Payroll is one of the business aspects that business owners should take seriously. Essentially, payroll refers to the fair amount of compensation employers must pay for the services an employee has rendered. Processing payroll involves managing and computing wages, salaries, and taxes, even setting up a payroll schedule and other similar processes related to it.
However, much like other company processes, payroll can be considered a complex Human Resources and Accounting matter that needs to be taken care of. And as a business owner, compliance with specific laws and regulations should always be your priority when dealing with payroll operations. That said, failure to stay on top of your compliance responsibilities may result in hefty fines and penalties which can adversely impact your business in the long run.
So, if you’re new to payroll compliance, here’s a quick guide to help you get started.
What Is Payroll Compliance?
Payroll compliance ensures that the payroll is organized according to federal, state, and local rules and regulations. It should be enforced from the day the company hires an employee until after their employment contract.
In most cases, payroll compliance means fulfilling the following:
- Employee Classification
- Reporting of Benefits
- Employee Paycheck Deductions
- Annual and Quarterly Tax Filings
- Reporting of Health Coverage and other similar payroll duties
Tips For Maintaining Payroll Compliance In Your Business
Now that you’re aware of payroll compliance, it’s time to familiarize yourself with how you can stay payroll-compliant in your organization.
Related: Who Qualifies for the Payroll Protection Program?
1. Ensure Up-To-Date Employee Records
When it comes to maintaining payroll compliance in your business, you must keep all employee records up-to-date. More so, having correct and updated employee information can be crucial for most HR processes. For instance, any changes on your employees’ personal data may change their tax liabilities or affect their overall payroll deductions.
With that said, to ensure that your employees receive the salaries and wages they deserve while staying compliant with particular employment and labor laws, remind them to provide updates when there are information changes on their end. Or perhaps, you can also conduct or implement an annual record update for your entire organization.
2. Invest In Reliable Payroll Tools
Processing employee payroll doesn’t need to be a complex undertaking. With the advent of technological advancements, keeping up with the current payroll trends and other related laws would be more manageable.
With that in mind, if you want to simplify payroll compliance for your business, it’d be best to invest in some of the best tools. To start, here are some applications and software you can use:
Payroll Reporting Software
Using a payroll reporting tool can be a good idea to generate comprehensive payroll reports quickly. All you need to do is to input employee information. The software will then display the data you need.
Time And Attendance Software
If you need a tool to track your employees’ attendance, including late and tardiness, absences, and leave credits, using a time and attendance tool can be a great idea. Aside from attendance tracking, you can also utilize the software to compute salaries, wages, and tax liabilities to achieve full payroll compliance.
3. Classify Employees Properly
To help you attain payroll compliance, you need to ensure proper employee classification right from the beginning. Generally, workers can be classified into full-time employees, part-time employees, and independent contractors. Although all these personnel may be under your business’ employment, payment rules and other employment laws may differ for each one.
So, to avoid misclassifying them, which can result in payroll non-compliance, make sure to classify your personnel correctly. You can do it by defining their duties and responsibilities and determining their employment duration.
4. Seek Professional Help
Seeking professional help is always considered a good idea, especially for smaller enterprises with little to no experience in running payroll. Doing so allows you to ensure that you’re not only able to manage your employees’ payroll properly but also your business’s compliance.
For example, suppose you need assistance with tax filings and payments. In that case, an accountant who has good knowledge about regulations, updates, and essential changes can help your business stay payroll compliant. More so, they can assist you in doing taxes correctly and on time and identifying specific payroll issues, including discrepancies in the records.
Having professionals in your corner, you can navigate the payroll compliance process more effectively. As a result, you can minimize the risks of committing mistakes that can affect your business operations.
Bottom Line
Although payroll compliance can be an overwhelming undertaking for business owners like you, it doesn’t have to remain that way at all times. By keeping this quick guide in mind, you’ll be equipped with the proper knowledge, resources, and tools that’ll provide you with the best chances of staying payroll compliant. Also, a good thing to note, the more you adhere to specific compliance requirements, the more you can help your business grow and become successful in the long run.
