Payroll compliance can make the difference between a successful business and one that’s bogged down with penalties. Make no mistake; the government, the IRS, and whatever other agencies your company answers to will be keeping track of your compliance. If you fall out of compliance with the IRS, you’ll hear from them, and you may not like what you hear. The best way to avoid trouble is to keep your payroll as compliant as possible. Here are five ways that the small business owner can keep their payroll compliant and avoid penalties and fees.
1. Know the Regulations
The first step to staying in compliance is knowing what you’re in compliance with. What are the payroll regulations on a federal, state, and local level? The Federal Government has several guidelines when it comes to payroll and employment, from overtime rules to minimum wage and more. Check with your state guidelines, as well. Each state has different requirements for taxation, payroll, minimum wage, and more. If you don’t know the guidelines, how can you stay compliant?
Keeping yourself informed will ensure your business doesn’t fall behind with compliance either. Laws and regulations are constantly changing due to social pressure, economic factors, and more, so you’ll want to stay updated with any changes and enact them immediately so as not to fall out of compliance. Check your state’s business website or the federal government’s business administration website at least monthly to make sure no changes have occurred or are forthcoming.
2. Trust Payroll to a PEO Service
Sometimes, small business owners just don’t have the time or the resources to manage payroll themselves or hire someone to do so. You’ve got enough on your plate already, from running and growing the business to interacting with customers and keeping employees happy. You may not have time for payroll, but staying in compliance is necessary; so, what is one to do in such a predicament?
A PEO service can handle payroll for you. Taxes, withdrawals, direct deposit, and everything else associated with the payroll process is handled by your PEO service, so you can focus on running your business instead. PEO services help minimize your liability, and take some of the burden off of the business owner to keep things running smoothly. These services are especially useful for small businesses that can’t afford a full-fledged HR department. If you’re in the Golden State, you can use Retireat21.com to find the best PEO Companies in California.
3. Get Personal Information Correct the First Time
Nothing makes for a more confusing or frustrating payroll process than the wrong information on hand. While employees are responsible for filling out tax forms and other payroll information, it’s up to the employer to double-check for errors and ensure that everything is accurate. Submitting the wrong information when you’re filing payroll taxes can cause a nightmare that you simply don’t want to be a part of.
Be sure that you’re getting all of your employees’ information right the first time. A missed social security number, last name, or address can mess up the entire process, and cause frustration on every end.
4. Don’t Miss Deadlines
Payroll taxes have deadlines, and, depending on your state’s individual requirements, other factors may also have hard deadlines to keep up with. If you don’t know what your deadlines are, you’re going to miss them. If you do, you could be subjected to much more than just simple late fees. The IRS does not take kindly to late taxes! While under certain circumstances you can file for an extension, it’s just a better idea to not miss deadlines.
Trusting a PEO company with your payroll needs will ensure you’re not missing deadlines. In fact, you won’t even need to think about deadlines, as your PEO service will handle it for you. Keep yourself in compliance with experts in your corner that know what to do.
5. Keep Accurate Records
Every business should keep accurate records of employment, payroll, and all other HR services. Whether you’re keeping physical records in storage, digital records on the cloud, or simply putting everything in a filing cabinet, it’s vital that you keep accurate records should you ever be audited. Accuracy ensures that if the IRS comes knocking, you can answer any questions they may have and keep your business from incurring any penalties.
Not to mention, there are legal ramifications in certain industries (such as healthcare) for not keeping accurate records for up to a certain period of time. Check with state and federal guidelines to see if your business falls into one of those industries that have very specific record-keeping requirements.
Compliance is Everything
Staying in compliance with payroll guidelines is absolutely essential to not only the continued success of your business, but also the happiness of your employees. Payroll should always be taken seriously, so hire a PEO or payroll service if you find you’re lacking the resources to keep the process streamlined.