information is up-to-date and accurate before year-end to avoid any mistakes or discrepancies.
Employee addresses and phone numbers - Employee addresses and phone numbers are used to properly deliver W-2s and other tax forms. It's important to verify that this information is up-to-date and accurate before year-end to ensure that employees receive their forms in a timely manner.
Payroll data - This includes information on employee salaries, bonuses, and other forms of compensation, as well as taxes withheld and paid, and any other deductions. This information is used to calculate the total compensation and taxes owed for each employee for the year.
Retirement contributions - If a small business offers a retirement plan, they'll need to gather information on employee contributions and employer matching contributions for the year. This information is used to calculate the total contributions for each employee and to ensure that the proper taxes are withheld and paid.
Workers' compensation reports - If a small business offers workers' compensation insurance, they'll need to gather information on employee injury and illness claims for the year. This information is used to calculate the amount owed for workers' compensation insurance premiums and to ensure that the proper taxes are withheld and paid.
Paid time off (PTO) reports - If a small business offers paid time off, they'll need to gather information on employee PTO usage for the year. This information is used to calculate the amount owed for PTO and to ensure that the proper taxes are withheld and paid.
Tax forms - Small business owners will need to gather the necessary tax forms for their employees, including W-2s, W-3s, 1099-NECs, 1096s, 940s, 941s, 944s, and 1095-Bs. These forms are used to report employee compensation and taxes to the relevant agencies.

The Internal Revenue Service (IRS) has strict deadlines for submitting tax forms and paying taxes, and small business owners who miss these deadlines can face penalties and fines. According to the IRS, the failure-to-file penalty for Forms 941, 940, and 944 can be as much as 5% per month, up to a maximum of 25% of the taxes owed.

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What's The Purpose of a Year-End Payroll Report?

The purpose of a year-end payroll report is to provide an accurate record of an employee's total earnings and deductions for the year. This report is used by both the employer and the employee to calculate and file taxes, as well as to make sure that the employee has received the correct amount of compensation. The report typically includes information on the employee's gross pay, taxes withheld, Social Security and Medicare contributions, and any other deductions taken from their paychecks.

Having a comprehensive year-end payroll report is critical for compliance with tax laws and regulations. It helps ensure that the business pays the correct amount of taxes and that employees receive the full benefits they are entitled to. A well-prepared year-end payroll report can also be used to track the company's financial performance and identify any areas for improvement.

Does someone write the report?

The year-end payroll report is usually generated by the payroll software or by the payroll service provider . However, businesses can also produce this report manually if they prefer. The important thing is that the report is accurate and that all relevant information is included.

Who's even going to read it?

The year-end payroll report is read by employees, the Internal Revenue Service (IRS), and other relevant agencies. Employees will receive a copy of the report, which they will use to prepare their tax return. The report is also submitted to the IRS, which will use it to ensure that the correct taxes have been paid.

Do we have to do it?

Yes, year-end payroll is a mandatory process for all businesses. The IRS requires that businesses report all forms of income, including bonuses, severance pay, and other taxable benefits, to employees on W-2 forms. Failing to do so can result in significant penalties and fines, which can harm the financial stability of a small business.

Conclusion

Year-end payroll is a crucial aspect of any business's financial management. It requires careful preparation, attention to detail, and a solid understanding of payroll tax regulations. By following the steps outlined in this article, you can help ensure that your year-end payroll process runs smoothly and your employees receive accurate compensation and benefits.

If you're still feeling overwhelmed, consider partnering with a payroll services provider. Our team of experts will work with you to ensure that your year-end payroll is handled efficiently and accurately. So why wait? Schedule a free consultation , and take control of your year-end payroll process.

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How Does Payroll Outsourcing Maximize The Efficiency Of Your Small Business

Fri, 13 Jan 2023 17:00:00 GMT

As a small business owner, you know how critical it is to make the most of your time and resources. But with so many tasks on your plate, it can be hard to find the time to focus on growing your business. One area that often requires significant attention is payroll. Managing payroll can be complex and time-consuming, from calculating employee salaries and benefits to ensuring tax compliance. But what if there was a way to streamline and optimize your payroll process, freeing time and resources to focus on more important tasks? Enter payroll outsourcing.

With its specialized expertise, time-saving benefits, and cost-saving advantages, payroll outsourcing is a powerful tool for small businesses looking to optimize their payroll process. But don't just take our word for it - a survey by the American Payroll Association found that small businesses that outsource payroll save an average of 7.5 hours per month on payroll-related tasks and an average of 15% on payroll costs. So if you're ready to take your small business to the next level, keep reading to learn how payroll outsourcing can help you maximize efficiency.

Reduced Workload

Payroll can be time-consuming and complex, particularly for small businesses that may not have dedicated payroll staff. A National Small Business Association survey found that nearly 50% of small business owners spend at least one day per week on payroll and human resources tasks. Outsourcing payroll allows small businesses to free up time for the business owner and employees to focus on other tasks and responsibilities. This can help reduce the business's workload and allow employees to focus on more value-adding activities, which can help improve efficiency.

Specialized Expertise

Payroll outsourcing companies typically have in-depth knowledge of payroll and tax compliance, so they can handle these tasks more efficiently and accurately. This can help to reduce the risk of errors and compliance issues, which can be costly for businesses. In fact, a survey by payroll software company SurePayroll found that a small business's average cost of a payroll mistake is around $400. By outsourcing payroll, small businesses can tap into the expertise of these specialists to ensure that their payroll process is handled accurately and efficiently. This specialized expertise can help improve the payroll process's efficiency by reducing the risk of errors and ensuring compliance with relevant laws and regulations.

Time-saving

In addition to reducing workload and providing specialized expertise, payroll outsourcing can also help small businesses to save time and money. Outsourcing payroll can save time as the business owner and employees don't have to spend as much time on payroll-related tasks. It can also eliminate the need for businesses to spend time on tasks such as updating payroll software or training employees on new payroll processes. A survey by the American Payroll Association found that small businesses that outsource payroll save an average of 7.5 hours per month on payroll-related tasks. This time-saving can be significant for small businesses that have limited resources and need to make the most of their time.

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Cost-saving

In terms of cost-saving, a survey by the American Payroll Association found that outsourcing payroll can save small businesses an average of 15% on payroll costs . The business does not have to pay for payroll software , training, or employee time. By outsourcing payroll, small businesses can reduce their overhead costs and stretch their resources further. This cost-saving can be significant for small businesses that have limited budgets and need to be mindful of their expenses.

Flexibility

Payroll outsourcing allows small businesses to be more flexible in terms of staffing. It enables businesses to scale up or down as needed without worrying about hiring or laying off employees. This can be particularly useful for businesses that experience fluctuations in their staffing needs. By outsourcing payroll , small businesses can be more agile and responsive to changing business conditions, which can help them to stay competitive. This flexibility can be an important factor in maximizing efficiency, allowing businesses to adapt to changing circumstances and optimize their workforce.

Conclusion

Payroll outsourcing can be a powerful tool for small businesses looking to streamline their payroll process and increase efficiency. According to a survey by the National Small Business Association, 60% of small businesses that outsourced payroll saw an improvement in their overall efficiency. Additionally, outsourcing payroll services can help small businesses save time and money. A study by Paychex found that small businesses can save up to 40 hours per month by outsourcing payroll, and the average small business can save up to $15,000 per year.

Outsourcing payroll can also help small businesses comply with employment laws and tax regulations, as payroll service providers have expertise in these areas. With the right payroll outsourcing partner, small businesses can focus on their core competencies and leave payroll details to the experts.

If you're a small business owner considering outsourcing payroll, it's important to research and choose a reputable payroll service provider. With the right partner, outsourcing payroll can help your small business maximize efficiency and achieve long-term success. Schedule a free consultation to learn more.

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What Is Employee Onboarding

Fri, 16 Dec 2022 08:21:30 GMT

It costs over $4000 to onboard a new employee, so getting it right the first time is critical. The purpose of onboarding is to help new employees feel comfortable in their new roles. It provides them with the information they need to be successful in their job.

When small business owners are hiring employees, they should make sure to have a proper onboarding process in place. This helps ensure that all new employees understand the company policies and procedures, as well as culture. It also helps to set expectations for their work.

Let's explore what is employee onboarding so you'll get it right the first time.

What Is Employee Onboarding?

Employee onboarding is the process of helping new employees adjust to their roles in a company. It helps new hires become more productive and helps them understand the culture of their new workplace. Onboarding includes activities such as orientation, training, and other tasks to ensure that the employee is comfortable in their new role.

How to Onboard Employees

When you're onboarding new employees, the goal is to make them feel welcome and part of the team. You should also make sure they understand all your policies and procedures. Here are some of the steps to follow.

Introduce them to their team and colleagues, so they can start building relationships. Explain the company's mission, vision, and values to help orient them to the company culture. Go over the job description and expectations in detail, so they understand what is expected of them.

Provide training for their specific role and tasks so they can start working right away. Give them an employee handbook and other relevant documents to familiarize them with company policies and procedures. Show them how to use the systems and tools they'll need for their job.

Invite them to team meetings and company events so they can engage with the team.

Duration of Onboarding Program

This depends on the size and complexity of your organization, as well as the job role. An effective onboarding program should take anywhere from two weeks to six months.

One Day to One Week

This is the duration when onboarding a single employee or a small team. This timeframe can be used to introduce new hires to the company culture, introduce them to the team, provide basic job training, and give basic onboarding tasks.

Two Weeks to One Month

This is the ideal duration when onboarding a new team or multiple employees. This timeframe allows for more in-depth training sessions and provides support to help new employees adjust to their roles.

One to Six Months

This duration is good for onboarding a large team or department. This timeframe allows for more comprehensive training and on-the-job coaching to help new employees fully understand their roles and responsibilities.

Three Months to Six Months

At this time, it is important to evaluate their performance and take feedback to gauge their engagement. This will help business owners determine if the onboarding process was effective and if any changes need to be made. Additionally, this feedback can help business owners improve their onboarding process for future employees.

Six Months to a Year

By now, new employees should be onboard and understand their role within the company. They should be fully assimilated and comfortable with the company's culture and values. This is also a good time to plan professional development opportunities for them.

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Tailoring Onboarding to Different Audiences

Onboarding should tailor to the specific needs of different audiences. A new executive requires more detailed planning and resources.

Executives

For executives, the process should be more comprehensive and detailed. The executive must understand the company's strategy, goals, and objectives. Relationships with key stakeholders and the building of a network of support are important.

Managers

For managers, the onboarding process should focus on teaching them how to manage and lead their teams. This should include teaching them how to:

Set expectations
Give feedback
Manage conflict

They should also learn about the company culture and the organizational structure.

Remote Workers

For remote workers, the onboarding process should be more focused on technology. Give them the tools and resources needed to work successfully from a distance.

Differently-abled Employees

For differently-abled employees, the onboarding process should tailor to their specific needs. This could include things like providing accommodations. It should also introduce them to other employees with similar disabilities.

Veterans/Returning Servicemembers

They may have different needs when it comes to onboarding. Making sure the transition is smooth requires an understanding of their unique experiences and skill sets.

Depending on the veteran's experience level and the position they are filling, you may need to adjust expectations or provide extra training or guidance.

Second-Chance/Formerly Incarcerated Workers

These workers may have unique challenges that you need to address during the onboarding process. This may include explaining reentry policies and addressing any residual trust issues.

Gig Workers (e.g., Independent Contractors, Consultants, etc.)

While gig workers do not have the same expectations and commitments as traditional employees, they still need onboarding. Onboarding for gig workers is often referred to as Learning and Development (L&D).

The goal of onboarding gig workers should be to ensure that they understand the company's mission and values, as well as the project or tasks at hand. This is especially essential for gig workers, who don't have the same expectations and commitments as traditional employees.

Important Metrics and Tracking

It's important to track the progress of your onboarding process by using metrics. This could include things like:

Time-to-Productivity

How quickly an employee becomes productive in their role is a key metric to track during the onboarding process. By doing so, you can more accurately evaluate the effectiveness of your program.

Turnover/Retention Rates

The retention threshold is the point at which most employees remain with the company long enough to be successful. By tracking how many employees reach this point, you can understand the success of your process.

New-hire Surveys

New-hire surveys give you the opportunity to hear directly from employees about their onboarding experience. This way, you can learn where changes need to be made to improve the process.

Performance Measures

Performance measures are another important indicator of employee success. By tracking how performance changes after the onboarding process, you can better assess its effectiveness.

Informal Feedback/Reviews

Informal feedback and reviews are also important metrics to track. This could include things like employee surveys, interviews, or focus groups. This provides a better understanding of the employee experience. It identifies any areas where you need to make improvements.

Use Onboarding Software When Hiring Employees

Now that you know what is employee onboarding, you should also know that technology can help. Automate the process of hiring small business employees with our help. Schedule a free consultation to learn more.

By understanding the onboarding process, you can ensure that all of your employees are set up for success.

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What Is Payroll

Fri, 18 Nov 2022 09:00:10 GMT

Payroll is the process when companies pay employees for the work they performed. Employers have to run payroll regularly so employees are paid.

Payroll has many different parts that companies must consider. These range from collecting working time to calculating deductions, such as taxes and other benefits. Employers must also file and submit reports regarding wages, taxes, and other deductions to government agencies.

Keep reading to learn the answer to "what is payroll?" You'll also learn common terms and the phases of payroll.

What Is Payroll?

Payroll is the process of making sure employees receive their wages for work performed. As a part of this process, a company must gather the hours that their employees worked, figure out taxes and other deductions, and make sure that those taxes and deductions make it to the right parties (like the IRS).

During payroll, companies calculate and manage employees' pay. Companies can choose to run payroll in-house or through a third-party provider. A third-party provider may be an individual, like a bookkeeper, or a company that handles payroll for many organizations.

Many companies outsource payroll because it is such an intricate process that requires so many moving parts and reports.

What Is Certified Payroll?

Certified payroll ensures that the company is compliant with all the payroll laws and regulations. A certified payroll service provider can help you in this process. They will take care of everything from calculating taxes to filing your quarterly reports.

Payroll Phases:

Payroll is usually a scheduled process. The human resource department or a payroll company submits payroll. Most companies divide payroll into three phases:

Running Payroll

Running payroll is the process of calculating, crediting, and distributing the net pay to the employees. Running payroll is not a one-time task. You must do this however often you pay employees, whether that is monthly or weekly.

There are a lot of software companies can use for running payroll . They all have their own benefits and drawbacks. Some of this software is free, while others are paid.

Employees on Payroll

An on-payroll employee is an individual who is employed by a company. The company pays this person a salary or wage. They typically receive benefits such as health care, retirement, and vacation time.

Payroll Expense

Payroll is the expense of paying employees for their work. Payroll involves calculating wages owed and other employment-related costs. The company then distributes this money to the appropriate individuals.

The term "payroll" covers a wide range of expenses that an employer may incur. These include:

Salary, wages, and benefits
Taxes
Social Security
Medicare
Unemployment insurance
Workers' compensation insurance
Retirement benefits (pensions)

There are risks associated with managing the payroll management process in-house. You can learn more about them here .

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Key Payroll Terms:

An important aspect of payroll 101 is understanding key payroll terms. If you are an employer, you must pay your employees correctly and on time. Understanding these terms can help you to make sure that you are meeting this obligation.

Common terms include:

Pay Frequency

Pay frequency is a term that describes the number of times per month or year that a person receives their paycheck. Pay frequency ranges from once a week to once a year. There are also biweekly or monthly payment options.

Gross Wages

Gross pay is the amount of salary that a person gets before a company deducts taxes and other deductions. Gross pay is the amount of money that an employee earns in a given month.

The gross salary for someone who works for $2,000 per month is before taxes and other deductions. The net salary after taxes would be $1,500.

Overtime Pay

Overtime pay is the payment of a premium wage for working more hours than the normal work week. Employees who work over 40 hours a week receive overtime pay. You calculate it by multiplying the employee's hourly rate by 1.5.

Payroll Taxes

You may be wondering, what is payroll tax? Payroll taxes are the taxes that employers withhold from their employee's paychecks. These taxes include social security, Medicare, and federal income tax.

Employers are responsible for withholding payroll taxes from their employee's paychecks. The employer is also responsible for sending these withholdings to the appropriate agencies. Each agency differs, but it is usually on a monthly or quarterly basis.

Pre-Tax Deductions

Pre-tax deductions can reduce taxable income, which means employees will pay less in taxes. Some examples of pre-tax deductions are contributions to a 401k and health insurance premiums.

Post-Tax Deductions

The post-tax deduction is the process of calculating the deductions an employee will be eligible for after taxes have been taken. A post-tax deduction is also known as post-tax net pay.

The post-tax deduction calculation is done by subtracting taxes from gross pay. You then subtract the deductions from that amount.

Net Pay

Net pay is the amount of money that an individual has left over after taxes. It is the amount they take home after taking out taxes and deductions.

Pay Stub

Pay stubs are a document that provides information on the wages and taxes withheld from an individual's paycheck. They are usually issued by an employer to their employee.

They show how much pay an employee receives. It also shows how much was deducted from pay for federal income tax, Social Security , Medicare taxes, and other deductions. They may also include additional information, such as union dues or health insurance premiums.

Payroll Forms

The payroll form is where all the information about the employee is written. This includes information like their name and address, social security number, and salary information. It also includes deductions from their paycheck for taxes and other items such as retirement funds or union dues.

Payroll Software

Payroll software is an integral part of any payroll process. It is software that provides the necessary tools for managing and processing payroll. It can calculate wages, deductions, and other payroll functions.

There are many reasons why a company should consider using payroll software. One of the most important reasons is that it saves time and money . Another reason is that it helps to comply with regulations and laws in the country or region where the company operates.

Ways to Process Payroll:

There are many ways in which a company can process payroll. There is the traditional way of doing it manually, which is not only time-consuming but also prone to human errors. The other ways are online payroll services and payroll software that can automate the process.

We'll outline each below:

Manual

The process of manual payroll processing is not any different from electronic processing. In both cases, employees need to provide their personal information and other details to ensure that they get paid correctly. The only difference between these two methods is that manual payroll processing requires more time for data entry and calculations than electronic payroll processing does.

With it, people make manual calculations and entries to calculate and distribute wages. The process is often time-consuming and fraught with errors. This is why many companies choose to outsource it or use payroll software.

Outsourced

Many companies use outsourced payroll processing to reduce the cost and time spent on payroll. Companies can outsource payroll processing to a third-party company. They will then handle all the calculations and data entry for them.

This type of service is most beneficial for companies that have an HR department with limited resources and time. The outsourced payroll processing company will take care of all aspects of the employee's payroll. This includes everything from calculating taxes and deductions to issuing paychecks and filing tax forms.

Payroll Software

Payroll software calculates how much money to pay employees automatically. It also determines how much social security and other taxes should be withheld from the employees' paychecks.

Payroll software can be accessed online, through a company's own website, or through a third-party provider. Some providers offer payroll services as part of an HR package, while others offer them as standalone services. Companies can generally purchase the software outright or through a subscription.

How COVID-19 Affected Payroll

The COVID-19 pandemic had a huge impact on payroll processing. It was one of the first things disrupted by the virus. This is because employees were not coming to work, and companies were struggling to get their workers paid.

This led to an increase in manual payroll processing, as well as an increase in overtime hours for those who did come to work. Companies had to navigate many payroll changes at the last minute. The pandemic revealed many inefficiencies in the process for a lot of employers.

This has led to improvements and streamlined payroll processes. The entire world quickly adapted to constant changes during the pandemic, and while it was difficult at the time, it also resulted in a lot of operational changes and improvements.

Get Help With Payroll Today

Now we have answered, "what is payroll?" We hope this article helped you understand small business payrolls better. The payroll management process is time-consuming, so why don't you let us help you with it?

At Bulldog Payroll, we have years of success in helping run payroll for small businesses. Contact us today to learn more about our services.

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Why Should You Be Extremely Careful About Paying Correct Taxes On Time and Filing Correct Reports

Fri, 14 Oct 2022 12:54:30 GMT

Employers must pay federal payroll taxes to the government and file the appropriate reporting and informative reports.

Employers deduct payroll taxes from employees' paychecks and send them to the IRS. Employers must deduct the right amount of taxes from employees' paychecks.

You also need to add the taxes you must pay as an employer. For example, the worker only pays half of the Social Security tax; the employer pays the other half.

The employer is in charge of depositing the amount that was withheld. We look at the rules for paying and payroll taxes filing, as well as the benefits of paying taxes on time and with correct information. Learn more by reading our guide.

Understanding Payroll Tax Payment and Filing Requirements

Understanding payroll tax payment and filing requirements are crucial to any business. Proper payroll tax management requires:

Paying and reporting federal and state taxes
Reporting income, withholdings, and payments on behalf of employees and contractors
Keeping federal and state records

Compliance is crucial to avoiding payroll tax penalties. Let's look at the requirements.

Income and FICA Taxes Deposit Due Dates

Your required schedule for submitting your federal tax deposit of income and FICA taxes depends on your employment tax obligation size.

The IRS tells you which schedule to use for the next year after each year. For example, your program may be yearly, quarterly, monthly, or biweekly.

Employers who make monthly federal tax payments must pay by the 15th of each month. If you pay semi-weekly, federal tax contributions are due within 2-3 days following paycheck, excluding weekends and holidays.

FUTA (Federal Unemployment) Tax Deposit Rules

You must submit FUTA tax contributions to the IRS at particular times. If your company owes more than $500 in FUTA Tax in any quarter, you must pay by the end of the following month.

If your tax liability is less than $500 in any quarter, you do not have to pay it until the accumulated amount reaches $500 or more. However, if your end-of-year unemployment tax liability is over $500, you must submit a deposit by January 31 or with Form 940.

Federal Payroll Return Requirements

Federal income tax is a wealth tax, which changes depending on how you file your taxes. This means that the tax rate goes up as your income goes up. The tax rates for each person can be anywhere from 10% to 37%.

Employers must also give employees and contractors W-2 and 1099 forms that show how much money was paid and taken out. There may also be state requirements.

Income and FICA Tax Return Requirements

FICA is a payroll tax employers withhold from employees' salaries and pay to the IRS (IRS). FICA tax is used to finance Medicare and Social Security using employee and employer contributions.

The employer pays the same portion of Medicare tax and Social Security tax as the employee.

FUTA (Federal Unemployment) Tax Return Rules

Employers pay FUTA, not employees. The FUTA wage base is the first $7,000 of an employee's total compensation. Gross pay exceeding $7,000 is not subject to FUTA tax. The introductory FUTA tax rate is 6%.

Form 940, or the Employer's Annual Federal Unemployment Tax Return, must be used to report FUTA tax and be submitted by January 31st of each year if the following criteria are met, such as if a business paid $1,500 or more to an employee(s) in any quarter of the current or preceding year. And, if in 20 plus weeks of the present or prior year, a company recruitedone1 or more people for any part of the day.

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Penalties that You Need to Keep on the Radar

If you ignore or completely disregard your tax payroll obligation , your business may face a penalty for failing to pay payroll taxes.

The IRS assesses penalties based on the following factors:

How much money do you owe
How late your payment is

Missing a payroll tax deposit due date can mean more than penalties. Then there's interest. According to the IRS, interest can range from 3% to 6%.

The IRS may file a tax lien against your property if you don't pay your taxes.

If the IRS believes you're attempting to avoid paying taxes, you could even face jail time apart from a fine. Don't forget that late reports also incur additional fines.

However, the IRS may dismiss a penalty if you provide a good enough justification. Therefore, you must clarify why you think you have a valid excuse for not paying after getting an IRS notice.

Benefits of Paying Taxes on Time

Nobody wants the IRS to conduct a particular investigation into their affairs. To stay on their good side, be sure you don't owe them anything. By doing this, you benefit in the following ways:

Avoid Additional Interest and Penalties

Employment regulations are becoming more complex, and taxes make it more challenging to comply. In the fiscal year 2021, the Internal Revenue Service levied civil penalties totaling $37.3 billion .

There aren't any maybes, ands, or buts: you WILL be fined if you have outstanding payroll taxes. What if you are unable to make the entire payment? Pay what you can afford! Even a partial payroll tax payment will lower the fines you will incur.

Of course, the ideal situation is to pay on time and the total amount. It is the only safe option to avoid interest and penalties.

Foregoing Future Refunds

Many people may lose a tax refund because they failed to file a federal tax return. In addition, you only have three years from the initial due date, usually in April, to seek your refunds under the legislation.

In most cases, they will not be penalized if they are owed a return. Any refunds are first used to repay any back taxes that are owed.

Protect Your Credit Rating

While tax payment has no direct impact on your credit ratings , using credit to pay your taxes can indirectly impact your credit. Also, avoiding payment of your taxes not only gets you into issues with the IRS but also jeopardizes your future ability to apply for credit.

If the IRS issues a Federal Tax Lien, it may restrict your ability to obtain credit. In business, property and rights to company assets, including accounts receivable, are subject to the lien.

Keep Your Business Squeaky Clean!

Ensure you're doing everything possible to remain compliant before your company gets harmed.

It is preferable to detect problems early, face up to them, and correct them now rather than wait for penalties and legal action. And, if you genuinely want to avoid costly payroll mistakes, consider the benefits of paying taxes and getting upfront before falling behind.

Are you experiencing headaches keeping up with timelines and payments of your payroll taxes? Then, contact us to schedule a free appointment! We take care of your payroll stress, so you don't have to.

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Year-End Payroll Checklist

Fri, 16 Sep 2022 08:32:33 GMT

Worried about tax? The end of the year is a busy time for businesses, and managing payroll is often at the top of the to-do list. From tax deadlines to employee vacation days, there's a lot to keep track of.

But don't worry, we've got you covered. Use this year-end payroll checklist to make sure you're on top of everything.

Read on for more information.

Taxes

No one likes paying taxes, but it's a necessary part of running a business. The first step is to make sure all your taxes are up to date. This includes federal, state, and local taxes.

If you're not sure what you owe, you can use an online tax calculator or speak to an accountant.

Once you know how much you owe, you'll need to make a payment plan. You can do this online or by mailing a check to the IRS. Be sure to include your business tax ID number on all payments.

Paying taxes may not be fun, but it's an important part of being a responsible business owner. By staying on top of your tax obligations , you can avoid penalties and keep your business running smoothly.

What Is Year-End Payroll?

Year-end payroll refers to the final payroll processed in a calendar year. This final payroll typically includes any vacation pay or bonuses that employees have earned throughout the year.

Year-end payroll also generally coincides with tax season, which means that employers must withhold the appropriate amount of taxes from their employee's paychecks.

In addition, employers must also provide their employees with a W-2 form, which details the employee's earnings and taxes for the year. Once year-end payroll is processed, employers can begin preparing for the new year.

This typically includes creating budgets, hiring new staff, and making changes to company policies. By taking care of these things in advance, employers can ensure that they can start the new year off on the right foot.

What Payroll Forms and Reports Do I Need for Year-End Payroll?

As the end of the year approaches, it's important to make sure that you have all the forms and reports you need for payroll. First, you'll need a W-2 form for each employee.

This form will report their total earnings for the year, as well as any taxes withheld. Next, you'll need to prepare a W-3 form, which is a summary of all the W-2 forms you've issued.

Finally, you'll need to prepare a 941 form, which is a quarterly report of your payroll taxes.

By making sure you have all the necessary forms and reports, you can ensure that your year-end payroll will be accurate and compliant with the law.

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When Do You Have to Complete Year-End Payroll?

For most businesses, the end of the year is a busy time. In addition to preparing for the holiday rush, businesses must also complete their year-end payroll.

For many businesses, this includes sending out W-2 forms and issuing 1099s to contractors. The deadline for sending out W-2s is January 31, and the deadline for issuing 1099s is February 28.

However, businesses that use an automated payroll system may have different deadlines.

For businesses that are unsure of when they need to complete their year-end payroll, it is best to consult with their payroll provider or accountant.

By doing so, businesses can ensure that their employees and contractors are paid on time and that all necessary forms are filed promptly.

Year-End Payroll Checklist

As the year comes to a close, it's important to take care of some key payroll tasks to ensure that your business is prepared for the new year. Here's a checklist of items to take care of:

Update Your Payroll Software

Make sure you're using the latest version of your payroll software, and that all tax tables and other information are up to date.

Review Employee Records

Take a look at your employee records to make sure they're up to date and accurate. This is especially important if you've had any staff turnover during the year.

Check Your Withholdings

Make sure you're withholding the correct amount of taxes from your employees' paychecks. You can use the IRS's withholding calculator to help you determine the right amount.

Process Year-End Forms

There are a few forms that need to be processed at the end of the year, such as W-2s and 1099s. Make sure you have everything you need to complete these forms accurately and on time.

You must understand that there is an element of risk if you are doing the payroll yourself so having a checklist is essential to make sure you stay compliant.

By taking care of these items, you'll be able to start the new year off on the right foot when it comes to payroll.

New Hires

Be sure to collect all the necessary information from new employees, such as their social security number and date of birth. You'll also need to calculate their first paycheck and set up withholdings for taxes.

Once you have all the information you need, you can add them to your payroll system and start running their paychecks.

You should also update your employee handbook with any changes to the vacation policy for the new year. This will ensure that everyone is on the same page and there are no surprises come January 1st.

By following this checklist, you can be sure that your payroll is in order and that your new employees are taken care of.

But, if you want to know more about filing your payroll taxes go here .

Now You’re Prepared for Tax Time

By following a year-end payroll checklist, you can make managing payroll at the end of the year a breeze. With a little planning, you can ensure that your business is compliant with all applicable laws and regulations.

Additionally, you’ll be able to focus on more important things, like growing your business and serving your customers.

Make sure to check out our blog for more helpful articles like this as you prepare for the New Year.

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The Risk of Running Your Own Payroll

Fri, 12 Aug 2022 10:47:35 GMT

Running payroll manually can lead to problems such as wage complaints and lawsuits, fines, dissatisfied employees, etc. Payroll isn't just about compensating your employees, it's also about adhering to payroll laws and securing payroll data. Failure to comply with payroll laws can hurt your company and cost you money. You can avoid costly mistakes by automating or choosing the right payroll service .

Most Common Payroll Risks

Here are the risks involved when running your own payroll:

Ghost Employees

One risk for not automating your payroll is paying ghost employees. These types of employees get paid without working. They could be real people that don't know they are on a company's payroll, false identities made up by another employee or real people who either already left the company or who have died.

One of the ways to avoid ghost employees is by using biometrics for recording and tracking attendance. Doing performance reviews also ensures that there are no fictitious or real persons that are not supposed to be paid. Working with a payroll service provider also helps.

Buddy Punching

Businesses lose money from buddy punching , an unethical practice where an employee clocks in for another employee. A typical scenario is when an employee is running late for work but plans to still qualify for the attendance bonus. So he asks a colleague to clock him in so that he gets paid for the number of hours he's not in the office and also gets the incentive.

Buddy punching can cost you businesses a lot of money in the long run when not addressed. Using time tracking software or creating a firm policy for time theft can help prevent this problem. Hiring payroll professionals trained to eliminate payroll issues also helps.

Hour Padding

Any action that leads to inaccurate reporting on time worked is considered hour padding. It's when employees may put down exaggerated work hours and get paid for them. This can happen when you don't automate your payroll — employees may round up their time to the nearest hour to get paid. You will lose money in the long run if not resolved.

Lack of Security

A breach in your payroll systems will not only cost you money but can also lead to fraud or hurt your company. In some cases, it may lead to the loss of employee trust. Your payroll system needs security to ensure your employees' information is safe and you don't lose money.

Incorrect Classification

The IRS collects a portion of employees' salaries to cover income taxes. You could end up paying more for taxes when you incorrectly classify contractors as your employees. Contractors are responsible for paying their taxes, not the company that hired them. You can avoid incorrect classification of employees by automating your payroll or outsourcing payroll.

No Compliance Focus

You can avoid legal disputes and fines by making sure you adhere to payroll laws. While it's best to keep up with the laws, working with payroll professionals can save you the hassle of researching on employer/employee laws or payroll benefits.

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Payroll Controls You Can Implement Today

Consider these changes if you are still doing payroll in-house. These payroll controls can help you streamline payroll processes and protect your business.

Audits, change logs, segregation of duties - Don't just assign one person to do everything. You should have someone who prepares the payroll, another person to do authorization, and another to take care of payments. It's also best to hire an auditor who can look at your books to ensure you're not making any mistakes.

Check payment controls - Use a separate checking account for paying employees who left the company. Always update your records to avoid payroll fraud and other miscalculations.

Calculation controls - Apart from the auditor, have someone else look at the entire payroll for review. Provide this person with information on the hours worked, deductions, taxes, pay rates, and other employee benefits.

Regular variance analysis - A payroll variance report can help HR managers review any potential variances in the actual compensation of employees compared to the payroll budget. If there are significant changes, make sure you do a thorough investigation to avoid payroll issues.

Should You Manage Your Own Payroll or Outsource

Payroll mistakes can get your business into trouble or you may end up losing employees. While there's nothing wrong with managing your own payroll, there are just some risks involved. Here are two options for running a payroll: DIY or DIY + Payroll Software. Check the comparisons to help you decide which to implement.

DIY Payroll

Without a software, this means you will have to do everything from creating the spreadsheet to manually entering employee information.

Time - DIY is the most cost-effective option but it takes a lot of time. You will have to add employee hours and calculate taxes.

Knowledge - You will need to familiarize yourself with the laws, especially on the tax codes and benefits procedure. Find out about 401k contributions, overtime pay or bonuses.

Money - The biggest advantage is that it won't cost you a lot of money to DIY your payroll. Consider this only when you have just started and you only have a few employees.

DIY Payroll + Payroll software

A payroll software can help you record time logged and manage the accounting better. However, this may cost you a fee per employee.

Time - While you still need to manually enter and check the information, the software can automate most of the difficult tasks.

Knowledge - Some vendors may provide support to ensure their clients stay with them. Ask for a demo to help you in using the software efficiently.

Money - Check for the features you're getting with the software, how much payroll services costs , the support you'll get, and the terms of service. This should help you determine if it's a good idea to invest in the software.

Stay Efficient With Your Payroll

To help you make an informed decision, carefully weigh the benefits of outsourcing your payroll over doing it all on your own. If you want to avoid the risks associated with manual payroll, get in touch with us so we can provide you with the best solutions.

Are you looking for more payroll processing information? Check out our Ultimate Guide to Payroll Processing.

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What You Need to Know About Filing Payroll Taxes

Fri, 15 Jul 2022 07:00:51 GMT

When a business hires full- or part-time members of staff, it’s necessary to have them set up within the payroll system. This doesn’t simply mean ensuring their wages are paid in full and on time, but that the business meets all requirements related to payroll taxes too. Filing payroll taxes can be frustrating. At times, matters related to payroll tax can be complicated. This article guides you through everything you need to know if you’re wondering how to file payroll taxes.

Payroll and FICA Taxes

It is an employer’s responsibility to report and pay taxes to the Internal Revenue Service (IRS). The employer needs to take the appropriate deductions from each paycheck, including federal and state income tax and FICA taxes. This is known as tax withholding.

Taxes are charged on wages, tips, and all other forms of compensation from employment.

Federal and State Income Tax

Often referred to as simply income tax, federal and state income taxes are payable according to published tax rate schedules. These are adjusted yearly to reflect inflation. State tax rates vary according to location.

FICA Taxes

FICA taxes are commonly known as payroll taxes. These are taxes made under the Federal Insurance Contributions Act, and they cover taxes for funding Social Security and Medicare programs.

Along with deducting taxes from an employee’s paycheck, employers must also match payments of FICA taxes. Employers must also typically pay Federal Unemployment Tax or FUTA. FUTA tax is not deducted from an individual’s salary.

Employer Payroll Tax

Things to know

Employer payroll taxes refers to the taxes a company must make on behalf of an employee toward Social Security and Medicare. Essentially, an employer must match an employee’s FICA tax contributions.

In general, employers must report and pay employment taxes quarterly, via Form 941. However, in certain situations, small businesses can use IRS Form 944 to opt in to file payroll taxes yearly. The opt-in program only applies to businesses with a yearly liability of up to $1,000 for federal income taxes and FICA taxes combined.

Federal tax payments must generally be made online through the Electronic Federal Tax Payment System (EFTPS). This is a free service provided by the U.S. Department of the Treasury. Note: To register for EFTPS a company must have a federal Employer Identification Number, or EIN, which allows the IRS to identify a business.

If a small business exception applies, businesses can alternatively remit taxes with the quarterly return, which uses Form 941. This exception only applies to businesses that have taxed a maximum of $2,500 for the current or previous quarter.

When completing taxes, it’s important for a business to understand exactly which team members it has tax responsibilities for. A business only needs to complete tax information and payments for employees. Businesses are not liable for taxes in relation to freelance contractors or external consultants. Such individuals are responsible for filing their own taxes and making their own payments to the IRS. However, it’s vital that businesses don’t try to evade tax responsibilities by incorrectly classifying staff members. There are harsh penalties for such practices.

Types of Businesses

For sole proprietors, the business isn’t taxed separately; business taxes must be included on a personal income tax return. When it comes to payroll taxes, sole proprietors must follow local and national tax laws. This means making tax deductions from employees’ wages, and reporting and remitting taxes.

Although partnerships also don’t pay tax at the company level, the owners are still required to adhere to tax rules for any employees.

Payroll taxes must also be filed for all employees of a Limited Liability Company (LLC), C Corporation, and S Corporation.

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Penalties

There are strict penalties for failing to file, failing to deposit, and failing to pay appropriate taxes. It is, therefore, imperative that any business returns tax information and payments on time. Penalties are given in the form of monetary fines. Ignoring fines leads to greater penalties, and the IRS will always find a way to collect any monies owed to it through civil recovery methods based on the Trust Fund Recovery Penalty Tax.

Failure to file results in fines starting from 5% per month up to 25% each month.

Failure to deposit results in fines starting from 2% per month up to 25% each month. If business files are between 1 and 5 days late, they are subject to the lowest penalty of 2%. If filing is late between 6 and 15 days, the fine increases to 5%. More than 16 days late incur a penalty of 10%. If a business has received a notice from the IRS and still doesn’t pay, the fine increases to 15% after 10 days from the notice to pay.

A payroll services provider can help you avoid late penalties and remain tax compliant.

Paying Your Payroll Taxes

If your business has outstanding taxes that it's struggling to pay, there are several solutions.

You can agree on a payment plan with the IRS. Essentially this is an agreement to pay all owed taxes within a stipulated time frame. When a payment plan is in place, the IRS cannot seek to collect debts.

Offers in compromise (OIC) can allow you to make a partial payment in full satisfaction of the total amount owed. The IRS considers each request on a case-by-case basis.

Abatement of penalties is a form of penalty relief that may waive fines for failing to file, deposit or pay.

Under the Statute of Limitations on the Assessment of Tax, the IRS must assess taxes and begin any court proceedings within 3 years of a tax filing.

Forms to Be Aware of for Payroll Tax

There are several key forms related to payroll tax. These include:

Form 940
Form 941
Form W-4
Form W-2
Form 1095-C
Form SS-4
Form 1099-MISC
Form 1023
Schedule B of Form 941

For easier payroll and to ensure your business meets all of its tax obligations, Bulldog Payroll can assist. Contact us for further information and to discuss your requirements.

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Time Tracking Tips and Tricks

Fri, 10 Jun 2022 06:00:00 GMT

Studies suggest that Americans are only productive for three hours out of an eight-hour workday. This is one of the reasons why it's so important that employers accurately track employee hours.

With employees being responsible for tracking and reporting their own time, there are bound to be some errors. Some may even be intentional.

How can employers cut down on these timesheet errors? Keep reading for tracking tips that will help ensure more accurate reporting.

Time Tracking Tips

Labor is one of the biggest expenses for any company. But with so many employees and tasks, it can be difficult to keep track of everyone's time. These tips will help you get a better handle on employee hours.

Simplify the Time Tracking Process

The simpler you can make the time tracking process, the less likely it is that employees will make mistakes. Use an online time tracking system that's easy to use and accessible from any device. Consider using a biometric time clock that captures employee fingerprints or other unique identification. This type of system can't be faked, so you'll always know exactly who was working and when.

Set Clear Expectations

Be sure to set clear expectations with your employees about how you expect them to track their time. Let them know what type of documentation you need and when it's due. Provide regular training on the time tracking system you're using.

Let your employees know what kind of personal matters can be handled at work and what's not allowed. Set clear break times and let your employees know when they're expected to be back from lunch.

If tracking employee hours is new to your business, be sure to give employees a grace period to get used to the system. Explain that you're tracking time to improve productivity and let them know that you're open to feedback on the process.

Track Projects, Not Just Hours

In some cases, it may make more sense to track employee hours by project instead of by the day. This is especially true if you have employees who work on multiple projects throughout the day. By tracking employee hours by project, you can get a better sense of which projects are taking up the most time – and where you may need to make changes.

Monitor Overtime Hours

Be sure to closely monitor overtime hours worked by your employees. If you see that an employee is always working overtime, you may need to reassign some of their tasks or hire additional staff. Working too much overtime can lead to burnout, so it's important to keep an eye on it.

Review Timesheets Regularly

Don't wait until the end of the pay period to review timesheets. Check them at random intervals to identify and correct any mistakes. This will also help you catch any potential fraud. Do this at least once a week, if not more often.

Audit Employee Hours

Periodically audit employee hours to ensure accuracy. Compare time cards to schedules, projects, and task lists. If there are any discrepancies, talk to the employees involved to get an explanation right away, while the time period is still fresh in memory.

Make Use of Technology

Technology can be a big help when it comes to tracking employee hours. Use project management software to track assignments and due dates. Set up alerts so you're notified whenever an employee logs in or out of the system, and consider using GPS tracking for employees who work off-site.

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Use Data to Your Advantage

Once you start tracking employee hours, you'll have a wealth of data at your fingertips. Use this data to identify patterns and trends in employee behavior. Look for ways to improve efficiency and address any issues that arise.

With your time tracking data, you can also create more accurate budgets and project timelines. You'll be able to see how much labor you need for new projects and any areas in your business where you're overstaffed. This information can be valuable in helping you run your business more effectively.

How to Track Time for Payroll

There are a few different ways to track employee hours for payroll. The most important thing is to find a system that's accurate and easy to use.

One option is to use an online time tracking system. It's a good idea to look for one that combines several features like payroll and workers' compensation along with tracking time. The best time trackers will also be able to update you on things like who's working in real-time, what they're working on, and how long they've been working.

Another option is to use a time clock. This can be either an electronic device or a physical punch card system. Time clocks are most often used in businesses with a lot of employees, as they can make it easier to keep track of everyone's hours.

There's also the option of using a paper timesheet. With this method, employees fill out their hours worked each day and turn in the sheet at the end of the pay period. You'll then need to manually enter the information into your payroll system . This method lends itself to human errors and can be time-consuming, so weigh these disadvantages when choosing your time tracking system.

Time Tracking for Payroll

Time tracking is one of the most important parts of payroll. By tracking employee hours, you can ensure that everyone is being paid correctly and that no one is working too many hours. This can help prevent burnout and improve efficiency in your business.

Go further than implementing these time tracking tips by working with experienced professionals. Schedule a consultation with us today and let us show you how our payroll system can help you save time and money.

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6 Benefits Of Working With A Payroll Service Provider

Fri, 13 May 2022 07:41:24 GMT

In 2018, it was estimated that the global market for outsourcing was worth about $85.6 billion . Many businesses utilize outsourcing to save time and cut down on their operational costs. One of the most commonly outsourced services is payroll.

Do you want to learn more about the benefits of payroll services and why you should consider outsourcing your payroll needs?

Keep reading this article for the top six benefits of using a payroll service.

1. Payroll Service Provider Helps You Overcome Common Business Challenges

One of the biggest benefits of working with a payroll service provider is that it helps you overcome common business challenges.

As a small business owner, you likely have a lot on your plate. This includes record-keeping, privacy and confidentiality, tax compliance, payroll accuracy, and even staying on top of employment law and regulatory changes.

This can quickly become overwhelming if you are doing everything on your own. When you hire a professional payroll service provider, it will help you deal with each of these challenges. So, what are payroll services ?

Payroll services help with administrative work, like cutting checks. It also helps with time management, recruiting and retention, and other human resource and risk management services!

Outsourcing your payroll and these additional services will allow you to focus on other important aspects of your business without having to worry about these challenges.

2. Maximum Accuracy in Payroll Computations

Another important benefit of outsourcing your payroll services is that it will provide you with maximum accuracy when it comes to payroll computations. Human error is one of the largest causes of payroll inaccuracies.

There are many things that go into your payroll computations. These include:

Salary adjustments
Withholding tax on compensation thresholds
Mandatory government contributions
Leave credits
Sick leaves
Overtime worked
13th-month pay
Bonuses and benefits
Allowances
Other considerations for individual circumstances

If your payroll is not accurate, it can lead to issues with your employees, compliance penalties, and more. However, a payroll service provider is trained to do payroll quickly while increasing accuracy.

This will provide you with peace of mind as a business owner. You can feel confident that everything regarding your payroll, including taxes, compliance, and more, will be done correctly.

This reduced risk will allow you to focus your energies on other important areas of your business.

3. Payroll Tax - Ensuring Compliance

Payroll tax can be a complicated topic for many business owners that don't have a background in finance. Typically, businesses are responsible for calculating and withholding taxes from their employees.

Plus, business owners need to pay the employer's share of payroll taxes. If these taxes are not calculated or paid correctly, your business could be penalized by the IRS. This is such a serious issue because these payroll tax withholding collected by business owners make up 72% of IRS revenue .

To ensure compliance, your payroll provider will have to consider a monthly withholding tax on compensation, the annualization of employee compensation income, and the annual information of income taxes withheld on compensation annually.

To avoid compliance mistakes, businesses can hire a payroll provider. They will ensure that you are tax compliant and will reduce the chance of manual error causing payroll tax inaccuracies.

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4. Set-Up and Management of a Payroll System

Another one of the top benefits of outsourcing payroll is that they will set up and manage your payroll system for you.

Managing your payroll system can be difficult, especially if you regularly have changes to your employees. Small changes, like your employees moving to different tax jurisdictions, can affect the tax withholding calculations.

Creating a payroll management system for the first time can also be quite difficult. This includes applying for an employer identification number, gathering employee tax documents, and more.

When you choose the best professional payroll provider , they will take care of each of these steps for you! If there are any changes to your employees, they can update and manage the payroll system to keep it as accurate as possible.

5. Payroll Service Provider Manage and Streamline Rules, Regulations, and Services

Another benefit of working with a payroll service provider is that they can manage and streamline all of your rules, regulations, and services. Streamlining your payroll services is necessary to keep it organized, meet deadlines, and save money.

Payroll service providers have experience managing payroll, so they understand the necessary rules and regulations to follow as well.

This will help you stay compliant as a business owner and ensure that your payroll is done correctly and efficiently.

6. Payroll Providers Can Save You Fines and Fees

Finally, finding the best payroll provider allows you to save money as a small business owner. Running payroll can be quite expensive. Not only will you need to pay for specific payroll software , but you will need to pay the person in charge of payroll.

Typically, payroll will cost a few hundred dollars per employee per year. Plus, if you deal with payroll compliance issues, there will be other fines and fees that you have to pay.

Outsourcing your payroll responsibilities is a cost-effective solution and it may even end up paying for itself in the future. Payroll specialists are trained to do your payroll quickly and efficiently so you can save money.

Learn More About the Benefits of Payroll Services

You may be wondering, "should I use payroll services?" There are many benefits of payroll services. It helps them save time and money and it also prevents payroll errors and ensures compliance. By considering each of these benefits, you can protect your company and improve your employee satisfaction.

Do you want to learn about the benefits of payroll services? Bulldog Payroll can help! We handle all the stress of payroll so you don't have to.

Contact our team to schedule a free consultation and to learn about our payroll services.

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Types of Wage Garnishments

Fri, 08 Apr 2022 07:55:01 GMT

Do you have employees who have court-mandated wage garnishments? The 2020 National Consumer Law Center stated over 4.5 million workers faced this action.

Calculating normal payroll, deductions, and taxes can prove confusing for many business owners. Adhering to the employee wage garnishment rules can add further complications.

The following guide explains this specific payroll mandate. Keep reading to learn more.

What Is Wage Garnishment?

Wage garnishment results when a court orders this solution to pay a debt. This action may also come from other authorized agencies.

This means employers must withhold a specified amount out of each paycheck. The money is then sent directly to the person or organization owed the money. You continue this process until the total amount is fully paid.

How Wage Garnishments Are Issued?

The process for garnishing wages must follow specific rules and limits. The Consumer Credit Protection Act (CCPA) establishes the procedure for debt payment.

Title III makes it illegal to fire a worker because they're subject to wage garnishment. This applies even if they have multiple levies or proceeding to collect the money. The employee isn’t protected if they receive a second or more action for future debt.

All personal earnings are subject to Title III proceedings. This includes salaries, wages, bonuses, commissions, pensions, and retirement pay. Most of the time it doesn’t include tips.

Defining Disposable Earning

Employers must follow all Title III rules. It defines “ disposable earnings ” (DEs) as the wage remaining after legally mandated deductions.

These include local, state, federal, Social Security, Medicare, and unemployment insurance taxes. The law may also require the inclusion of withholding for employee retirement accounts.

Deductions Not Subtracted

The law also defines the types of deductions not included in gross earnings adjustments. This includes the following examples.

Charitable cause contributions
Life and health insurance
Retirement plan payments not required by law
Savings bond purchases
Union dues
Voluntary wage assignments

You also shouldn’t include payments the worker makes to the employer. This includes the purchase of merchandise or payroll advances.

Wage Garnishments Limits

Title III defines the maximum amount of pay that’s withheld in a pay period. If the employee has more than one garnishment order, these rules still apply.

“Ordinary garnishments” exclude withholding for bankruptcy, state or federal tax, or support. The limit for garnishment of wages is the lesser amount of the following DEs.

The employer first calculates the worker's wage. This amount is then compared to the federal minimum wage (FMW).

For employees making less than $217.50/week, their income is below 30 times the FMW. In this case, no wage garnishment is allowed.

Employees earning over 30 times the FMW (over $217.50/week) are subject to garnishment. The maximum limit is 25 percent of the DEs. If you pay less often than every week, you must multiply the weekly maximums.

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Types Of Wage Garnishments

The Internal Revenue Service (IRS) or State Treasury Department defines wage garnishment types. It’s important for employers to understand and adhere to these requirements.

State and Federal Tax Levies

Upon receiving a notice of a state or federal tax levy, the employer must inform the worker. The worker then completes the Statement of Person Exemption part of the levy notice.

There’s a seven-calendar day limit to complete and return this form to the payroll department. If the deadline isn't met, the max amount allowed is withheld.

The amount of money that’s withheld depends on the limits previously described. The number of exemptions an employee claims also impacts the total wages taken.

Employers should continue garnishing wages and paying the designated entity each pay period. You will stop when you receive written notification from a legal authority. This may include the State Treasury Department, IRS, or a Bankruptcy Court.

Child Support & Alimony

Court orders to pay child support or alimony by garnishing wages have Title III limits. The law allows a max withholding of 50 percent of the worker’s DEs. This applies to individuals currently supporting another child or spouse.

For workers who aren’t supporting anyone else, they can have up to 60 percent taken. If they’re over twelve weeks behind on support payments, an extra five percent may be taken.

Federal Student Loans

In March 2020, the Coronavirus Relief Bill paused collection activities for most federal student loans. This moratorium is now effective until November 1, 2022. Before this law, the government could take up to 15 percent of your DEs to recoup defaulted loans.

State Income Taxes

Workers may face withholding of wages if they owe state income tax. This can also occur if unemployment compensation payments aren't returned as directed.

State government agencies rank lowest on the priority list for taking IRS refunds. Yet, in these types of situations, the worker may lose part or all of their federal tax return. This serves to pay their debts to the state.

Credit Cards

Credit card companies can recoup debt via wage garnishment. When opening an account, credit cardholders agree to make payments for their charges. If they default on their credit, the law helps companies get their money back.

First, the business must take the person to small claims court. The court will rule on the case and determine the method for debt repayment.

It’s key to know that four states don’t permit credit card companies to use wage garnishment. These include North Carolina, South Carolina, Pennsylvania, and Texas. Employers must comply with all state rules and court orders.

Wage Garnishment with Direct Deposit

Do you offer a direct deposit option for your workers’ payments? Today, about 82 percent of employees prefer this method.

But how does this work if you must garnish wages? You will notify your direct deposit agency about the ruling for wage garnishment. They will work with you to have the specific amount redirected.

Do You Worry About Adhering to the Rules for Garnishing Wages?

As an employer, do you struggle with calculating wage garnishments at payroll time? Bulldog Payroll relieves your stress by managing your payroll process. You'll find our solution easy to use because we've already taken care of every detail.

Our product gives your contractors and employees quick and accurate direct deposits. Reduce your time and expenses by converting to this paperless system. No more writing checks or filing paperwork.

Schedule a free consultation today to see how we can simplify your payroll.

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Common Payroll Mistakes and Errors to Avoid

Fri, 11 Mar 2022 08:33:12 GMT

Your employees report to work with the promise that you will pay them their fair dues on time. Miscalculations in their payments could damage employee relations. Additionally, late payments could cause employees to lose faith in your integrity.

Underpaying an employee could put them in a precarious financial position with bounced bill payments and late fees. On the other hand, overpaying an employee causes financial loss to your company.

This is why it's important to use the right tools and resources to have an effective and accurate payroll. Keep reading to learn about the most common payroll mistakes and how to avoid making them.

Misclassifying Employees

One of the most common payroll mistakes employers make is to misclassify their employees. Misclassification of an employee occurs when you place them in the wrong pay group. For instance, you could classify a new employee as an independent contractor when they are an employee.

Another example is classifying an employee as overtime-exempt when they should get overtime if they work over 40 hours per week. Such misclassifications would result in underpayments for the employee, which would break their trust in you. You may also get fined under the Fair Labor Standards Act (FLSA) .

Miscalculating Pay

Miscalculating employee pay is probably the most common payroll mistake that employers make. Errors can happen if the employee is a new hire or if there are changes in an employee’s contract. Mistakes may also happen if there are changes to employment taxes or insurance payments.

Whatever the case, miscalculating staff pay can be very frustrating for the employee involved. If you made an overpayment, they have to deal with getting a deduction on the next pay cycle. If you underpay them they may have trouble paying their bills.

Should you miscalculate an employee’s pay, it's important to do a payroll correction immediately. A payroll correction involves adding or subtracting money from the original payroll to account for any mistakes. Some states allow employers to wait until the next period to pay an employee any owed funds.

In Oregon for instance, the underpayment must be less than 5% of the employee’s total paycheck. In case the underpaid amount is more than 5%, you must pay the owed amount immediately. Other states like Florida do not have any regulations about when to do payroll corrections.

Missing Payroll Deadlines

Managing payroll timelines is necessary if you want to pay your employees on time every month. There are many steps involved in calculating payroll .

For instance, the accountant may have delayed sending payment instructions to the bank resulting in delayed salary payments. When you pay your salaries late you damage your reputation as an employer. Prompt salary payment is the bare minimum of expectations that employees have for their organization.

Timely tax payments are equally as important as there are many financial and legal consequences for late payments. You may cost your organization thousands of dollars in fines for any late statutory payments.

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Neglecting to Send Out Tax forms

At the end of every year, each of your employees must get a W-2 while independent contractors that earned more than $600 must get a 1099. Neglecting to send out tax forms is another one of the most common payroll errors that employers make.

Employees need these forms to file their taxes on time. Delaying or forgetting to send out tax forms can inconvenience your employees and spell legal trouble for your organization.

Failing to Keep Complete Records

The last of the most common payroll errors that employers make is failing to keep records of each month’s payroll. The FLSA requires employers to keep at least 3 years’ worth of payroll records. Some states may need organizations to keep records for even longer periods.

These records can come in handy during financial audits or if you need to prove your case after a lawsuit. Payroll records can also make your monthly payroll easier. You can refer to them when calculating the present month's salaries.

How to Avoid Payroll Errors

You can avoid many payroll mistakes by investing in a payroll service provider and HRIS software. Accountants and HR admins are human so you can’t fault them for making mistakes when running payroll manually.

HRIS and payroll software make it easy for your company to track employee data and communicate the same to your payroll system. The software also keeps data so that you can produce reports, payslips, tax payments, etc. at the touch of a button. Payroll services may be quite affordable considering the amount of time, money, and headaches it will save you.

Your payroll and HR team should also stay up to date with current payroll regulations to avoid making payroll mistakes. Encourage them to join professional organizations that alert members on any regulatory changes. The payroll administrators must also conduct some research before classifying employees.

Another way to avoid common payroll errors is to run reports that can allow you to check the accuracy of your payroll. First, you can run a deductions report to double-check the amounts that will be deducted from each employee’s salary.

You can also run a payroll register to see all the payroll information in a summary format. Finally, you can also run a cash requirement report to see how much money you must have in the bank to complete all the payroll payments for the month.

Your organization can also avoid payroll errors by having a written procedure or checklist detailing all the steps you must follow to complete payroll. This ensures that nothing is ever missed when making payments. Payroll admins can also keep lists of any employee updates in a central location. This may include information like new hires, salary increments, salary advances, etc that the admin can quickly check when processing payroll .

How to Fix Common Payroll Errors

As soon as you notice that you have made a payroll mistake you should adjust the error as soon as possible. If necessary, you must also notify any state and federal authorities that you report to.

There are three main ways to fix common payroll errors. The first and best way is to immediately cancel the payroll, make updates and then reprocess it. Or you can run an additional payroll that adjusts only the affected employees. Finally, you can make payroll corrections on the following month's payroll.

Learn More About Common Payroll Mistakes

Payroll is easily the biggest expense for most businesses. Mistakes can be very costly for both your employees and your company. Investing in the right payroll and HRIS software can save you many costly payroll mistakes.

Maintain your employee’s trust by choosing the right payroll software. read the rest of our blog. Contact us for a free consultation.

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How to Choose the Best Pay Schedule for Your Company?

Fri, 11 Feb 2022 09:31:46 GMT

Did you know that biweekly pay periods are the most common type of pay period used by companies? At least 36.5% of businesses are using this method. When it comes to running a small business, payroll is always one of the most challenging tasks.

Figuring out when to pay your employees, how often to pay them, and how much to pay them can be daunting. Don't worry, we're going to explain some of the most common pay schedules used by businesses and give you tips on choosing the best one for your company payroll. So read on and learn more about payroll schedules.

What Are the Different Types of Pay Schedules and How Do They Work?

There are five different pay schedules you can choose to use in your company. Each schedule has its own pros and cons. So, if you want to know how to choose the best pay schedule for your company it's important to consider the benefits of each schedule before deciding which one is best for your business.

Let's take a look at the different types of pay schedules, their benefits, and their drawbacks. People often only consider there to be four forms of payment schedules, but there are five.

Daily Pay

Daily Pay is a good option for employees who work part-time or only during certain times of the year, like summer interns or people who work on a seasonal basis or during school breaks. With this setup, employees are paid daily instead of once every two weeks (or semi monthly).

This means that checks are cut more on a frequent basis, which can be helpful when an employee needs money immediately, but it also means that the company will have to deal with paying people more often.

Drawbacks- This pay schedule is very fast-paced, may not be ideal for companies that don't have seasonal workers, not a popular option
Benefits- Employees get paid more quick and you can satisfy your seasonal workers

Weekly Pay

With weekly pay, employees are paid every week. This is a common option within companies today because it's easy for employees to budget and stay on top of their finances when they know how much money they will be bringing home each week.

The drawback to this process is that in some weeks, employees may end up in a negative balance if they work overtime one week and then not at all the next. Not to mention that companies must pay out wages earned in previous weeks before an employee starts on a new payroll cycle.

Drawbacks- Popular with employees, ability to satisfy freelance and contract worker payment, simple for your payroll team to coordinate
Benefits- Potential for irritation due to the time it can take to process for a large team

Semi-Monthly Pay

Semi-monthly pay occurs twice a month. Fun fact, it's not the same as biweekly although the concept is. With a semi-monthly payroll instead of getting your funds on second Fridays, you're paid on usually the 15th and last day of a month.

You may be asking yourself: "Doesn't that mean my employees will only get paid once a month?" No.

Semi monthly pay still occurs 52 times per year, but since there are no breaks in between the pay periods like with weekly or daily payout, employees will receive 26 checks each year instead of 52.

Drawbacks- This is the best option for salaried employees, this option can cause some issues for your administrative team depending on the size of your employee pool
Benefits- Employees understand and may be used to this method, which makes payroll management more simple, ability to avoid bank holiday interruption

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Monthly Pay

With monthly payments, employees are paid at the end of every month. If you're familiar with your company's budgeting process and know how much money you plan to bring in for the next month before it begins, then this method might work well for you.

However, if your company's revenue fluctuates month to month or if you have employees who are paid before they start working for you (like contract workers), this method may not be the best choice. It's important that for longer payment periods, you always check what is and isn't allowed by your state laws.

Drawbacks- This option is not the most popular among employees
Benefits- Least amount of work on your part, easy to align with other payroll deductions

Bi-Weekly Pay

Bi-weekly pay is exactly what it sounds like; employees are paid every two weeks. There are 26 bi-weekly pay periods in a year, which means that employees will receive more checks than with semi-monthly payout, but less than with weekly pay.

The advantage to using bi-weekly pay is that there are no breaks in between the pay periods so employers don't have to track down money from months prior or incur late fees when paying their employees later in the month. Plus, since there are fewer pay periods, tracking hours and taxes is a little bit easier which can help avoid some accounting problems .

Drawbacks- Your monthly expenses could be affected across pay periods, deductions can become complicated.
Benefits- Immediate time-saving option, less chance for errors within payroll

What Features Should You Look Out for When Choosing a Pay Schedule?

Since every payroll schedule has its own benefits and drawbacks it's important to choose something that will meet your needs and not put a strain on your finance department. It's also useful to know that there are different types of options whether in the form of software for your overall system.

There are three major factors to keep in mind when choosing a pay schedule. They are;

Federal and state laws
How much time do you actually need to pull off each schedule
What type of schedule do you currently have and are thinking of switching to or adopting.

Most times when employers violate labor law, they are either unaware or do not consider how their choice in payroll can affect their company's status.

Different types of pay schedules require different amounts of time to manage.

It is important to choose something that you will be able to manage on a daily basis, otherwise, it may become more work than it's worth in the long run.

Streamline Your Payroll

When deciding which pay schedule will work best for your company, there are many factors to take into consideration as we've mentioned. When you are choosing between the different types of payment schedules, you want to go with an option that will help you avoid tax penalties or late payouts, that's where Bulldog Payroll comes in.

If you are unsure what type to choose, consult with an experienced company to see what options would best suit your needs. Interested in streamlining your payroll? Visit us today .

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How Much Do Payroll Services Cost?

Fri, 14 Jan 2022 13:47:19 GMT

Payroll is one of the most stressful and time-consuming activities companies face each month. It can also be very costly when you factor in the salaries of the payroll accountant, their supervisor and the payroll software they must use. This is why many companies end up outsourcing their payroll services.

You may also want to do so but can’t decide due to confusion around what payroll services cost. The truth is, there isn’t a straight answer to the question how much do payroll services cost. The cost varies based on the number of employees, services required, number of locations, etc. Keep reading to learn more about how much payroll services cost.

What Is a Payroll Company?

A payroll company is a business that helps other companies compute, pay, and report their employee’s wages and taxes. They can either offer self-service payroll software or a complete range of payroll services. Payroll services include:

Collecting timesheets and wage data
Calculation of gross wages
Subtracting withholdings
Paying out employee net pays through checks or direct deposits
Printing and sending out payslips

Whatever your budget, you can find a payroll company to suit your needs.

How Is Payroll Pricing Structured?

Payroll companies have different pricing structures. While some have fixed pricing based on a range of services, others charge clients per frequency of pay or per employee per month.

For the fixed charge, the payroll company will assess how many employees you have and how frequently you pay your employees. They may also look at your state and how complicated it is to compute your payroll. They'll then come up with a fixed price or base fee of anywhere between $25 to $200 per month.

Most payroll companies also have a per employee per month (PERM) fee that they charge based on services provided. This fee ranges anywhere between $2 to $12 per month. Companies with less than 10 employees often pay more per employee than companies with hundreds of employees. This is because payroll companies give a discount to businesses that have more employees.

If you want to run your payroll in-house and only need payroll software , you'll only pay a license fee. This can be a monthly fee, an annual subscription, or a one-time license fee whereby you will only pay for future upgrades.

Some payroll companies also offer custom quotes for each company based on the services required. These companies prefer to discuss with key decision-makers about the payroll services that will best suit a company. They then propose a price for the payroll services that would best suit the company.

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What Factors Increase the Price of Payroll Services?

Other than the basic fees, payroll services costs can go up if there are some special tasks you need them to do. For instance, you may need tax filing and W-2/1099 and 1095 processing, printing, mailing, and reporting.

Tax reportings can drive your payroll costs up, especially if your company operates in many different states. On average, year-end tax filing costs about $50 per employee but the cost may be higher if you have employees across many states.

Other reports that may drive up your payroll cost are workers’ compensation reporting and affordable care act (ACA) reporting. Companies that have a 401(K) will also need to pay extra for customized file transfers to each employee on the scheme.

Another service that may drive your payroll costs up is payment options. Companies offer employees several payment options like direct deposit, pay cards, and paper checks. The more options you have, the more complicated your payroll becomes─ which drives up your payroll services cost.

If you pay by check and mail them out to employees, you'll need to factor in the cost of check stuffing and sealing as well as courier and delivery charges.

Do Payroll Companies Have Hidden Fees?

Because of the wide range of payroll services on offer, some employers may end up paying for services that they weren’t aware of. It's important to ask any payroll company that you engage to list down all the services they are offering you and their cost. This should be part of your contract with the payroll provider.

The payroll company should also list any extra services they offer and the cost of each. This will allow you to pick and choose extra services whose cost you are aware of.

Do Certified Public Accountants (CPAs) Offer Payroll Solutions?

Many small companies hire CPAs rather than payroll companies to process their payroll. CPAs are trained and licensed accountants that must adhere to professional accounting standards to maintain their certification.

So, what do you gain from hiring a CPA rather than a general accountant to process payroll? Well, CPAs must complete a bachelor’s degree as well as two years of professional work before they can attain the certification. This assures you that they have the knowledge and experience to process your payroll accurately.

Hiring an accountant that isn't legit may be cheap in the short term but expensive in the long run if they process your payroll incorrectly. They may even get your company into legal problems with the IRS if they file your payroll taxes incorrectly.

The disadvantage of hiring a CPA to do your payroll is that they may get overwhelmed by the task at hand and complete your payroll late. A CPA may also make mistakes while processing your payroll which may cause issues with your employees. This is especially true if the CPA processes your payroll manually rather than through a payroll system.

So hiring a payroll company may be safer than hiring an individual CPA. Payroll companies can dedicate employees to work on your payroll each month so that it is always accurate and on time. Payroll companies also have access to the latest payroll systems and technologies so that they can process payroll quickly and accurately.

Learn How Much Payroll Services Cost For Your Company

Estimating the cost of payroll services can be tricky as companies charge based on your payroll needs. Before you choose a payroll company it's important to know what services you will need from the company. This will enable them to come up with an accurate payroll services cost estimate.

Managers that complain about hidden costs of payroll companies often haven’t been clear about the services they need from a payroll subcontractor. But when we consider the services most companies require we can estimate that for most companies payroll services cost around $25 to $200 per month.

If you're ready to reduce the stress around your payroll processes, schedule a free consultation today to learn how we can help.

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What Are Voluntary Payroll Deductions and How Are They Calculated?

Fri, 10 Dec 2021 17:00:05 GMT

Payroll deductions refer to arrangements in which employers withhold a portion of an employee's paycheck for a specific purpose, typically benefits. They can be involuntary or voluntary payroll deductions.

Medicare and Social Security are typical examples of involuntary payroll deductions that employers are legally required to withhold. In contrast, voluntary payroll deductions are arrangements in which an employee authorizes their employer to withhold a part of their paycheck for a specific purpose, such as healthcare, retirement savings and more.

If you're interested in opting into a voluntary payroll deduction program, you must sign a voluntary payroll deductions form. The form clearly details how much money your employer will subtract from your paycheck and the purpose for which the funds will be used.

Note that your employer is legally required to obtain written consent from you before making any deductions on your pay, with the exemption of FICA taxes. Be sure to read the payroll deduction authorization form carefully before signing the agreement.

First, a Few Abbreviations

Before discussing voluntary payroll deductions, here are a few terms you need to be familiar with to improve your understanding of payroll deductions.

FICA: It stands for Federal Insurance Contributions Act , a federal payroll tax that funds Medicare and Social Security.
OASDI: It stands for the Old-Age, Survivors and Disability Insurance , the official name for Social Security. This tax is part of FICA.
FIT: It stands for Federal Income Tax . The Internal Revenue Service levies this tax on corporate or personal income. FIT is often the most significant deduction on most people's income statements.

Another crucial plan is the Section 125 Plan, which is also called a Cafeteria Plan . This employer-sponsored benefit lets you use your pre-tax income to pay for expenses, such as child care and medical costs. Cafeteria Plans is therefore beneficial as it reduces both the employers' and employees' overall tax burdens.

Why Opt Into a Voluntary Payroll Deduction Plan?

As an employee, you can use payroll deductions as a convenient means of automatically allocating a portion of your income toward an investment or an ongoing expense. For instance, you can have your employer deduct a specific percentage of your income and send it to your traditional or Roth Individual Retirement Account (IRA).

Likewise, you may also choose to have your employer automatically deduct and pay premiums for an insurance policy to ensure you never miss a payment. Sometimes, employees may use voluntary payroll deductions to contribute toward buying shares in common stock.

In these cases, you can opt into your employer's stock purchase plan and have a portion of your paycheck go toward purchasing your employer's stock. You can usually buy the stock at a discounted price.

Here are a few other examples of voluntary payroll deduction plans:

Contributions to a pre-tax health savings account or flexible spending account
S. Savings bond purchases
Vision, dental, medical or health insurance plans
Employer-sponsored life insurance premiums
Deductions professional certification fees or tuition
Payments for purchases of company merchandise such as retired equipment
Payments for job-specific items, such as tools or clothing
Contributions toward an employer-sponsored charity
Retirement savings plan contributions, such as a 401(k) plan or ira
Union dues
Short-term disability insurance plans

Common examples of involuntary payroll deduction plans include:

Court-ordered child support payments
Wage garnishments
Local taxes (imposed by towns, counties and cities for unemployment or disability insurance)
State-mandated income tax withholding
Federally mandated income tax withholding
FICA taxes (for Medicare and Social Security premiums and contributions)

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Voluntary Payroll Deductions Reduce Your Overall Tax Burden

Pre-tax deductions apply to an employee's gross income, meaning they're subtracted before taxes and social security. These deductions typically pay for contributions toward life insurance, health insurance , retirement plan or health savings accounts . Moreover, you may be eligible to deduct commuting expenses of up to $260.

These deductions reduce your overall tax burden because they're not taxable, thereby incentivizing employees to participate in the programs. Contributions toward a traditional IRA lower your overall tax burden as they're taken from pre-tax income. In contrast, Roth IRA contributions are taken from your post-tax income, but distributions are not taxable.

How Payroll Deductions Are Calculated

Payroll deductions can be applicable pre- or post-tax. The first step to calculating the take-home pay is to subtract pre-tax deductions, such as retirement contributions and insurance deductions, from the gross salary. The remaining amount is the taxable income.

The next step is to calculate tax withholding that applies to the taxable income. Withholdings include Medicare Social Security and, as well as local, state, federal and taxes.

The final step is to subtract post-tax deductions, including wage garnishments, certain employee expenses, or union dues. After-tax deductions also include Roth IRAs. Once all deductions are made, the resulting amount is the net income you see on your final paycheck.

Payroll Deductions for Tipped Income

Payroll deductions for tipped income are a bit more complicated. You're required to record your tips daily. Furthermore, if your tip earnings exceed $20 in a month, you're required to report the amount via Form 4070: Employee's Report of Tips to Employer . Like employee salaries, combined wages and tips are also subject to payroll deductions and taxes.

Additionally, employers in tipped industries are required to ensure that employee tips are equal to at least 8% of the total revenue that the business earns in the same period. In cases where the tips are not equal to 8% of total revenue, the employer must pay employees the difference. However, Employers may request a lower percentage, as long as it's not than 2%.

Reduce Your Tax Burden and Never Miss a Payment With Voluntary Payroll Deductions

The primary purpose of voluntary payroll deductions is to make contributions toward employee benefits by automatically subtracting specified amounts from an employee's paycheck. Doing so ensures that you don't miss or delay payments such as insurance premiums and retirement savings.

Furthermore, some voluntary payroll deductions are subtracted from your pre-tax income, reducing your overall tax burden. Visit our FAQ page to learn more about payroll and payroll processing questions.

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Payroll Software vs. Payroll Services: What’s the Difference?

Fri, 12 Nov 2021 16:04:14 GMT

When it comes to running a successful small business, payroll is one of the last things on your mind. Your goal is to create products and serve your clients, creating the best possible experience for them.

But in order to do that, you need motivated employees to make your business run. And they certainly won't be motivated if they aren't getting paid on time.

That's why payroll processing is a crucial function for businesses. And finding the proper channel to handle your payroll is imperative for helping stay on top of payroll. Payroll software vs payroll services, is there a difference, and is there a better option for your company?

When deciding between implementing payroll software or hiring a payroll service, consider the positives and negatives of each method, which are covered in detail below.

What Is Payroll Software?

Payroll software is usually offered as a SaaS product, or software as a service. That means you'll pay a recurring monthly fee to utilize the software.

It can either be downloaded onto a computer or accessed through your web browser. And it lets you, as the business owner, or a designated employee, manage payroll directly.

Payroll software is the DIY method when it comes to payroll processing.

Pros of Payroll Software

Payroll software is a huge industry. Many businesses, both large and small, choose to handle payroll in-house using payroll software. Here's why you might want to take care of payroll on your own, using modern software.

Easier to Make Changes

When you manage your own payroll, making changes or adjustments is quick and easy. You just need to log into your software and edit as needed. It's much quicker than trying to contact a person or company to make a change on your behalf.

More Internal Control

Managing payroll yourself means having total control over the process. You know exactly how many hours each employee works, whether they work overtime, and what their hourly rates are. You get to ensure each team member is paid correctly, and that your company isn't losing money.

Easy Access

Access to payroll software is available any time, day or night. You can always figure out what payroll is going to cost, and how many hours your employees are putting in. When working with a service provider, it may take longer to access some of this information.

Long-Term Vendor Relationships

When you find payroll software that you like using, you will likely stick with it for many years. Having this type of history with a software provider may earn you benefits from the company, including enhanced levels of service, and possibly pricing discounts in the future.

Integrated Human Resources Management

When managing payroll on your own, you have the ability to integrate your payroll system with HR management. The best payroll software makes interconnectivity a breeze. Not only can you manage payroll, but you can manage employee schedules, vacation requests, important documents, and much more from one platform.

Cons of Payroll Software

Even though modern payroll software is easy to use, it's not for everyone. Here's why you might want to pass on DIY payroll processing.

The Learning Curve

As with any piece of software, there's going to be a learning curve. Your first few weeks running payroll on your own are going to be slow and cumbersome.

You'll likely have a lot of questions about the software, so you'll need to reach out to the company's support team, or browse through their FAQs and forums. Basically, you'll be spending a lot of time running payroll, at least in the beginning.

DIY Responsibility for Mistakes

When processing your own payroll, there's a good chance that you going to make a mistake or two from time to time. Mistakes on payroll mean someone is either getting too much money or not enough money.

And once a check is printed, or a deposit is made, it becomes very messy having to deal with it. When handling your own payroll, these mistakes are on your shoulders, and you'll need to figure out how to solve them, which can cost a lot of time.

Fees

Payroll software has moved into the SaaS business model , meaning that you are going to pay a monthly fee in order to use their software. The fee is usually variable, depending on the size of your business, number of employees, and the level of extra functionality you'd like included in your software.

While still cheaper than hiring a payroll service provider, there is cost associated with it.

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What are Payroll Services?

Using a payroll service is the easy, hands-off way of completing payroll in a timely fashion. Rather than paying for software, you pay a team, or an individual, to complete payroll on behalf of your company.

Pros of Payroll Services

Successful business owners know that delegation and outsourcing are key to long-term growth. Here's why you should outsource your payroll processing to a team of experts today.

It's Easy

It can't be said enough times, using a payroll service is the easiest way to ensure your employees are paid on time, every time. And because a team of payroll experts is managing your payroll, you can rest assured knowing that it's getting done correctly.

Enhanced Assistance

When working with a payroll service provider, mistakes are rare. But if there ever is a mistake, your service provider will handle that. If you have questions or concerns, you can always get in touch with your provider.

The best payroll services will save you tons of time, and free up space in your mind, so you can focus on serving your customers and building your business.

Cons of Payroll Services

The only downside to using a payroll service, as opposed to DIY software, is a higher cost. After all, you are paying highly trained experts to handle this vital task on your behalf.

Ultimately, you have to decide if the higher cost is worth the time and hassle that payroll services save you as a business owner.

Payroll Software vs Payroll Services

Payroll software vs payroll services, which should you choose for your business? Making the choice between implementing payroll software or enlisting the assistance of payroll services depends on the needs of your business, as well as your existing processes.

Payroll software and payroll services differ greatly. Having a strong grasp of your current business climate simplifies the choice. Your level of experience handling payroll will play into it, along with the amount of time you want to spend thinking about payroll each week.

Want to see if hiring a payroll service provider is right for you? You can schedule a free consultation today to learn how Bulldog Payroll can make it easier to manage your business.

Are you looking for more payroll processing information? Check out our Ultimate Guide to Payroll Processing.

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What Is the Difference Between an Exempt and Non-Exempt Employee

Fri, 15 Oct 2021 16:00:08 GMT

Congratulations! You just finalized an offer letter to a potential new hire.

Before you send it off, are you sure you've classified the offer correctly?

As a professional in the industry, you also need to be sure you are compliant with employee classification. You have a variety of workers on your payroll but are still a little tentative when it comes to making sure you're providing new hires with the right compensation expectations.

So-- what is the difference between exempt and non-exempt? Keep reading to find out.

What Is the Difference Between Exempt and Non-Exempt Employees?

What is an exempt employee vs. a non-exempt employee? Employee status will vary depending on the type of work and the likelihood of overtime requirements.

The Fair Labor Standards Act

The Fair Labor Standards Act regulates the employment standards of employees in the private sector and in Federal, State, and local governments. It was most recently updated in July of 2009 and includes:

Federal minimum wage requirements ($7.25 per hour effective July 24, 2009)
Overtime requirements
Hours worked
Employer recordkeeping
Child labor restrictions

All employers must follow these guidelines to remain compliant with Fair Labor practices. Failure to do so may result in severe penalties to your business.

Exempt Employees

Exempt employees are usually always paid by an annual salary-- not by the hour. They are typically professional or executive roles, and meet any of the following criteria:

Administrative - primary duty must be the performance of office or non-manual work
Executive - Must manage the enterprise and direct the work of at least two or more other full-time employees--maintains hiring and firing power
Computer - skilled worker employed in the computer or technology field
Outside sales - primary duty is making sales away from the employer’s place or places of business

If you are unsure if your employees meet this exemption criteria, you may refer to the Department of Labor duties test to determine where they land.

Non-Exempt Employees

A non-exempt definition is most important for contractors , freelancers, interns, retail associates, and similar jobs in the United States. They are most commonly hourly workers that track their hours.

Non-exempt employees are usually paid an hourly wage or earn a salary that’s less than a minimum amount determined by the Department of Labor. If employees are non-exempt, it means they're entitled to minimum wage and overtime pay when they work more than 40 hours per week.

Wage and Hour Laws

The most common application of FLSA law is determining the type of wage and hours eligible for compensation during an employee's workweek. A workweek is a recurring period of 168 hours or seven consecutive 24-hour periods. Certain individuals or groups of employees may have different workweeks.

FLSA Overtime Rule

The FLSA requires that most employees be paid at least the federal minimum wage for all hours worked. Once an employee has exceeded 40 hours in a workweek, that employee is entitled to time and one-half the rate of pay for all additional hours. This is considered "overtime" pay.

Exempt Employee Overtime

The FLSA allows for an exemption for overtime pay and minimum wage for employees in certain categories. These are typically "white collar" exemptions that keep employers from compensating unnecessary hours outside of a standard workweek.

In other words, overtime pay is not required for those who meet executive, administrative, professional, computer work, or outside sales.

These employees may still be eligible for nondiscretionary bonuses and incentive payments (including commission earnings) paid on an annual or more frequent basis.

Salary vs. Houry Pay

Salaried employees are not paid based on the hours they have worked. Instead, they're paid the same amount on a consistent pay schedule. These employees are offered an annual amount upfront that is divided up into equal payments throughout the year.

Hourly employees must track and record their hours for their employer. They are then paid based on the total hours they have worked in a given pay period.

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Salaried Non-Exempt Employees

Salaried exempt employees must be paid a minimum amount of at least $913 a week or $47,476 a year in salary in order to avoid overtime requirements. If an employee is salaried and makes less than this amount, they are no longer exempt and must be paid appropriate overtime wages.

Hourly Exempt Employees

Most hourly employees fall under the "non-exempt" category for employee classification. However, the following positions industries contain hourly exempt employees:

Truck Driving
Theater and Stage Work
Railroad
Movie Theater Staff
Wait Staff and Servers

Due to the nature of their work, these industries are specifically excluded from FLSA guidelines.

Consequences of Employee Misclassification

Non-compliant employers face severe consequences for failing to abide by FLSA requirements. Fines, lawsuits, and additional costs may be in store if you are not fully aware of the correct way to classify and compensate your employees.

Regulatory Enforcement Action

The FLSA may investigate complaints of workers claiming their rights are being violated. The Department of Labor may also target low-wage industries with records of violations for in-depth investigations of current practices.

Fines and Penalties

Knowing violations of the FLSA may result in criminal prosecution and fines of up to $10,000. A second conviction or repeated non-compliance may result in imprisonment.

Employee Lawsuits for Unpaid Overtime

An employee lawsuit could result in liquidated damages equal to the amount owed. Additionally, an employer may be required to reimburse an employee for payment of the employee’s attorneys’ fees.

Costs to Remedy Misclassification

A misclassified employee may be entitled to up to two years of back pay for any wages owed to them. This amount can increase to three years of entitled back pay if the court determines a willful violation has occurred.

Eliminate the Stress From Your Payroll Process

What is the difference between exempt and non-exempt? We hope this guide helps to clarify this common question so you can get back to running your small business.

Are you taking full advantage of all of your payroll and business tools? Schedule a free consultation today, and let Bulldog Payroll answer all of your payroll and payroll processing questions.

Are you looking for more payroll processing information? Check out our Ultimate Guide to Payroll Processing.

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How to Choose the Right Payroll Service for Your Business

Fri, 10 Sep 2021 14:35:19 GMT

Did you know that over 32% of businesses struggle with paying themselves and employees due to poor cash flow and money management? If you fall in that category, you might need to look into better solutions for your money management—a step in the right direction in choosing a payroll service.

You might ask yourself how to go about choosing such a service, but fear not! In this handy guide, we have put together the proper steps on how to choose a payroll service.

Keep reading on for the best tips and tricks to get your business back on track.

Different Payroll Providers

Before you start looking at what your company needs, it is good to have an overview of the different types of payroll providers the market has to offer. There are multiple avenues you can take, so let's see where they all lead.

Payroll Software

A start-up company or a small business usually uses payroll software. The software can be accessed on your computer or online, and the owner often does the payroll themselves.

You will need to fill out the information of your employees manually. However, good payroll software allows you to save the information so that you only have to fill it out once.

Bookkeepers

Bookkeepers will do track your company's financial health and keep a report of your cash flow. A bookkeeper is also responsible for payroll. You can hire an in-house bookkeeper or hire a professional employment organization, or a local payroll service.

Different Payroll Needs

Each business will have different payroll needs. You will need to evaluate your business to find out what does needs are. We will go over a few different scenarios that may require different needs.

Size and Location of Your Business

The number of employees in a business is significant when choosing the correct provider. A small business with less than 10 employees is often handled by one professional. Whether it is an in-house bookkeeper, such as your manager or yourself, it is quite manageable. Keep in mind whether your employees are on salary or hourly, as hourly requires more work, while salary is the simplest form of payroll.

The location of your business is also key. If your business is located across several different states, it is important to note that it may be a bit more difficult to navigate the various regulations for each state.

Budget

Small and new businesses often don't have the budget to outsource their bookkeepers. Instead, evaluate the skills of certain team members and consider promoting the right team member to take care of the books .

Payroll Software Integrations

Some businesses may require some integrations with other programs to keep running smoothly. Therefore, when you are choosing your software, make sure to keep in mind the other programs you are already using. For example, choose payroll software that works with your company.

Payroll software should integrate smoothly with the rest of your operations.

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Research Your Options

When you are looking for a new payroll provider, it is important to keep in mind the different options they can provide, how much they cost, if the system is user-friendly, and more.

We will highlight some of the key factors you need to look out for.

Payroll Costs

Once you have your budget set up, make sure you research the costs of each service. For example, can you afford to outsource your payroll needs, or do you need to look in-house?

If you are looking for an in-house solution, payroll software is your best bet. There is likely a monthly cost and an initial set-up fee. However, it will be much more cost-effective than outsourcing your needs.

If you have a larger company and your budget allows for outsourcing, it is a great time-saving solution for your company. You can rest with ease and focus on the success of your company.

Payroll Compliance

Keep in mind that payroll is not just the process of paying yourself and your employees. Payroll is important to track your taxes, your employees' time off, and much more.

While you are researching the different options, keep in mind that you will need to issue tax forms such as W-2s and 1099s.

Payroll Software should have a list of features that are essential to the well-being of your company, employee morale, and your bookkeeping.

These features include:

Payroll taxes
Direct deposit
Paper checks
Employee benefits
Time off tracking
And more

These features will save you a lot of time during your payroll process, whether you choose to pay on a weekly basis, bi-weekly, or monthly.

Additionally, these features can save you time and money when you need to replace one of your team members.

Customer Reviews

While you are conducting your research, look at the customer reviews of the payroll provider. The best reviews are on third-party sites. The payroll provider is not able to alter or contact the customers. Therefore these reviews are reliable.

If you are able, check which businesses in your industry use the payroll provider and see what they think of the services.

How to Choose a Payroll Service for Your Company

As mentioned above, each company has different needs. All the while keeping a proper budget in mind. As the owner, evaluate your business, your employees, and your own skills to make an informed decision on how to choose a payroll service.

Don't become one of the companies that can't pay their employees. Instead, take control of your finances today and contact us for more information.

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Payroll Taxes Explained

Fri, 13 Aug 2021 07:17:23 GMT

So you have finally started that small business of yours that you have always dreamed of. It is fun and exciting as it should, but now you are left with one burning question. What are payroll taxes?

Sure, you've heard of payroll taxes and understand that they're essential to running a business. Yet, the inner workings of payroll taxes are still nothing more than a mystery to you.

You put so much effort into bringing this dream of yours to life. All you need is knowledge about these key components of payroll taxes to keep your business going.

Having payroll taxes explained to business owners is Bulldog Payroll's specialty. Down below, we will provide you all you need to know.

Mandatory Employer Payroll Taxes Explained

The first of mandatory employer payroll taxes to understand is the Federal Income Tax . This tax is paid by withholding a certain portion of the earnings that employees make. Employers determine what this portion is by having their employees sign a W-4 form upon being hired.

Social Security and Medicare taxes are two other taxes an employer is also responsible for paying. That said, certain wages and compensation for both social security and medicare are not the responsibility of the employer to pay taxes on. For example, the wages from sick leave and family leave provided by social security are not the responsibility of the employer to pay.

There is also an Additional Medicare Tax that an employer must withhold if they pay an employee over $200,000 a year. While the employer must start withholding wages, this tax is imposed on the employee only.

When it comes to the Federal Unemployment Tax, an employer must determine if they must pay the tax based on specific criteria. This criterion is provided by the general test, household employees test, and farmworkers test. Should an employer find that they meet the criteria of either of these three tests, then they will have to pay the Federal Unemployment Tax.

Who Pays the Payroll Tax?

It might seem obvious that it is the employer that pays all the payroll taxes that they are responsible for. In reality, it is the employees that pay taxes rather than the employer.

This is because it is technically the employee's earnings that are being sent to the government by the employer rather than both employer and employee splitting the burden of the tax amongst one another.

Whatever capital an employee might be providing, the tax burden will ultimately fall on them.

Tax Forms to Be Familiar With

The first tax form to be familiar with besides the W-4 is the 8850 form . This form is used to determine if your new employee is from a targeted group .

The I-9 is important to complete when hiring a new worker because it verifies who an employee is. The I-9 is also proof of work authorization for the employee.

The next form is the 940 . The 940 form is what is used to report the Federal Unemployment Tax. The 941 is the form used to report the earnings withheld from employees to pay the income tax, social security tax, and Medicare tax.

The 943 form is similar to the 941 one in that it reports the income, social security, and Medicare taxes. The difference is that this applies to agricultural workers. The 944 form also reports these taxes, but this form is used by businesses whose annual liability for those taxes is under $1000.

Lastly is the 945 form . This form will report earnings not related to payroll earnings such as gambling winnings or pensions.

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Withholding Wages and Depositing Taxes

When depositing employer payroll taxes, two different schedules can be followed social security and medicare taxes. These deposits are either monthly or semi-weekly.

Determining how much of an employee's wages to withhold depends entirely on what type of tax an employer is withholding for. Determining how much to hold for the federal income tax will vary from employee to employee due to how they file their W-4 form.

Determining how much to withhold for social security and medicare, however, is easier to determine. For these taxes, there is an employee tax rate.

This rate can change, so be sure to keep up on the most current rate. Simply take every payment and multiply that number by whatever the tax rate is for social security and medicare.

The Federal Unemployment Tax is not withheld from the wages of employees. An employer only needs to determine if they are responsible for paying the tax. Depositing for the Federal Unemployment Tax takes place every quarter.

Lastly, there are statutory nonemployees. As far as taxes go, these types of employees are considered self-employees and are therefore not the employer's responsibility when it comes to federal taxes.

All federal tax deposits must be done using the EFT. To do so, you have a few options. The first is to deposit the EFT using what is called an EFTPS . The purpose of the EFTPS allows a person to file their taxes privately and securely.

If you do not want to use this method, you can hire someone to do it for you. A payroll service or a trustworthy third - party can be hired to use EFTPS for you to send your EFT.

Trustworthy Payroll Professionals

you understand their inner workings, payroll taxes are much less daunting.

While educating yourself on payroll taxes is great, having payroll taxes explained to you one on one goes a long way. At Bulldog Payroll, we have countless professionals that can provide you with any assistance you need regarding your payroll tax needs.

So go ahead and schedule your consultation today , and we will make sure your payroll tax needs are taking care of.

Are you looking for more payroll processing information? Check out our Ultimate Guide to Payroll Processing.

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How to Flawlessly Run Payroll (a Step-by-Step Checklist)

Fri, 16 Jul 2021 06:19:55 GMT

In 2016 alone, 82 million people were impacted by payroll problems in the US. That's a staggering 54% of the American workforce.

Payroll is an essential part of a business that needs handling correctly and with precision. If you’re constantly bumping into issues or spending more time than necessary sorting out payroll, we’re here to tell you it doesn’t have to be this way.

There’s a straightforward method that doesn't include burning yourself out or frustrating your employees. Read on to learn how to run payroll–the right way.

What Are the Preliminary Requirements for Setting up Payroll in the US?

It's crucial to get together a quick-look payroll checklist. It should contain everything you'll need to hit the ground running.

This includes:

Federal Tax ID number or Employee Identification Number (EIN)
This is used to identify a business entity. If you need to apply for an EIN, (check out the IRS website for a detailed guide)
Local Tax ID numbers
State and Local Withholding Accounts (this is where you’ll store a withholding tax amount from an employee's wages to go directly to the government)
Employee Pay and Tax Information (this is the amount an employee is earning and the tax bracket they fall under)

Some states and local governments require businesses to source ID numbers to process taxes. To request a taxpayer identification number and certification, click here for the W-9 form.

Each US employer will also need to complete a Form I-9 for each individual they hire to verify their identity.

The employee will then have to provide you with suitable documentation to evidence their identity and employment authorization. This process is the same for both citizens and non-citizens.

How to Flawlessly Run Payroll: The Main Steps

There are a few key steps involved in processing payroll.

Calculating time: You’ll do this by assessing your employee's hourly time cards and timesheets.

Calculating gross pay: Gross pay is the amount of pay earned before taxes and deductions. You’ll do this by assessing your employee’s hourly rate and the number of hours they worked that month.

Determining withholdings: Withholdings are the amounts needed for federal and state taxes benefits and withholdings. The amount of income tax withheld will depend on how an employee filled out their IRS W-4 Form. This includes a worksheet that helps employees determine their withholdings based on factors like how many jobs they hold, their marital status, and their number of dependents.

Calculating net pay: This is the final payment issued to an employee after taxes and deductions. You can figure this out once you’ve determined and set aside withholdings.

Issuing pay: Pay is typically issued via direct deposits or cutting checks.

Distributing Withholdings: This is the part where you send off your employee’s taxes and other withholdings to the appropriate accounts and service providers.

Payroll Tips: Your Employees

Your employees also have a duty to comply with these procedures.

To maintain compliance, employees will need to:

Keep detailed, completed, and organized records (for example, of their working hours and their withholdings)
Pay state and federal taxes promptly to avoid penalties. Employees can do this through the EFTPS online system provided by the US Department of the Treasury.

You'll also need to report hiring and workforce changes to the IRS

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How to Run Payroll: A Processing Checklist

If you want to run your payroll efficiently, you’ll need to be proactive. This means keeping on top of things and being thorough in your approach. To do this, you may find it helpful to run through a simple checklist.

Before Processing

Make sure you have all the information needed to meet the preliminary requirements (as mentioned above). You should also make sure you have your payroll budget account, payroll schedule, and tax payment schedule ready.

Review Employee Information

Before you begin, make sure to review your employee’s information.

For New Employees : this will include names, addresses, social security numbers or EIN, and the details provided on their forms (W-9, W-4, etc.).

For Existing Employees : check you’re up to date with any changes to address, withholdings, benefits, employment status, job title, and wage or salary.

Calculate Gross Pay

For Hourly Employees : Do this by checking signed time cards and approved timesheets and calculating any commission, bonuses, retroactive pay, overtime, or paid time off.

For Salaried Employees: You’ll need to look at gross pay, paid time off, retroactive pay, commissions, or bonuses.

Calculate Net Pay

This is the take-home pay your employee receives after you, as the employer has made all the necessary payroll deductions. You can calculate net pay by subtracting deductions from the gross pay.

Before first, make sure the tax information for your employees is correct and factor in any tax-exempt adjustments.

To Finish Off

Last but not least:

Conduct a final review of the appropriate information and ensure it’s correct
Issue payment to your employees using your preferred method
Distribute withholdings appropriately

That's it!

A Note on Employee Classification and Independent Contractors

Depending on the needs of your business, you may need to hire an independent contractor from time to time. You don't employ independent contractors.

Instead, they perform a set amount of work over an agreed period. As you don't remove taxes from their pay, you should classify independent contractors correctly on your payroll to avoid penalties.

Under employee classification, workers can fall into three categories: 1099, W-9, or W-2.

Each employee classification also has different specifications that dictate various work assignments, business manager direction, and company control.

If you’re unsure whether a worker is an independent contractor or an employee, you can fill out Form SS-8 with the IRS. This can be done by either the business or the worker.

Provide the IRS with the facts and circumstances. They’ll determine employee classification for you; however, this can take up to six months.

Are You Ready to Better Manage Your Payroll?

We hope that, having read this article, you now have a better idea of how to run payroll. By using the preliminary and processing checklist outlined above, as well as all the other advice in this article, you shouldn't go too far wrong.

But if you have any questions on the subject, we're here to help. Contact us for a free consultation.

Are you looking for more payroll processing information? Check out our Ultimate Guide to Payroll Processing.

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Employee Classifications: Independent Contractor vs Employee

Fri, 11 Jun 2021 16:00:03 GMT

Over 10 million workers are independent contractors. The gig economy expanded, and even traditional companies use them. Many are looking into bringing on more freelance workers and independent contractors. Therefore, it is important to know how to handle these special cases in payroll procedures.

What is an independent contractor vs employee? A company does not employ independent contractors. Instead, they do a set amount of work for an agreed-upon period of time. Employers do not remove taxes from their pay. Therefore, they must be careful to classify contractors with accuracy or face penalties .

Protect yourself and your business. Understand exactly who qualifies as an independent contractor in employee classifications.

What Employers Need to Know About The FLSA

Worker classification as employees or independent contractors falls under the Fair Labor Standards Act . This prevents a business owner from refusing benefits. In addition, job protections extend to misclassified employees.

The FLSA makes it impossible to reclassify an employee who meets all other criteria of a W-2 employee. There is no legal way to make an employee into an independent contractor without changing their responsibilities. Even if your worker agrees to misclassification, you could have penalties for misclassifying them .

Paying under the table, signing an agreement, filing a 1099, and more still cannot change someone acting like an employee in a company. It's up to employers to understand what makes a worker an employee. In addition, they must avoid misclassifying them.

Classifying Independent Contractor vs Employee

Employee classification forces workers to fall under one of three tax categories: 1099, W-9, or W-2. Each class of workers also falls under different specifications. This includes different types of work assignments, company control, and business manager direction.

If a staff member has employee classification, it means the company is in charge of job elements. These include things like scheduling, equipment used, the performance of tasks, and more. Taxes are withheld and paid in part by the employer.

If a worker has independent contractor classification, the company has little say in the work details. The worker works any hours they need to. They use their chosen tools or software. Contractors get tasks done in a way that works for them. Their only responsibility is to meet the requirements outlined in their contract, such as deadlines.

What Are the Pros and Cons of Independent Contractors vs Employees

There are times when it makes more sense to have independent contractors complete work for your company. And times when it doesn't. Knowing when you need an employee vs a contractor is an important skill to cultivate.

There are benefits to using an independent contractor. These are most noticeable in companies with operations in foreign countries. Using contractors instead of employees in these cases can reduce staffing costs. It also eliminates the commitment of an employment relationship.

Employees come with the need to pay benefits packages and unemployment insurance. Independent contractors do not have these perks. Instead, they have an agreed-upon wage for a project.

However, there are some downsides to hiring independent contractors, as well. Given the lack of benefits and long-term commitment, loyalty is thin. Some independent contractors may lack the job dedication a full-time employee has. The relationship ends once the contract completes—unless you make a move to extend it.

The flip side is the pros of hiring a full-time employee. An employee is a long-term relationship. They pursue deeper involvement in projects and their co-workers.

Employees choose jobs based on their benefits, including pensions and relocation expenses. These are incentives to continue high-quality performance and remain with the company for a period of time. For example, a vesting schedule in a 401k can help retain employees longer.

The cons of full-time employees are the costs of these benefits. Employers must also absorb things like paid vacation, sick days, parental leave, and pensions. Large benefits packages can be difficult for small businesses to offer.

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Avoid the Risks of Misclassifying Workers

Sometimes employees with very flexible schedules may experience misclassification. They may have independent contractor classification by mistake.

Other times, employers give in to the temptation to utilize independent contractors rather than employees to reduce costs. However, the danger of misclassifying a worker who would otherwise be a W-2 employee comes at both cost to you and the worker.

Employers caught misclassifying an employee get penalties. These include the expectation of paying back wages and unpaid overtime plus interest. You will also need to make good on unemployment insurance contributions and employment taxes.

Finally, you may face penalties for fraudulent actions. The financial and legal consequences of misclassifying workers are significant for small businesses.

Misclassification's Impact on Workers

Furthermore, misclassification can have a serious impact on workers. Independent contractors have so few labor protections. Misclassification as one when a worker is actually performing an employee's work puts them in a poor legal position.

For instance, if your misclassified employee needs to take leave, they may not be able to. Worker protections provide for time to care for a sick family member. But independent contractors do not qualify for protected leave under the Family and Medical Leave Act.

If your business folds, your misclassified employee has no way to file for unemployment. They also go uncompensated for any time off, including for serious illness.

Even if you both agree to a misclassification, it is wrong. It is your duty as an employer to consider the ramifications of this choice on your employee. Doing the right thing protects your valued worker in times of hardship.

Pay Your Contractors and Employees with Bulldog Payroll

Now that you know how to classify your workers as independent contractor vs employee, make payroll that much simpler. Calculate payment for both independent contractors and employees. With us, you are always taking out the right amount of taxes.

Reach out today with questions about getting your Bulldog Payroll set up. We handle the books so that you can get back to running your small business. Schedule a free consultation to learn more.

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What Is a Payroll Service Provider

Fri, 14 May 2021 19:11:10 GMT

Did you know that outsourcing payroll management is a quick way to grow your business?

As a small business owner, you most likely deal with a plethora of expenses that make it seem difficult to expand. However, having a payroll service provider on your side can ensure that you outperform other businesses in your industry.

"But what is a payroll service provider?"

This is something that many small business owners question, but it doesn't take long to understand who they are and how they can help you.

Read on to learn everything you need to know about payroll services for small business owners.

What Is a Payroll Service Provider?

A payroll service provider is essentially a company that manages anything payroll-related. These companies can provide a plethora of benefits to help you reduce expenses and focus on the core of your business.

When hiring a payroll service provider, you'll have access to full-service payroll and an online payroll system. With these, your business can handle payment processing, direct deposits, tax payments, and more. You don't even need to ask "what is a payroll provider" to realize how much they can help.

Full-Service Payroll Provider

Unlike in-house payroll processing, a full-service payroll provider is a third party. Outsourcing payroll to a third party prevents you from having to hire someone or take time away from running your business. Aside from that, they can do everything an in-house team can do and more.

Full-service payroll providers are often more cost-effective than hiring an in-house team because you only need to pay them when their services are needed. With an in-house team, you may have to pay for an employee's yearly salary. Aside from that, you'd have to pay for training, which could take a lot of time.

Online Payroll System

With a full-service payroll provider comes an online payroll system that can be used remotely to handle all payroll tasks. Despite outsourcing payroll management to a third party, you can see everything they're doing from within the system.

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What Does Payroll Service Include?

From the moment you hire payroll services for small business owners, you'll be relieved of many tasks that would otherwise take a lot of time. For example, filing tax documents whenever you pay employees requires you to check through various records.

So why use a payroll service? Here are the main services included:

Payroll Reports

A payroll report outlines how much money was spent during a pay period. These reports are crucial when it comes to filing taxes because you need to submit accurate numbers. Aside from taxes, they'll help you create a business budget so you can allot more money elsewhere.

Payroll Tax Payments

When paying employees, employers are required to deduct payroll tax from their payments. This payroll tax must then be sent to the government, so a payroll provider will ensure that the correct amount is deducted at all times.

Supporting Journal Entries

Here at Bulldog Payroll , we provide our clients with supporting journal entries to help them get a better understanding of the transactions we make. This is something that few payroll providers, but we offer this service because it ensures that we can earn your trust.

Within these journal entries, we'll outline all transactions with supporting documents so that you know exactly where money is going and why.

Annual W2 and 1099 Reporting

The main two tax documents you'll provide to employees are W2 forms. The W2 is provided to those in which you deduct taxes from their income. The 1099 form is given to those that are contracted to work under your business, but are technically self-employed. You don't need to deduct taxes from 1099 employees.

When providing these documents to employees, a payroll service provider will create a report so that you can see who was given each document.

Employee Direct Deposit

Many businesses hire payroll service providers solely for their hassle-free direct deposits. With their online payroll system, they can send mass payments to all employees based on their pay schedule.

Local, State, and Federal Filings

Payroll services for small business owners can file local, state, and federal taxes for you so that everything is accurate. Because of the other documentation services they provide, having them file taxes is much easier than having an in-house team do them.

Payroll Service Add-On Options

Many people ask, "what are the pros/cons of using a payroll service provider?" Fortunately, you won't find any cons when working with one because of how many benefits they provide. You can check out the other payroll FAQ to get a better understanding of why there aren't any cons.

Not only can you outsource payroll management, but you can also get several add-on options to further improve your business.

Time Tracking

If you have employees that earn hourly wages, you'll need to invest in time tracking to ensure they're getting paid the correct amount. With a payroll service provider, you can use a digital time tracker to monitor the exact times in which an employee works.

HR Services

Payroll providers can also offer HR services to help both you and employees when needed. They can take care of recruiting, onboarding, training, and more.

401k Retirement Plans

Depending on the payroll service provider you work with, you may get access to 401k retirement plan administration. This service allows you to outsource 401k recordkeeping, which is useful because they'll have all the info they need to assist employees.

Start Working with a Payroll Service Provider Today

Now that you've read this article, you no longer need to ask yourself, "what is a payroll service provider?" We encourage all businesses, both small and large, to invest in a payroll service provider because of how much they can improve them.

Here at Bulldog Payroll, we'll help your business maximize profits and reduce expenses.

Are you looking for more payroll processing information? Check out our Ultimate Guide to Payroll Processing.

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