Top 4 Things To Know About Payroll

Unless you studied finance in college, you don’t necessarily know the ins and outs of payroll, and I’m not judging you for it. I have a master’s in Linguistics, and I know next to nothing about this, but my partner is well-versed in this matter, and the following are some of the books he recommends for anyone who wishes to get into the waters of payroll.

Payroll is an essential element for any business to be successful and for them to pay their employee for their jobs. However, most of us don’t really know what that entails, and this is where we come in handy. So, without further ado, let’s dive into this blog and learn more about payroll.

1. New hire

If you are hiring a new employee, be it full-time, part-time, or seasonal, procedures and policies should be enforced. Make sure that the new hire is also authorized to work in your country and that they comply with their new hire paperwork requirements. Some of the necessary hire forms that you should be aware of:

• • Form I-9: A form that each new hire should complete to verify work authorization

• • Notice of Coverage Options: Under the ACA (Affordable Care Act), employers need to provide a Notice of Coverage Option to all their new hires

• • Form W-4-: This form determines the federal income you are supposed to withhold from an employee’s wage. Depending on your state, you might also be required a tax withstanding form.

• • State and Local Notices: Depending on your jurisdiction, the employers might also be required to provide specific notices to new hires.

2. Employee Classification

Misclassifying employees can be quite a costly mistake, which is why it is important to recognize the different classifications of employees. This can be divided into 3 main classifications/categories:

a. Independent contractor vs. Employee

According to the Internal Revenue Service or IRS, an independent contractor is a self-employed person who isn’t paid through payroll. An employee on the payroll is entitled to certain benefits like family/medical leaves, overtime, and unemployment.

b. Exempt vs. non-exempt employee

The FLSA or Fair Labor Standards Act has instated some requirements for exempt employees. The latter is usually a salaried employee but is excluded from the Act’s overtime pay provision. At the same time, a non-exempt employee is a wage employee who is entitled to overtime if they work over 40 hours a week. If one is misclassified, they may miss out on earned overtime pay.

c. Worker compensation class

It is a way for companies to identify specific categories of work. These codes allow for proper employee classification and job description, requirements, and pay grades. Miscoding an employee, can also have some severe implications in the case of worker’s compensation claims.

3. Employee record keeping

The FLSA also requires employers to maintain certain records for non-exempt and exempt employees. Some of the required documents are employee contracts, time cards, and even records that show deductions in addition to their wages. The ADEA also demands that employers keep payroll records for a minimum of 3 years, and further requirements might be required depending on the state you work in. A single employee record is easy to maintain records and ensure compliance.

4. Wage payments

Understanding the federal and state minimum wage laws for processing payroll is also important. The federal minimum wage may sometimes differ from a state minimum wage, and you have to take this into consideration when processing your payroll; it is important to know that the higher rate is always applied.

Another thing that you need to be aware of is that minimum wage laws also apply to tipped workers. Some states might also have additional requirements such as set paydays or even paid rest breaks, and you need to verify with your state for more information on this particular matter.

Looking for help?

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They provide a wide array of services, which includes anything from payroll, superannuation calculation, bookkeeping, recording, and even BAD lodgement. So what are you waiting for? Make your business prosper with professional help. Give them a call and let your business prosper with the help of SBJ Bookkeeping.