Misclassification of Workers
The preceding years have witnessed a rise in the audits monitored by regulators of federal and state wage. One of the biggest mistakes that you should avoid at all costs happens to be misclassifying workers. Since the costs of paying, payroll taxes and providing employee benefits can become substantial, many business owners think of classifying their workers as independent contractors instead of employees.
Bad idea! Legally, you can’t call an employee an independent contractor because that classification is influenced by the extent of control you exert over a worker. If as their employer, you can tell them when and how they complete a job, then they are not an independent contractor. Forming an agreement with the latter removes any chances of employer-employee relationships from the equation.
Omitting or Overlooking Gifts/Bonuses
When you reward an employee with a gift card or holiday bonus in cash, you have to include it when doing your taxes! The W-2 that you will be filing at the end of the year must also include the fair value of such prize along with the employee’s wages. If you overlook this amount, you could technically be called out on paying your employees under the table. Don’t guess, do your homework.
Data Security
Whether you are a small business or a large one, the security standards must be maintained when it comes to keeping the payroll records confidential! If you are having your payroll outsourced and records kept in physical form, keep those records locked with a designated username and password for yourself. Leakage of such sensitive information can result in various kinds of problems, from identity theft to data breaches!
Matters of Employee Travel
For the most part, employee travel won’t be considered taxable income. However, things are different for employees who have to leave the work site for more than a year. Keep an eye out for any long-term travel assignments as they may also be a part of that employee’s income.
Hiring the right Company
This is very important! When you hire an HR firm to do your payroll, it is a good idea to hire one that you know is trusted. After all, you are going to have that firm calculate the withholding amounts and pay taxes to the U.S. Treasury and IRS.
Choosing the right company with experience will help you avoid payroll pitfalls and give you assurance the job is being done properly. That is why so many companies prefer pinnaclesolveshr as their human resource outsourcing partner. We offer management of payroll, calculation of payroll tax withholding, and tax reporting all as part of a comprehensive HR package.
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