Home: Message List - Event: Payroll

Event: Payroll

CommunityTeam — Tue, 24 Mar 2009 15:34:26 GMT

Having trouble running payroll? Want to set up it up for your small business but don't know where to start?

Kathleen Echeverria has provided thousands of practical payroll solutions to small businesses just like yours! Kathleen joined PayCycle, Inc. in 2004, and has eight years of experience as a Certified Payroll Professional. As director of customer support and training, Kathleen is committed to delivering excellence of service and high-quality answers to small- and medium-sized businesses. She is passionate about empowering these businesses to focus on success, while she and her team work to eliminate the headaches that so often accompany setting up and running payroll.

Kathleen will be responding to questions such as:

1) What is the most common payroll mistake made by small business employers?
2) If I haven't gotten off to a good start in payroll (not doing proper withholdings or tax filings) how can I best move forward?
3) I've made a mistake on my employee payroll for a prior period or a prior year. How can I recover?

PayCycle, founded in 1999 by René Lacerte and Martin Gates, is the leader in on-demand payroll for small businesses and for the accounting professionals who serve them. The company is headquartered in Palo Alto, California, with a second location in Schaumburg, Illinois.

The event will be on April 2 at 2:00PM ET on this thread.

How do I participate in this event?
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During the time frame of the Live Event, you can also post additional questions to the thread. The Expert is on hand and able to reply to any additional questions to the thread during the scheduled Live Event. Because the Expert may not have time to get to all questions, we also collect questions in advance of the event, so post your question for PayCycle today, and then check back on April 2 for the response. All events are archived too, so if you can't join us on April 2, you can always find this thread and read all the responses.

Re: Event Apr. 2: Payroll

CommunityTeam — Thu, 02 Apr 2009 18:52:32 GMT

Kathleen - thanks so much for taking the time to share your expertise with SBOC.

Community for more information about managing payroll, please visit PayCycle's website at: http://www.paycycle.com.

Re: Event Apr. 2: Payroll

Kathleen_Pay — Thu, 02 Apr 2009 19:01:06 GMT

My general advice to employers trying to navigate the various laws and regulations regarding payroll for their employees is not to wait. Don't put off payroll decisions, thinking you'll deal with them later. This is going to take money from your pocket and put it in IRS coffers. Even if your payroll is in a bit of a messy state today, it is still better to handle this mess now, before it grows larger. Getting on the right track is part of what employers should do to ensure they'll have a healthy, thriving business in the future. Payroll providers exist to provide this service to employers, because unlike us, you're in the business of doing what you do. You're not in business to do payroll. Partnering with the right company to provide this assistance will be money well-spent.

I'll also answer the sample questions posted in the event description, as these are common ones:

1) What is the most common mistake made by small business employers?

The most common mistake is putting off doing the administrative things required to get off on the right foot. Employers are so anxious to get started, and to pay employees, that they neglect their employer responsibilities, feeling they can do them later. Common things left not done are:

Registration for an employer identification number
Employee tax withholdings from paychecks
Registration with EFTPS to make federal tax payments. Many employers may not know that the IRS no longer sends out coupon books. They're making it tougher to make manual payments, as they want everyone to be electronic!
Tax payments and filings on the proper schedule
Generally, understanding the obligations and requirements of being an employer

2) If I haven't gotten off to a good start in payroll (not doing proper withholdings or tax filings) how can I best move forward?

There are a few general things to do to start with:

Firstly, get your resources in order. Publication 15, also known as Circular E, is an annual must have for employers who are doing payroll themselves, and it is available on the IRS website. It's not a fun read, but it's a necessary one. Don't be intimidated by the size of this resource: most of the good stuff employers need to know is condensed to 20 pages or so; the rest of the pages are tax tables, which are good for reference but not necessary to read straight through. Also, call the state in which you are doing business to understand your state responsibilities as an employer. Most states also have a website of resources.
Secondly, don't be afraid to get organized. You may discover that you've paid taxes late or not at all, but this shouldn't stop you from catching up and doing filings properly. The IRS will allow you to make a payment plan, if need be, to get caught up on the necessary taxes.
If you haven't withheld properly from employees, then you can do a couple of things: you can either have a conversation with your employees and make a plan to get them caught up with subsequent paychecks, or you can do what is called a "gross-up" to add more gross pay to cover taxes based on the net amounts you've paid. In the latter situation, the employer ends up actually covering these taxes, but this gets you on track moving forward.

3) I've made a mistake on my employee payroll for a prior period or a prior year. How can I recover?

As soon as you've made a mistake, it is important to act. In many cases, you will not be charged penalties, even if you owe more tax, if you correct your payroll tax filings as soon as you discover the error. The IRS is making it easier to file amendments with its new 941-X amendment form. It is much more straightforward to use than previous years' forms. In general, thinking about the mistake made, do the following audit:

Were taxes deducted from the employee deducted improperly? If so, you must refund or assess the taxes due to the employee immediately, before correcting with the IRS and/or the state agency.
What calendar quarters were impacted by the mistake?
Once you've identified the dates involved, what forms were filed for those periods? Be sure to think about both state and federal forms, as well as any annual forms you filed. This is the set of forms that needs to be corrected. The IRS has specific procedures, forms, and instructions on their website. For individual state corrections, call the state directly. Many states will just say "Produce a correct form and fax it to us" and in this way, you can easily recover from your mistake.
Do you owe more taxes or happily, are you owed a refund? If you owe more taxes and cannot pay them right away, work out a payment plan with the agencies to pay the extra tax.

Re: Event Apr. 2: Payroll

Kathleen_Pay — Thu, 02 Apr 2009 18:54:34 GMT

Security is an important issue to surface with your online payroll provider. Assuming they've put in place the appropriate safeguards, your information is more secure online than it would be in files in your office or residing on your own computer. Think of it this way, with paper, your filing cabinet is the only barrier between the information and someone who wants to access it. With software, whatever security precautions you've taken with your computer are the only barrier. With an online service, you're paying a company to securely store your information and it is their business to keep it safe. Safeguards to check for include: password protection, advanced encryption technology, 128-bit Secure Socket Layers, firewalls, heavily guarded servers and intrusion-detection devices. You'd also want to be sure your provider has been certified by industry watchdogs, like VeriSign TRUSTe, and the Online Better Business Bureau®.

Re: Event Apr. 2: Payroll

gseevers — Thu, 02 Apr 2009 18:41:10 GMT

should I be concerned about security by using an online payroll service? what protections are in place to safegaurd my companies information?

Re: Event Apr. 2: Payroll

Kathleen_Pay — Thu, 02 Apr 2009 18:48:29 GMT

Yes, for the most part, worker's compensation insurance is required for all businesses with employees. PayCycle has partnered with The Hartford to offer Worker's Compensation insurance services. Our payroll customers can request a quote, and if eligible for insurance, get pay-as-you- go insurance through us as a result of this partnership. Additional resources related to worker's compensation laws in general can be obtained from this national website: http://www.workerscompensationinsurance.com, and I recommend doing your research thoroughly, as laws vary widely by state.

Re: Event Apr. 2: Payroll

Kathleen_Pay — Thu, 02 Apr 2009 18:44:58 GMT

Great question! We founded our business ten years ago and we have seen a big movement in recent years toward doing and transacting business online. This, of course, has been a boon for our business, since we've been online since the start.

We're also seeing small businesses gravitate toward offering paperless payroll: direct deposit and online tax payment and form filing as a way of more conveniently operating their businesses. Small business owners are concerned with convenience -- they have so many tasks to complete during the day associated with running their businesses, that they may want to do payroll in the evenings or on weekends, from home or from the office. Payroll services need to be able to keep pace with these needs, and help employers to deal with payroll in between the many distractions of their day and during "off-hours".

A very recent trend, according to some research PayCycle conducted, shows that 30% fewer small business employers are worrying a lot about the economy in recent days, but that also corresponds with a 48% lack of confidence in the recent stimulus package. The research can be viewed in more detail here: http://www.prweb.com/releases/2009/02/prweb1950124.htm. It remains to be seen how this will play out in payroll decision making and management, but a segment of employers are definitely postponing both hiring and termination decisions while they wait to see how this will ultimately all shake out.

Re: Event Apr. 2: Payroll

gseevers — Thu, 02 Apr 2009 18:33:49 GMT

Is worker's compensation insurance required for all businesses and does your service offer it?

Re: Event Apr. 2: Payroll

Kathleen_Pay — Thu, 02 Apr 2009 18:34:01 GMT

Tax time is definitely a scary time for many businesses. PayCycle completely manages tax time for employers and we top that off with a tax guarantee, where we guarantee for employers that our tax calculations and forms are correct. PayCycle keeps employers on track for important payroll deadlines with tax and form filing email reminders and a To Do list, which shows the deadlines for critical tasks.

An important idea for businesses doing payroll to understand is that tax time is not a one time a year event. Taxes are due continuously throughout the year, based on payroll activity, and payroll tax forms are due for many businesses on either a monthly and/or quarterly basis. This is in addition to the annual forms (Form W-2, 1099, 940) that most employers are familiar with.

Re: Event Apr. 2: Payroll

Kathleen_Pay — Thu, 02 Apr 2009 18:29:53 GMT

This is a good question and this is an important thing to get right. The penalties are steep if an employee is misclassified as an independent contractor. IRS Publication 15 offers advice to employers on determining whether a worker is an employee (and thusly subject to tax withholding) or an independent contractor. The link to this is here: http://www.irs.gov/pub/irs-pdf/p15.pdf -- check out page 9 in particular. If after checking this out, you're still confused about the proper status of a worker, you can ask the IRS to review the facts and give you an official ruling on worker status. You are able to request this by completing Form SS-8, which is available here: http://www.irs.gov/pub/irs-pdf/fss8.pdf.

In general terms, if you can control the work--the time, the place, the manner in which it is done, then the worker is an employee. Typically, people in business for themselves, like doctors and lawyers, are not employees and may be considered contractors.