While mistakes will occur from time to time, one area where it should be minimized most is payroll. Small businesses especially are susceptible to errors since they lack the personnel and resources of their larger counterparts, making it challenging for them to keep up with constantly changing regulations. The worst thing about these errors is that even if they are not intentional, if not quickly resolved they can land you in hot water with the Internal Revenue Service. Below are three common payroll errors to watch for this year.
Payroll departments handle a lot of sensitive data on a daily basis, including addresses, wages, bank account details and social security numbers. As a consequence should this payroll data become compromised the consequences can be absolutely devastating. Below are some steps to ensure it doesn’t happen.
There are a number of things that employers and their employees should be aware of for 2018. While the start of a new year can be a sluggish transition for some, for others it can be a storm of activities involving meetings, deadlines and the establishment of goals. Regardless of which spectrum you fall under, below are payroll and tax info for this year that you need to know. Read More
To negotiate the most desirable payroll salary, you must emphasize the interests of each side, while maintaining principles which are ethical. It is best to avoid rigidity in favor of flexibility, and you should also do your research prior to beginning negotiations so you can be sure you have firm ground to stand on. Below are some additional best practices.
Payroll data is highly coveted by cyber criminals today. Should it fall into their hands, the consequences will be horrific. The information will either be quickly sold to third parties or used to commit identity or digital theft. Companies which fail to secure their employee’s time and labor data and other salary information could find themselves hit with multiple lawsuits and crippling fines. As a consequence, many HR departments have looked for new ways to secure data, with cloud computing being one of the most popular. Below are some tips for effectively securing cloud payroll.
International expansion is a fundamental requirement for any business to become a multinational corporation. While this presents significant opportunities, it also increases responsibilities, one of which is managinginternational payroll. Below are some best practices for this process.
One strategy used by payroll departments is to lower costs and boost productivity is documenting various department processes, finding components which are nonproductive and then altering or eradicating them entirely. Below are some reasons this method is effective, and ways in which it should be done.
Employees don’t like to be left out of the loop, particularly when it comes to pay cycles. An employer that plans on making a switch should communicate early and frequently, so that employees are aware of what is happening. Most businesses will switch their pay cycles for greater efficiency.
When preparing to change pay cycles, employers should utilize the 5 Ws, which are why, where, what, who and when. Employees should know who is affected by the change, why the change is being implemented, when it will go into effect, and where. People are naturally wary and resistant to change, so it is critical for employers to alleviate anxieties and demonstrate that the switch is important for everyone.
Proposed changes should also be posted to bulletin boards, websites, brochures and other places where employees are likely to read them. Announcements could also be made at company meetings. Changes regarding the delivery dates of paychecks and the days within a pay period will usually result once the new pay cycle is initiated. Employers should understand the calculations that can occur whenever a pay cycle is switched.
A team will need to be formed which will be responsible for planning and executing the next pay cycle. This team will typically consist of members from departments such as finance, information technology and human resources. It is also helpful to include an ombudsman in the group who will not be affected by the change and can therefore make suggestions which are unbiased.
The team will next need to assemble a calendar which demonstrates dates for payment, as well as cutoff times for processing and direct deposit. Everyone on the team should unanimously agree on milestone as well as checkpoint dates. Details are important for this process, as the group will need to assess the effects of moving pay dates backwards or forwards, and should review the deductions and earning codes so that communication can be facilitated regularly and early.
Many states have laws on the books regarding the switching of pay periods, so it is important for employers to be aware of this. It is one of the reasons why many businesses switch to bi-weekly payments from semi-monthly payments, due to requirements from FLSA and other state laws. Some states only allow bi-weekly payments at the maximum, so employers should find out what rules apply to their area of operations.
Another factor to consider is benefits deductions, and the way in which they should be managed. Employees will have concerns regarding deductions from dental or health insurance benefits, so employers must decide how they will approach these. Some choose to switch to twenty six periods, while others choose to skip the deductions for the first payroll or remain at twenty four periods and skip the third payroll two times a year.
It is important for employers to establish a process for recording the noncash and cash payments to ensure that the correct taxes are withheld for expat employees. A number of businesses employ individuals who live overseas, and it is important to ensure that their payroll is properly managed.
Electronic systems which are used to record the payments which are made to expats must account for the payroll systems which are used in their host countries. This includes transactions which are accounts payable as well as expense reports. The job positions within the company should be specified which are responsible for offering data which is related to the compensation of expats, as it allows for accumulation tracking and procedural documentation.
The problem with using the names of employees as opposed to job positions within the procedural documents is that any requests which are made for payroll could be incorrectly sent to parties that are no longer responsible for tracking the payroll data of expatriates.
Compensation accumulation is one of the most important aspects of expatriate payroll management. It allows for payroll filings to be accurately completed and is essential for the completion of expat tax returns. Furthermore, compensation accumulation makes it simple to build an administration process. If a company doesn’t do a great job at this, or lacks formal procedures, compensation accumulation will be problematic to say the least.
Procedures and systems for audits which are used for expat payroll must be able to recognize and eradicate any errors in regards to data collection, as these will cause problems that necessitate the filing of adjustment forms or paying extra to fix. It is best for these audits to be performed at regular intervals.
Payroll staff must be responsible for carefully reviewing the taxability for the various payment types which are tracked for compensation accumulation, and they must be able to recognize the payments which must be taxed differently due to the host country where the expat is based and the home country where they originate. This is necessary to guarantee compliance with the nation’s tax code as well as their filing requirements.
A number of employers outsource the compensation accumulation for expats to third party firms, but should carefully scrutinize the ability of these vendors to account for the procedures and tax laws for both the home and the host country when payment data is processed. A vendor that does not correctly track the nuances between host and home country taxation could cause mistakes which the business that hired them will end up being responsible for.
Businesses that develop plans for expat payroll must recognize that treaties may exist between host and home countries which could determine how the expat employees are taxed. Employers must carefully study double taxation laws, which in many cases will use a 183-day period as the maximum number of work days within a year that an employee working overseas can go without being taxed by the host country.
Technology is truly miraculous. It has brought us wireless computing, networking and greater access to information than our ancestors could have dreamed of. However, this technology is not without its downsides. Payroll fraud has become a serious problem for businesses of all sizes, and it is being fueled by technological advances.
Fraud involving payroll occurs in many different ways, and as technology continues to advance, criminals will come up with new ways to exploit it. This is why employers must be vigilant, keeping abreast of industry changes and implementing the proper measure to ensure that sensitive data is never compromised. Some fraud is connected to attendance or time, while others involves the counterfeit of benefits, or gaining access to balances and checks for processing.
Fraud can be either external or internal, meaning parties outside the organization attempt to gain access to unauthorized information, or it may be internal, where employees within the organization leak information or use it for their own benefit. Many argue that internal fraud is the most dangerous, as this comes from individuals which the company trusts, who have greater and easier access to information than nonemployees.
While smartphones have provided a number of benefits to both employers and employees, they are also being used to commit payroll fraud. This is possible with the camera that is now installed in most of these devices. An employee can surreptitiously take photos of checks using their smartphone, which can then be used for deposits.
Smartphones have many other capabilities, which are why many high security buildings and installations require them to be placed in a container near the entrance, as visitors are prohibited from carrying them around the premises. Due to the fact that employees working in payroll have access to sensitive documents, companies should consider prohibiting them from carrying their smartphones into these secured areas, as this prevents them from taking photos of documents.
Employers that handle their payroll in house should review their security measures carefully, particularly when it comes to password protocols. Both copiers and printers should be situated in areas that are secure, and access to them and the payroll department itself should be restricted. It is highly recommended to implement an automated clearing house if you don’t already use one.
Processing Payroll Through A Third Party
Many small businesses choose to use a third party firm in order to process their payroll. This saves them time and energy, but also places them in a position where a mistake made by the payroll processor could have disastrous consequences. Those who use third parties for their payroll should learn about the security measures they have in place to prevent fraud, and should not do business or provide their payroll data to firms that do not have or maintain adequate security protocols.