Categories
Payroll Tools

Time Saving Tips for Your Payroll Team

A career working in payroll is challenging and sure keeps you busy. We know!  So here are some tips to help keep you on track and save time!

Make sure all your employees’ information is accurate

There is nothing more frustrating than going to process payroll and having the wrong information for an employee. Confirm every new employee’s information before you process their payroll so that you don’t have to go back to them on payday for the correct information. Here is what you will need:

To begin, you will need the following items:

  1. Your company legal name, DBA (if applicable), and company address
  2. All of your tax ID numbers, including:
    • Your federal employer identification number (EIN)
    • Your state tax withholding ID number
    • Your local tax ID numbers (if applicable)
  3. Your state unemployment (SUTA) account number and SUTA rate for your company. Note: Your state unemployment agency may send your SUTA rate determination in a separate letter. This rate is based on your industry and your company’s individual claim history for unemployment.
  4. All employee information*, including :
    • names
    • addresses
    • Social Security numbers
    • tax filing status
    • details on current deductions & contributions
    • (*This can be found on the W-4 form filled out by your employees.)
  5. The pay rate and pay frequency (weekly, biweekly, etc.) for all employees.
  6. All payroll registers for the current year, by pay date.
  7. All employer taxes for the current year, by pay date.
  8. Copies of all tax filings for current year (i.e. 941, state & local tax returns, SUTA).

Have a checklist

Make a list of the things you need to do to process payroll accurately and on time. This will save you time and streamline the process. 

Here are some items you might want to include on your list:

  • Collect time and attendance efficiently
  • Enter payroll information in your system
  • Process the payroll
  • Provide pay stubs, whether you pay employees in person, through the mail or with direct deposit
  • Tabulate taxes if your system doesn’t do this for you
  • Double check your information to ensure accuracy 

Keep your records organized

While this is typically a job for HR employees, there are files you may need to access as a payroll professional. This will allow for efficiency if changes need to be made in your system. Each employee should have a file that contains all of their payroll information. 

The following information about your employees is what you, as a payroll professional, should be able to access quickly. 

  • Employee identification number
  • State and local tax ID numbers
  • State unemployment ID number (most states require this)
  • Employee addresses, phone numbers and email addresses
  • Social security numbers
  • I-9 forms
  • W-4 forms

You should also carefully organize and be able to easily access:

If you are looking for more information about what these files should look like and include, take a look at this article by ADP.

Find a payroll software provider that works best for you

There are so many different payroll processing platforms out there. Some of these platforms, like Gusto, QuickBooks or Patriot are better for small businesses. Some payroll platforms are effective for all business sizes. 

Automate Payroll 

When processing payroll, try to automate as many processes as possible, using one of the payroll platforms mentioned above. Manual work creates a greater margin for human error. Not only does this cause mistakes that could create issues for the company, manual work is a waste of time for you! Automating as many aspects of payroll as possible will save time and money for you and your employer. For more information about how to avoid payroll errors, take a look at this column from the Journal of Accountancy.

Use direct deposit

Using direct deposit can save you tons of time and money. There are great benefits of direct deposit. Here are just a few of them:

  • Reduces worry about losing paper checks
  • Allows employees to access funds right away
  • Better for the environment
  • Increased security because no paper checks are changing hands

Some savings that you will realize from using direct deposit for payroll are:

  • Reduced payroll-processing time 
  • Decreased check fraud
  • Less time away from work for employees (they do not need to leave work to deposit checks)

If you are interested in learning more about the benefits of direct deposit, the NFIB has a detailed article about this.

Double check your work

For aspects of your payroll system that are manual, make sure to double-check your work. You can’t entirely avoid human error, but you can try! Just as a copywriter proofreads what they write, proofread your input into the payroll system to avoid errors.

Hopefully, some of these tips will help free up some time in your busy schedule as well as help you to work more efficiently in the long run.

Categories
Payroll Service

Choose the right payroll service provider with this basic framework

When it comes to running payroll, timeliness and accuracy are of the utmost importance. If you have an employee who receives her pay late or finds mistakes in her paystub, you can bet your bottom dollar that you’ll hear about it and have to work quickly to resolve the issue. Late or incorrect tax forms aren’t much fun to deal with either.

According to Business News Daily, one way to minimize risk and error is by using software to help you process payroll, calculate and file payroll taxes, generate payroll tax statements, and more. But with so many players in the space, choosing the right payroll service provider can be overwhelming. It can be made simpler with some basic considerations, including:

  • Price: For most companies, price is an important consideration when choosing any sort of outside vendor or software. Payroll systems can be very complicated, and pricing often depends on how many features or add-ons your team will use. Researching payroll service provider websites is a great place to start, but some large providers may require a sales call in order to better understand your needs and provide a quote.
  • Support: According to the U.S. Chamber of Commerce, customer support for a payroll service can be even more important than for software! Choosing a vendor with positive customer support reviews can help to save you and your IT team future hassles.
  • Security: Your payroll service provider will have access to your employees’ most sensitive personal information, including their bank account details and other personally identifiable information. It pays in the long run to pick a provider that encrypts information and safeguards it against bad actors. Carlos Rodriguez, president and chief executive officer of ADP, has said that ADP has a focus on “delivering market-leading, cyber resilient HCM solutions to clients who view [ADP] as a partner they can trust (source).”
  • Compliance: When it comes to running payroll, compliance is a top priority. In fact, the IRS recently reminded businesses to carefully choose their payroll service providers following continuing concerns that some disreputable organizations fail to deposit employment taxes, leaving businesses vulnerable to unpaid bills.
  • Experience: While every company is unique, choosing a vendor that has worked with similar companies to yours can help to ensure that they’re equipped to meet your business needs. Ask your potential payroll provider if the company serves similar clients to your business and check out reviews online to see how well they’ve serviced comparable organizations, or ask to speak with a reference!
  • Fit-Gap Analysis: Does the application have the right attributes to fit with what your organization needs done in payroll? Identify necessary tasks within your organization and ensure that the provider can fit the bill.

Add-ons, integrations and partnerships (oh my!)

While the considerations above provide a basic framework for evaluating payroll software companies, there are other features you should keep in mind if you want to ensure you’re getting the most innovation from your payroll provider:

  • Integrations and add-ons: Some companies will see real benefits from using specific payroll features or add-ons. The U.S. Chamber of Commerce suggests asking yourself: Do you have an existing suite of programs that demands careful integration? Does your company work in a heavily regulated vertical that might require sophisticated software? Selecting a payroll provider that can seamlessly integrate can save you time and money if this is the case.
  • Partnerships: Another way service providers scale out to include more services in their offerings is by partnering with other outside vendors who have been vetted as best-in-breed for particular applications, such as on-demand pay. These partners generally are included because they have a higher level of expertise and application experience in that particular service than the main payroll service provider can offer itself. Ensure these partner tools are compatible with any service provider software, allowing the additional application to be portable in the event a client chooses to make a change in their HCM or payroll processing vendor .

The bottom line

At the end of the day, every company is unique. The “right” payroll vendor for one company might not make any sense for another. Choosing a provider that has experience working with companies like yours, at a reasonable price point and with a commitment to compliance will help to ensure that you have a positive experience with your vendor.

Categories
On Demand Payroll

Top 3 Challenges of Off-Cycle Payments and How to Fix Them

Off-cycle payments are a bit of a necessary evil for payroll professionals. Whether you have to issue a bonus, provide termination pay or correct a payroll error, off-cycle payments are stressful, time-consuming and an all-around pain to deal with. Let’s explore the top three challenges that come along with these annoying little outliers and how best to handle them:

1) Off-cycle payments can create a lot of administrative burden.

You have your routines and processes in place. You live and breathe by deadlines, schedules and tight organization. And then off-cycle payments pop up along the way, totally disrupting your flow. It’s the worst! Sure, you want to make sure bonuses get into the hands of deserving employees and that you correct any errors you or your team may have made when processing payroll, but doing so off-cycle can grind your workflows to a screeching halt and add many tiny tasks to your to-do list.

 

So how can you ensure that employees get the money that’s owed to them in the most efficient way possible? Many companies have implemented policies to reduce the administrative burden of off-cycle payments. For example, a company policy might be that if a payroll error was only a certain small percentage of an employee’s paycheck, the remainder will simply be included in the next paycheck. Bonus checks may also be included within regular paychecks, as long as they are taxed carefully and correctly. See what works best for your team and your employees so you can create policies to make these processes as efficient as possible.

 

2) The costs of paper and overnight postage can really add up.

 

Since 93% of U.S. workers now receive their pay through direct deposit, so many of us forget how much paper and postage can cost, especially when you’re dealing with a large number of employees. One advantage of life in the digital age is that we are greatly reducing the amount of paper we consume as a culture. However, some off-cycle payments require you and your team to overnight checks via mail to employees or ex-employees.

 

Many states require termination pay to be submitted to the employee within 24 hours. Not only does that create a fire for you to put out, it also can be very expensive to mail, costing an average of $12-50 dollars per check. To cut down on these costs, which can easily be upwards of $50,000 annually, many companies are adopting digital payment solutions that have off-cycle payment technology built in. Not only do these new systems make it possible to send payments at the push of a button, they also eliminate the need for your employees to have to cash a paper check at their bank or check-cashing establishment, saving them time and money as well. You’ll also be saving a few trees in the process! These digital solutions are a win-win for you, your employees and the environment.

 

3) “Snail mail” leaves room for human error and other disasters.

Let’s face it. No matter how much we love and appreciate our mail carriers, there are still a lot of risks associated with sending off-cycle payments the old-fashioned way. We’ve all had those instances where we’ve mailed something and it was never received, or it came back to us with one of those frustrating “Return to Sender” stamps. Not only can things get lost in the mail, but the possibility of them being sent to the wrong address can cause even more issues. The last thing you want to worry about is re-issuing a payment that you’ve already sent out and having to pay for postage all over again!

 

A great solution to avoid this problem as much as possible is to send out periodic contact information requests to all employees. Having the most up-to-date information for their phone numbers, addresses and even emergency contacts can truly save the day in more ways than one. Keeping those records as meticulous as the hand-written address book your mom or grandma used can help you save time, issue off-cycle payments quickly and efficiently, and keep your processes as compliant as possible.

 

This year, the pandemic added another layer of worry, as paper mail is another thing that can potentially carry the COVID-19 virus. To avoid any potential risk associated with paper mail, discourage employees from interacting with their mail carriers up close, and encourage them to disinfect paper mail before opening it and to wash their hands afterwards. That way, you know you are helping them be as safe and germ-free as possible.

 

Do you have more “pro tips” on how to reduce the headaches associated with off-cycle payments? Please feel free to share your ideas below!

Categories
Payroll Trends

Payroll Trend for 2021: Remote Workers

Taxing remote work in 2021

  • Employers forced to address multistate tax-withholding issues
  • Taxing states have patchwork of requirements
  • Some employers may need to register in new states
  • Country-wide solutions proposed, but resisted

How states with income tax requirements are addressing the confluence of workers who are working remotely in other states, maybe their state of residence, or maybe not, will continue to be an uncertainty into 2021. Many employers have been forced to reckon with the potential that they are liable for tax payments for employees outside of their assigned business location. 

Some states have issued temporary reprieves on requiring employers to set up tax withholding in a new jurisdiction (which will expire), others are holding down their existing requirements for taxing nonresidents and residents that had been working in other states, but are telecommuting in their state. These requirements vary from state-to-state and are extremely difficult to apply, especially when employees may not be informing their employer where they are working from. 

An additional corporate tax issue can arise when a single worker teleworking in one state can trigger a status of business-related nexus in that state for the company, subjecting it to corporate filing and tax requirements as a business entity in that state. 

There have been efforts in Congress to set standards for state approaches to taxing teleworkers and employees who cross state lines to work. These have met with much resistance from states that fear they will lose revenue if their policies are forced to change. Look for more impetus to address this issue in 2021.

Business expense considerations in 2021

  • Can reimbursed business-related costs incurred by teleworkers be taxable?
  • Employers need to apply necessary accounting processes for these expenses
  • Guidance prohibits salary replacement, details how exclusions from income work
  • Some states require employers to reimburse costs of doing business remotely 

Along the lines of telework issues that payroll will need to be aware of, there’s the issue of whether certain reimbursed expenses from employers to workers in their homes are taxable. Accounting for legitimate business expenses, so they can be excluded from tax as additional wages for workers, can be tricky. Generally, flat cash reimbursements and stipends need to be included as wages, while more deliberate payments that can be verified (through bills, for example) and are specific to an expense have a better chance of being excluded. The IRS has an extensive program that explains how some procedures to pay expenses qualify for favorable tax treatment, and some don’t. 

Further, in some of that IRS guidance, there are prohibitions on employers seeking to use some of these expenses to offset full salaries, or characterize the reimbursement payments as part of employee wages, discounting the amounts paid for those purposes from someone’s agreed-upon salary or even hourly wage. In an environment when many who remain employed are experiencing salary cuts, some may find it attractive to use business expense reimbursements to artificially fill some of the gap.

Finally, don’t forget that state laws may have a play here as well with business expense plans. California, for example, requires employers to reimburse employees for costs of their mobile phone plan if the employee is using the phone for business purposes. There may be more states passing such requirements in 2021.