The beginning of each year is a time for fresh beginnings, both personally and professionally.
It’s also the ideal time to think about payroll compliance. If your business is like most small businesses, payroll compliance is one of your lowest priority issues, but failing to check-in with it at least once per year can cause headaches down the road.
Here are three payroll compliance review steps you can take right now to make sure you’re off to a good start in 2017.
1. Review your employee classifications
Are all of your employees correctly entered in your database?
For example, did any independent contractors become employees, or did an hourly employee become salaried?
These statuses are very important, particularly when calculating overtime pay and benefits. Most human resources management software has reporting capabilities that will allow you to easily generate a list of employees and spot any outdated information.
2. Review your employee demographics
Did any of your employees’ legal names or places of residence change?
Accurate name and address information is crucial for tax reporting purposes.
Additionally, employees in different localities may need different amounts of local tax withheld from their paychecks. Once a year is good time to confirm or update this demographic information.
3. Review your policy on expenses
Local laws vary when it comes to reimbursing employees for expenses such as travel, warns Xero’s small business payroll compliance guide.
Make sure you’re aware of the laws in your locality, and whether your existing policies are aligned with them.
If you don’t have a written policy, now is a good time to draft one.
For expert payroll solutions advice that will take the guesswork out of your annual payroll compliance review, please contact us.