Many employers find that payroll can be not only a struggle
but an area that causes them a great deal of stress. Employers found to be out
of compliance often end up with large tax bills and penalties. Whether an
employer does their own payroll or has someone do it for them, precautions
should be taken to avoid some common mistakes.- Employees classified as independent contractors:
The IRS has strict guidelines on qualifications of the two
types of workers. Taxes due, benefits eligibility and whether the worker is
issued a W-2 or 1099 all hinge on this. If this is wrong it results in serious
issues ultimately leading to penalties and fines.
- Payroll Tax deadlines missed:
This mistake can bring serious penalties plus interest. It’s important for an employer to know and
understand what each payroll tax is and when each one is due.
- Incorrect Payroll Tax Calculations:
It’s important to be sure that payroll tax calculations are
correct. When using payroll software you must be sure that the payroll software
has been updated with all current payroll updates. Also important to note:
Employees can be set up incorrectly or current payroll hours, deductions,
garnishments, etc. can be entered or setup and processed incorrectly.
- Garnishments:
Garnishments are always an unexpected issue that affects
payroll processing. Meeting and
processing all of the guidelines and requirements of this legal document can be
daunting. In addition calculations based on exempt and non exempt wages to
determine the wages subject to garnishment can be easily confused. Employers
failing to adhere to garnishment rules or to make garnishment payments on time
are assessed fines.
- Inadequate Records:
The IRS has rules for what documents you must have on file
related to your payroll. But some
employers don’t realize that the IRS also has rules on where certain employee
forms must be kept, for example Form I-9.
While states and specific agencies vary, the one with longest term of
retention is the automatic default. The
federal standard for retention of payroll and tax records, including time
sheets, cancelled checks, and W-4 forms, is 7 years.
It is easy to see why many employers find payroll processing
to be one of the largest headaches in their business. This is why some choose to outsource their
payroll headaches to someone else!
There are payroll services that take on all of the
responsibility of processing payroll for a business. Some of these services will even assume the
responsibility for correct payroll tax processing and payments accepting any
fines or penalties for incorrect or untimely submissions, as long as the
employer meets certain conditions that will allow the service to be unhindered
in meeting payroll processing requirements. Most services will also process
garnishments as part of your payroll.
At Complete Business Solutions, in addition to accepting
payroll processing responsibilities and processing garnishments, we make sure
that our client’s employees are classified correctly and assist them in
complying with all payroll and employee record keeping requirements. And as an added bonus we do annual workplace
posting compliance audits for our clients and provide them with a new Oregon
All in One BOLI poster each January.
If you need help with your payroll processing contact CBS today!
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