Getting payroll checks done has gotten so much easier than it used to be for small business owners. Many small business owners use software, such as QuickBooks, to calculate their payroll. Mistakes can still be made…and there are still some minefields when it comes to state and federal compliance.
If your small business has payroll, the following tips compiled by our team of payroll specialists at Bryant & Associates, P.C. in Lincoln will help you stay in compliance.
1) Business or Personal?
A great administrative assistant might want to help you in any way they can, including personal errands. But time spent having your administrative assistant pick up your dry cleaning and drug store prescriptions is not deductible as a business expense, even if it makes you more productive at work.
Be sure you separate your business payroll from personal payroll to avoid tangling with the IRS on this issue.
2) New Hire Report
It’s not every day that a small business needs to hire additional help. The Nebraska New Hire Report is easy to overlook. In Nebraska, this report is due within 20 days of your new employee’s hire date. Some payroll companies will file it for you, and some won’t, so it’s best to check so that you don’t make the common mistake of forgetting to file this report.
3) Worker’s Compensation
When you have employees, you need worker’s compensation. When you bring on your first employee, you’ll need to overcome this learning curve of figuring out what you need.
Even if you’re a veteran employer, you may have coverage holes in your worker’s compensation coverage. Do you have employees who work at home? Are you sure they are covered? In some states, employees have to be specifically named in the policy before they are covered to work at home.
Be sure you ask the right questions so there’s not a risky gap in this essential protection for employers.
There are both state and federal notices that must be posted for employees to be able to read. California is especially zealous and liberal about issuing fines (up to $17,000 per location) for employers that do not have their posters, well, posted on workplace walls.
5) Employee versus Contractor
The proper classification of a worker as a W-2 employee or a 1099 contractor has long been an area of scrutiny for the IRS. The IRS has rules as well as court cases that have established the guidelines that exist in this area.
If you classify a worker incorrectly as a contractor when they should be an employee, then you can be held liable for paying employment taxes on that contractor.
Bonuses can often be a spur of the moment thing or something that’s done at the very end of the year when we’re occupied with the busy holiday bustle. It can be easy to forget that the bonuses need to be run through payroll like all other wages so that the proper deductions and taxes can be calculated.
Contact Bryant & Associates Today at (402) 423-0404
Bryant & Associates, P.C. provides a full service payroll preparation service in Lincoln, NE. We hope that this article has given you some direction in how to avoid common payroll mistakes as well as reduce your business risk in the payroll compliance area. If you have any additional questions about your payroll or would like help with payroll preparation, contact us at (402) 423-0404 or fill out our online contact form and ask how we can help your business. We’d love to put our expertise to work for you. Let’s get started today!