Payroll processing is not something you enjoy doing. It is essential that you do it correctly if your business wants to be in compliance with the current labor and tax laws. Knowing a few basic facts about payroll can make your life easier. These are some essential tips to help you take the mystery out of payroll administration.
Learn the differences between salaried and hourly workers.
Understanding the primary job classifications is key to understanding how to pay employees.
Hourly workers must pay overtime. This means they have to be paid time and a half for hours worked beyond the 40-hour workweek. However, overtime is not due to salaried workers. Most salaried workers are white-collar professionals with managerial responsibilities or professional expertise.
Learn the differences between employees and contractors.
Confusion between employees and contractors is a common mistake made by business owners. Although it is tempting to consider workers contractors because it is easier (you don’t have to worry about their payroll tax and benefits), misclassifying workers could land you in serious trouble.
The rule of thumb is that employees should work within your core business while contractors should perform outside tasks. If you own a plumbing business, then the plumber who makes house calls three days per week for you should be considered an employee. A contractor can, however, be your part-time webmaster if he/she works for you outside of your primary business.
Be sure to include payroll taxes and wages in your payroll budget.
This is an essential tip for payroll that many business owners forget. Payroll taxes are required by your state. Make sure you account for them when planning your budget. This will help you to understand your obligations and avoid any unpleasant surprises.
Keep on top of state and federal tax deposits.
Payroll tax payments that are late or missed can result in costly penalties. Make sure you have your due dates on your calendar. To ensure timely payments, ask your employee to automate payroll.
Learn your obligations when it comes to providing health insurance.
Employers with more than 50 employees must offer health insurance coverage. You can qualify for a tax break if your company has fewer than 25 employees and your average salary is less than $50,000.
You don’t need to be a professional employer organization (PEO) if you don’t have the time or desire to keep up to date with ever-changing payroll regulations. A Professional Employer Organization can handle your payroll, saving you hours each week and ensuring that your business is in compliance with all current laws. PEO companies also take all aspects of human resources administration to ensure your business is in compliance with OSHA and labor regulations.
Call us if you want to spend more time on your core business. We have been helping businesses find the right PEO companies since 2001, and we provide the best customer service. Contact us today to get started.
Mike Burgelin has over 20 years of experience in PEO Employee Leasing. He is an expert in helping small business owners increase their growth potential by outsourcing human resources and payroll tasks. His knowledge and skills in workers’ compensation insurance have allowed his clients to save more than $40 million annually.