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.
The Trump administration has addressed DACA, or the Deferred Action for Childhood Arrivals program, which means that both small and large businesses must be cautious in regards to managing employees whom the program covers to ensure they are in compliance with federal law. Below are some key things to be aware of.
A growing trend among millennial workers is the preference for office space which is flexible in design. Such spaces encourage social interaction while also supporting a variety of different work styles. Ultimately, employers aim to use it to attract and retain millennials. There are a number of factors which have led to this preference, and we will explore some of them in this post.
The labor departments of a number of states have recently made announcements regarding the status of their minimum wage, specifically whether or not it will increase. These announcements are important for employers and their payroll departments, as it lets them know what to expect for 2018.
In the past, employers that chose to cover the meals of their employees who were traveling on business could only deduct a maximum of fifty percent of these expenses through income. However, a new ruling has changed this, giving employers the ability to deduct the complete amount for meal costs. Below are additional details regarding this rule and what it means for employers.
The American Tax Court ruled that the NHL Boston Bruins owner would be able to deduct the complete amount that was paid for meals for staff members and players during their away games. The court also concluded that the meals for the Boston Bruins fell under the exception of the 50 percent deduction for meal expenses which is listed under the 274 tax code section.
In order for an employer to qualify, they must show that the food was given in a place that is near the business premises of the employer and were distributed before, during or after the workday. The court also pointed out that the NHL requires their teams to play 50 percent of their games outside their hometown and that it is mandatory for players to attend the pregame breakfast. In fact, players can actually be fined and prevented from participating in a game if they’re absent or even late.
In the past court decisions gave employers within the entertainment business the ability to claim deductions for meals. The U.S. Ninth Circuit Court of Appeals in 1999 made a ruling that an owner of a casino in Las Vegas could completely deduct the meal expenses for their employees. The reason for this is due to the costs, which were considered to be in association with an important business purpose which maintained employees on the premises.
However, this has opened a door to whether small businesses in other industries can also claim these deductions. Many of these businesses find it challenging to determine the meal deductions since the meals may not be directly involved with the work schedules of the employees, as compared to traveling athletes or performers, who will do business in a company form.
When costs for food are deducted, you need records to support your claims. Officially, no deduction is possible unless these records are present, but there are some exceptions to the rule. The IRS carefully reviews deductions for food costs since it has a high likelihood of abuse, and if a return is scrutinized, you will be asked to show records. These records must show where, why and when the meal was consumed. You must also provide receipts for the expenses, with the only exception being not having to keep receipts for meals that cost under $75. There are a number of apps that can make it easier to maintain good records, which allow you to input the location, time and date.
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.
New paid leave laws have been recently passed in the states of Washington, Arizona and the District of Columbia. However, these laws have also become the subject of scrutiny, with new developments occurring regularly. Below are some things that employers based in these states should know.
The Department of Labor in this state, in preparation for the new law which will go into effect in January 2018, has established the 1433 Site to provide the public with guidance as it mandates the two rule sets which will be used to describe and enforce the new law. 1433 is an initiative which received approval in 2016 that requires businesses to give paid sick time to the majority of their workers. It also increases the minimum wage automatically for a number of years consecutively.
Those employed in the state of Washington are expected to gain one hour of paid sick time for each forty hours they work, which gives them time to take care of themselves and members of their family. Public hearings for the first group of rules, which pertain to reporting requirements, notification procedures and the management of records, were held in August. Various businesses in Washington are opposed to this measure and have begun protesting it.
The Chamber of Commerce in Arizona has challenged the requirement that businesses based in the state give employees a minimum of three days of paid sick time which went into effect in July of 2017, which resulted from a measure that was approved by voters. The constitutionality of the law has been challenged, to the extent that business owners and the Chamber of Commerce filed suit to block implementation, stating that it is a violation of state law. Their argument is that the ruling is a violation since it mandates the state to use funds without specifying a source of revenue.
Washington D.C. passed its Universal Paid Leave Act in 2015, which went into effect in April of 2017 and is expected to be funded completely by the fiscal budget for 2018. Regardless, a minimum of five repeal measures are now being reviewed by the D.C. council, particularly the UPLA Amendment Act, which was revealed on June 20th. This measure focuses on alternative ways of establishing paid leave, such as lower payroll taxes for small businesses and employer mandate for larger businesses, or exempting those employers who already give paid leave to their employees.
The UPLA is expected to be funded through at payroll tax of 0.62 percent that employers will pay into a pool which is administered through the government of the District of Columbia, which will distribute the benefits to employees working in the area. The duration of sick leave remains the same, which is 8 weeks for parents who have recently had a child and six weeks to provide care to sick relatives.
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.
The fourth quarter of 2017 is near, which means that more states will begin revealing the new rates for unemployment tax which is expected in 2018. States may alter their unemployment tax so that they can maintain the balance of their trust fund. Below are some things employers should know so that they’re prepared.
The unemployment tax is federally mandated and imposes a tax on employers which are used for the purpose of funding workforce agencies. Employers are expected to send this tax yearly, usually by completing Form 940 which is then transmitted to the Internal Revenue Service. The unemployment tax will cover a portion of unemployment insurance administration, as well as job service systems in each state. It also pays a portion of unemployment benefits which are extended, but like most taxes it is subject to change over time.
Some states will set up a single range for tax rates, which is referred to as a rate table or schedule. From these every employer is given a rate which is determined by their unemployment in association with their yearly payroll. Other states instead maintain multiple schedules, which are determined by the balance of their trust fund. Those which are expected to finalize their unemployment taxes for 2018 include South Dakota, New Hampshire, Wisconsin, Oklahoma, Georgia and Arkansas.
Oklahoma and Georgia both have multiple schedules which are determined upon a primary group of rates. Georgia actually uses 6 schedules which are essentially altered versions of the primary schedule, where every schedule denotes a percentage for which the employer’s primary tax rate schedule may be adjusted.
Oklahoma could utilize basic rates from either one of the four factors which are conditional, or from the unadjusted range which is 0.1 to 5.5 percent. The conditional factors will typically go into effect whenever the state’s trust fund balance is beneath a specific level. Every factor which is conditional will denote assessments which will be added for the tax rate of every rate group.
New Hampshire and Arkansas both have a single set of rates for employers that are experienced, and for the most part these rates won’t change. Additional surtaxes, rate reductions or assessments can be applied to the basic rate of employers depending on trust fund balance and whether the employer has a negative or positive rating.
Both Wisconsin and South Dakota will use multiple schedules. These schedules will go into effect based on the balance of the trust fund for unemployment. South Dakota is expected to select rates from up to two schedules for the very first time next year, under measure H.B. 1097 which was signed in March by Governor Daugaard. To learn more about unemployment taxes which are scheduled for release in 2018, review the Unemployment Insurance Chart.