Small businesses have a lot to worry about. Most business owners are experts in their field, but that doesn’t always mean they are small business payroll services experts. A simple mistake with your hired help can create big problems and huge fines if you aren’t careful.
The single biggest payroll mistake is simply not knowing the rules. The best way to protect yourself and your business is to leave payroll services in the hands of someone with the expertise to handle the job and avoid any mistakes.
What Is Payroll?
Payroll accounting is what takes care of yourself and your employees to ensure that all of the taxes, contributions, withholdings, insurance, garnishments, and other compensation issues are processed correctly.
Payroll accounting requires an expert degree of knowledge to make sure you are following all employment laws, small business payroll regulations, and company policies regarding sick leave, vacations, insurance, workers compensation, etc.
We make payroll services as easy as possible, by handling everything from time cards to direct deposit. First, we take the time to learn about your current process so that we have a good handle on how your employee compensation is managed. Once we have the basic paperwork including the last payroll register and the W4’s for tax withholdings, we can take over payroll services within a week.
Our process is basic and thorough to give you peace of mind your employees are taken care of.
- We enter hourly information directly into QuickBooks based off of employee timecards provided by you, and send out paystubs to each employee.
- We provide direct deposit services, or (if we are also providing bookkeeping services) we can provide physical checks as well. If we are not providing bookkeeping services, we provide the information so you can write your own payroll checks.
- As part of payroll solutions, we process quarterly or monthly payroll taxes and provide W2s at end of the year.
- We also process new hire reporting to state of KY to ensure your business is compliant with all local employment laws and regulations.
What Are the Benefits of Hiring a Payroll Company?
You may think that simply writing a check to pay the people that work for you should be a relatively simple process. Unfortunately, this is not the case.
Because of the numerous tax and regulatory requirements of employees, employers at the federal, state, and local levels, processing payroll is a bit more complicated than adding up a timecard and writing a check. Mistakes can mean big penalties for your company.
To stay compliant, it is best to hire a professional to take care of this end of the business. Here are just a few of the numerous payroll mistakes we can help you avoid.
- Employee Information Errors
Basic employee information holds some of the most common mistakes. It happens as soon as the employee is hired, and even a misspelled name or misplaced digit on the Social Security Number can cause headaches later on down the road.
Out of date employee information can also cause big problems. Name changes, deductions, moving, and other changes can even lead to IRS fines for delayed or inaccurate payroll taxes.
- Misclassification of Employees
This is a big problem, specifically with small businesses. A significant number of small businesses regularly misclassify employees in two ways.
- Employees vs. Independent Contractors. This classification depends on strict IRS criteria. Abuse of employee classification has been under strict scrutiny in recent hears and continues to be a serious issue with serious penalties that can cost you thousands.
- Exempt vs. Nonexempt. Nonexempt employees are entitled to overtime; exempt workers are not. The rules are intricate, and making a mistake in this field can lead to a wage-and-hour lawsuit.
- Payroll Tax Inaccuracies
This is a mistake that is realized by almost half of all small businesses, costing almost $1000 per year in fines. Payroll taxes are collected at the federal, state, and local level on a pay-as-you-go basis. That means you pay taxes every time you pay your employees.
Similarly, unemployment taxes are also due every pay period, and they are different in every state. Additionally, unemployment tax is collected where the employee resides, not where the company resides (another common mistake), so if you have employees living in different states, it can be difficult to keep up.
- Garnishments, Levies, and Child Support
As if making a simple paycheck with all the correct taxes wasn’t difficult enough, employers are often held responsible for collecting court-ordered debts from employees. This can include child support, a federal tax levy, or some other garnishment.
Employers are expected to withhold that money, send payment to the appropriate recipient, and the rules regarding this can vary state to state, and can get complicated if an employee has more than one withholding.
- Record Keeping
Don’t wait until you are subject to an audit before you discover the value of clean records. Following the payroll laws, and keeping tight records makes it so much easier to sail through an audit. On top of federal law, you must also observe state and local regulations when it comes to recordkeeping and keep the records organized as such.
The nuances and complexities seem to never end. Quite frankly, most business owners don’t have time for the intricacies of payroll, they have a business to run! Unfortunately, the IRS doesn’t give any leeway for mistakes if you don’t understand the rules.
We take pride in helping small business owners with the intricacies of payroll accounting. With us on board, we take care of you, your employees, and the IRS.
Our payroll services start at $100/month for up to 6 employees 2 pay periods (12 paychecks total). Other pricing is determined by pay periods and number of employees. Give us a call for a customized quote for your business.