First things first, compliance is everything in the back office. Whether you’re running the payroll, tracking employee hours, calculating who is eligible for ACA, or what have you, the key to success is making sure all your ducks are in a row. Issues with compliance can lead to hefty fines and working backward to correct what has been wronged. All-in-all, it should be avoided at all costs and with the help of a few tools, it can be for the most part. Even the most seasoned HR and payroll professionals can find themselves with a penalty due to error.
Total Payroll Compliance
If you’re responsible for running payroll for your business, you’ll need to be up-to-date on things such as local, state, and federal taxes, employee withholding options, unemployment taxes, Social Security withholdings, and more. If you don’t have a background in payroll, the list of ‘to-dos’ can be overwhelming. With so many things to remember before you even can calculate an employee’s net pay, it can be fairly easy to forget a step or two. In recent years many businesses have transitioned to software as a service (SaaS) for their payroll needs. There are a few reasons SaaS-based solutions are desirable.
- Taxes are calculated and filed for you, with no extra work on your part. Seriously, all you have to do is run your payroll and once everything looks good and you hit that ‘Accept’ button, your local, federal, and state tax payments are automatically sent.
- You have support every step of the way. Using a SaaS solution for your payroll gives you a certified payroll professional at your fingertips. If you’re in the middle of payroll and have a question about an adjustment or how to calculate a deduction, simply call or email your software provider. It could mean the difference between getting your payroll right the first time and having to rerun it later on and incur the extra cost of doing so.
- You have the option to run multiple pay frequencies for the same company. Sometimes, depending on your job function, you may be paid on a weekly basis, while your colleagues in another department are paid at a bi-weekly occurrence. Running multiple pay frequencies for one company is easy when you’re working with a payroll provider. Simply attach certain employees to the frequency you would like them paid at and you’re all set.
- If you get caught up in something else and miss your payroll deadline, you can still run payroll and have your employees paid the very next day. Depending on who you bank with, you may even be able to run payroll in the morning and have your employees paid that same day.
A lot of payroll software providers allow for customization within their software. This could mean you can create different fields based on information you need to track. The best payroll software is one that will be flexible enough to fit the needs of your business, rather than making you change your business processes to fit the software.
Time Tracking Compliance
If your goal is to eliminate errors without your payroll, I highly recommend finding a software solution that has both a payroll component and a time and attendance component. If you find this, make sure these two software pieces are connected. In other words, they allow information to flow back and forth between the two, eliminating the need for dual entry. If the payroll department is keying in hours to payroll, you have the potential of transposing numbers, or ‘fat-fingering’ the keyboard, creating invalid data. Having a system in place where your payroll and your time and attendance can pass information back and forth means you no longer have to act as a data entry specialist.
Aside from the elimination of manually entering hours, a great reason to invest in a timekeeping software is for the sake of FLSA compliance. Currently, the government is in talks of raising the salary level for white collar exempt employees. While this rule was supposed to go into effect December 1, 2016, it has been delayed until further notice. However, many businesses were preparing for the changes by re-evaluating who is truly exempt and who is not. This caused many salary employees to transition to any hourly pay rate, leaving employers with a need for time tracking software. The idea is that if an employee works more than 40 hours in a given week, they should be compensated accordingly (assuming they are classified in a way that would require this). In order to remain compliant with the Fair Labor Standards Act (FLSA), employers will need to document their employees hours and prove they do in fact pay overtime wages when they are due.
We have found that the best way to stay compliant and to prove compliance is to adopt a software that tracks your employee hours. If for example, your business is audited and you are responsible for providing documentation of employee punches and pay, you can do so very easily by pulling records from your software. This keeps you safe because it creates a sort of ‘paper trail,’ showing you did what the law required of you. Without this sort of documentation, it would be hard to prove your case in the event of an audit.
A few years back the Affordable Care Act (ACA) was introduced, and ever since then we’ve all been trying to keep up with the ever-changing regulations. If your business is considered an applicable large employer (ALE), you are responsible for extending an offer of health coverage to your full-time equivalents (FTE). If you’re unsure what any of this means, you can learn more here. This task can be daunting if you have several employees to track. A great ACA reporting software will allow you to stay compliant with regulations because it will lay out which employees should be offered coverage, eliminating the need to manually calculate this.
Each month the software shows you how many full-time employees you have, how many full-time equivalents you have, and what the total number of FTE’s comes to. You can track all your information and even detect errors through the software so you can fix them before it is time to file. Another great advantage to using software to track your ACA reporting is at the end of the year, your software provider will file your 1095 and 1094 Forms for you. With so much change happening surrounding the ACA regulations, it is good to have a software that receives continual updates with each change.
If you find yourself curious about how software can help your business stay compliant with payroll and HR, request a free, personalized demo below.