Business owners live a hectic life, juggling many tasks and handling a pile of work and pressure. They go through all the stress and trouble to accomplish one aim – consistent growth of their company. However, amidst their tedious schedule, they forget one important factor that is key to a successful business – payroll compliance.
Failure in keeping up with changing payroll legislation rules and regulations can lead to labor law penalties. There is no denying the fact that payroll compliance is one of the biggest challenges of payroll and HR professionals but it is also an important consideration. It protects employers and companies from heavy penalties while keeping the employees content by crediting their correct salary on time.
There was a time when adhering to changing rules involved more manual work. There were no automatic reminders, respective departments have to do all the paperwork and maintain records in order and update the files from time to time. This system was prone to errors which often resulted in penalties.
With time, many software and HRIS systems were introduced that now help finance and HR teams comply with the payroll rules while reducing the time invested in the process of compiling. However, employers and HR managers still have some responsibilities and duties to fulfill to eliminate any mistake and conduct the business according to the agency that they report to.
To avoid costly fees and fines, it is important for them to stay informed about employment laws, reporting rules, and compliance issues. Of course, it is easier said than done. Therefore, we have compiled a list of 7 tips that will contribute to payroll compliance and keep employers on the right track. Have a look:
Get Familiar With Workplace Pensions
There are various retirement plans that employees can make use of depending on their convenience, income, and security. There are certain rules and conditions regarding each of them that need to be followed by employers as well as the benefit-seeker. There is an option of a defined-benefit plan and a defined-contribution plan.
In the former case, an employee makes a monthly contribution and places the investment without any guarantee of minimum and maximum return like 401(k). On the contrary, the latter is funded by either employer or employee or both and the sponsor makes a promise to provide the beneficiary with a certain monthly amount after retirement.
Irrespective of the industry that your business belongs to, as an employer you have to follow certain duties under the law. Make sure that while you provide your workers with a plan, you have all the key information regarding it. You can also build a payroll software with built-in compliance tools and other customizations to keep your business protected against lawsuits due to non-compliance.
Keep Your Trust in PEO Service
As a business owner, you already have a lot on your plate to manage. You have to stay connected with your consumers, expand your business, coordinate with different departments, keep employees happy, and whatnot. Of course, you might have a lack of time and resources to look after the payroll management yourself.
However, this is not a logical reason to not comply with the regulations. So, what is the best way to tackle such a tricky situation? Well, seek PEO services. Hire a professional employer organization service provider who can take care of direct deposits, taxes, withdrawals, and other tasks related to payroll.
These services take the pressure off your shoulders and reduce your liability. It is the ideal option for enterprises that don’t have a separate HR department. This way you can pay the utmost attention to your responsibilities while minimizing the burden of compliance.
Ensure Accurate Personnel Records
We hardly need to emphasize the importance of updated records and details of employees. Maintaining the correct information is quite obvious and also your responsibility for as long as a person works in your company. Be it information about a salary increase, promotion, leaves, and anything else, it should be processed right away and any changes in the data must be updated without any delay.
You can use cloud storage, files, or HRIS software to keep accurate records as they can be audited anytime. This will come in handy when there is unannounced checking by the government officials or in case of legal ramifications as you will have written proof and answers to all the inquiries.
Check the guidelines first to know the requirements that your business must follow for record-keeping and you will certainly stay on top of the game.
Switch to a Self-Service Model
Let’s be honest, chasing timesheets and expense forms consumes a lot of time which you can rather put to more productive use. Every time you have to update any new information or data about the working lives of employees, it takes you long hours to finally be done with the work.
Yes, we know that you have appointed the HR team and assigned this task to them. However, don’t they have other valuable tasks to complete on a daily basis? So, why not entrust employees with submitting their information on reliable payroll software and save yourself and your team ample time.
Adopt a self-service model where your staff members can review their details, make the required changes, approve requests and send feedback as and when needed.
Stay Up With the Regulations
Knowing what you have to stay in compliance with, is the most critical step to adhere to rules. You must have knowledge about state and federal regulations and guidelines about payroll and employment. It includes everything from overtime rules to minimum salary to increment policy and more. If you are not acquainted with the basic guidelines, then there is no chance of compliance.
The question is, how to do so. You can attend seminars, watch webinars and be a part of conferences to educate yourself and come up with the best employee benefits plans for your team. This will also ensure that you are updated with the latest news and changes in the legislation and enact them in your company with immediate effect so as not to fall out of compliance.
You can also incorporate an effective HRIS system in your organization that will take all the stress of keeping up with the rules and laws. It will inform you about all the developments in the economy, society, legislation, industry trends, and payroll process. This cloud-based HCM platform will automatically update the compliance and send alerts to you regularly.
Discuss With the Experts
Another helpful tip for company payroll compliance and legislation is talking to experts. As we mentioned earlier, many conferences and seminars are organized to impart knowledge about the online payroll system and laws related to it. The people who conduct such events and talk about the topic have a great insight into the whole process.
They are the professionals who can provide you with valuable details. Discussions with them can lead to a stronger command of the concept. Moreover, you can also appoint an accountant who has years of experience in payroll and can work in your organization to guide you through regulations.
He can look into the matter and keep an eye on the changing laws and rules, thereby, giving you the updates. This professional can also file returns, record the data and remit taxes while offering necessary support around payroll issues. This is also a beneficial step towards finding solutions to any problem or error that occurred in the records.
Submit Payroll Information on Time
Late submissions can lead to penalties and fines. You simply cannot compromise with deadlines regarding payroll taxes, quarterly reporting, shifting paydays and other factors. No matter how complicated meeting the deadlines are, you have to spare enough time to accomplish the task.
To top it all, the government is not too kind toward late taxes and could take action against you. Yes, you have an option of an extension but that is just for special circumstances. Hence, it is better to stick to the final date and file the reports and taxes within the stipulated time.
You can create an annual calendar on your Human Resource Information System to help you stay ahead of the game. With all the important dates on your computer, there is a rare chance that you will miss them. This will also keep the employees informed on their pay and you can carry the payroll processes smoothly. A PEO company can also prove to be a great help when it comes to deadlines as they handle the submission task without bothering you.
However, there are some other points too that are correlated with payroll compliance.You can check them in the next section go through them:
Health and Welfare program
Employees spend a lot of time at work. It’s a good idea to offer programs that help you maintain your physical, mental and emotional health and well-being. For example, you can offer yoga and meditation classes, free or discounted memberships to employees at a local gym, or free health exams. Some companies even offer in-house welfare programs.
This is very important in the United States and other countries that do not have appropriate national regulations. You must provide some form of medical insurance to your employees. If any employer owns a small company with a limited budget, it’s important to limit your insurance for emergencies.
Well, health insurance is not counted as a mandatory option in some countries and some employers ad a “must have” benefit and can be put as an option. It’s because in many countries people have access to state health insurance, but it can still provide attractive benefits. Additionally, there are additional features such as dental and vision planning that make employees feel the need.
Again, this depends on the system of countries where individual retirement plans are insignificant in regions with more national pensions and compulsory systems, such as France . However, in many countries the responsibility is for individuals to save for their own retirement, and businesses are expected to help them.
There are colossal kinds of plans in various arrangements, but most of the basic idea is to donate a certain amount each month to prepare an employee for retirement, and perhaps match his donation to dollars. It is expensive to plan this, but there are often tax credits as well. It is worth getting help from a benefits consultant.
An annual review is a great opportunity to align your performance pay. In any case, you should perform a performance assessment of your employees at least once a year, review your success in reaching your goals, and set goals for the following year.
So it’s a good idea to do a payroll review at the same time. That way, wages can be tied to performance, giving you clear incentives and more motivation.It also takes into account the company’s overall performance.
If there was a great year for the business and the employees worked hard to achieve it, it probably cost a little extra. You may consider implementing a formal profit sharing program.
Summing It Up
Ignorance is bliss, especially when you are already burdened with other problems of your company. But here it can prove to be a bane for your business as it can face issues with government authorities. Yes, payroll compliance can be challenging with a pile of formalities and paperwork to complete.
However, we also cannot deny that it is a crucial factor in the success of your business and also to keep your employees happy. So, do whatever you need to. Hire PEO service, implement HRIS, or get support from professionals. Make your decision based on the industry you work in and rest assured that you will stay compliant with payroll.