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34 Replies Latest reply: Apr 2, 2009 3:01 PM by Kathleen_Pay RSS

Event:   Payroll

CommunityTeam Novice
Currently Being Moderated
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 Novice
    Currently Being Moderated
    Do you have questions on payroll? Paycycle will be here on April 2 to answer your questions. We are collecting questions in advance, simply login and hit reply with your question.
    • Re: Event Apr. 2:   Payroll
      gseevers Newbie
      Currently Being Moderated
      First, I would like to understand the changes from the federal stimulus package on payroll. I have heard a lot of rumors and I want to make sure I am covered. Second, I would like to understand better the benefits of online payroll.
      • Re: Event Apr. 2:   Payroll
        Kathleen_Pay Newbie
        Currently Being Moderated

        There are two primary components to the plan:

         


        The plan includes a tax credit for employees called "Making Work Pay". The IRS modified the withholding tables to lower income tax calculations for employees who qualify. There won't be any retroactive tax calculations. Instead, the IRS adjusted withholding for the rest of 2009 to give each tax payer their $400 or $800 credit. If you're processing payroll on your own, you should be sure to check out the IRS website for these updated tax tables, so you can begin putting more hard-earned dollars in your employees' pockets.

         


        The plan also includes tax credits for employers based on COBRA Health Insurance premiums. The IRS has modified quarterly Form 941 and annual Form 944 to report the Cobra credit. Employers who provide Cobra Premium Assistance can request a refund of the tax credit or apply the credit to future tax deposits. You will need to retain the appropriate documentation to justify the credits claimed and you will also need to consult their benefit and tax advisors to confirm eligibility, timing, and other qualifying details. I'm not sure if you're using a payroll provider or not, but if so, you're most likely on track--payroll companies have been working very hard to implement the changes for their customers. Because PayCycle is an online provider, it was easy to implement these changes in our customer's accounts even ahead of the deadline. (One of the benefits of using an online provider, in partial answer to your second question) You will want to be sure if you use a software provider that you've updated your software after April 1, which is when the changes were effective. PayCycle has also posted a free online recorded webinar that can be viewed at any time regarding this topic. It is available here: https://www1.gotomeeting.com/register/845818179.

        Further benefits of online payroll include convenient 24 x 7 access to your payroll account and records, the security of your payroll information (no paper floating insecurely around your office), and the ability to securely share that access with others, like your accountant or your office or payroll manager. It's also easy. Most payroll tasks can be completed with a mouse click or two.
        • Re: Event Apr. 2:   Payroll
          gseevers Newbie
          Currently Being Moderated

          Is worker's compensation insurance required for all businesses and does your service offer it?
          • Re: Event Apr. 2:   Payroll
            Kathleen_Pay Newbie
            Currently Being Moderated
            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
          gseevers Newbie
          Currently Being Moderated

          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 Newbie
            Currently Being Moderated
            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
    franklinplace Newbie
    Currently Being Moderated
    I have a handful of employees and I am printing checks. Am I the only one not doing direct deposit? Aside from employee convenience, what benefits are there to doing direct deposit?
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated
      You're definitely not the only employer who doesn't offer direct deposit, however, it is becoming an increasingly popular and expected employee benefit. Employee convenience is the primary benefit, but direct deposit also offers some conveniences for employers too. Employers enjoy that direct deposit makes their bank account reconciliation a bit easier (since they aren't waiting to cash checks, etc). They like not having to take the time to write or generate checks. And, in some cases, if the employer is using an online payroll service, the employees will be able to access their paystubs online and the employer's payroll is then virtually paperless and hassle-free.
  • Re: Event Apr. 2:   Payroll
    Howard Novice
    Currently Being Moderated

    I don't have any issues with managing payroll for my employees, but I do have challenges tracking my one-time and reoccuring invoices that I pay to different food suppliers. What advice do you have on managing these types of bills?
  • Re: Event Apr. 2:   Payroll
    abhitam Newbie
    Currently Being Moderated
    What questions should I ask while selecting a payroll vendor? What are the advantages of selecting an online provider over traditional phone/fax based providers?
    • Re: Event Apr. 2:   Payroll
      justobitome1 Newbie
      Currently Being Moderated
      Do employees have the ability to log in and change any personal information or does it have to go through management?
      • Re: Event Apr. 2:   Payroll
        Kathleen_Pay Newbie
        Currently Being Moderated
        Employees do not have the ability to log in and make changes. PayCycle's employee access website: www.paycheckrecords.com, currently allows employees to view paystubs but doesn't allow for any kind of updates. We are thinking about ways to enhance this site, while still allowing the employer to ultimately be in control of the information. Stay tuned for these future developments!
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated
      Great question! To be perfectly blunt: cost is a big factor for employers today. The most important thing to understand is whether you're getting the benefits and features you need, at a cost that makes sense for your business. Don't be overwhelmed by long lists of features. What most small business employers need is the ability to pay employees accurately by check or direct deposit, a way to pay and file taxes securely, electronically (so you don't have to make trips to the bank and post office) and on time, and access to payroll records and information all the time, so you can work on payroll at times that are most convenient for you. If you have other needs, make sure those are also included. Having a list of your needs ahead of time is a big time saver.

      Most small businesses also need strong, friendly, human-based support services from their payroll companies. A payroll company should provide multiple, easy-to-find methods of contacting them and have lots of available support hours. The bottom line: when you have a payroll emergency, the last thing you want to do is search through someone's online database of FAQ's instead of reaching a real, concerned human being. You should be able to get these services, with expert support included in the cost, for a flat, understandable fee. Check in particular for hidden charges related to checks, direct deposits, extra payroll runs, and tax form filing services.
  • Re: Event Apr. 2:   Payroll
    justobitome1 Newbie
    Currently Being Moderated
    What are the different pay cycles? Why should my company chose weekly vs. bi-weekly? And why?

    Are the monthly costs higher based on the payperiod a company choses?
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated

      There are different cycles. Most states require that you pay an employee at least monthly. You can also pay twice a month (semi-monthly), every other week (bi-weekly) or every week (weekly). The most common pay frequency is bi-weekly, however, some industries, like the construction and restaurant business most commonly pay weekly.

       

      Paying less frequently makes it so you aren't dealing with payroll quite as often, but it may not work well for your employees.

      Many payroll companies do charge by the payroll - PayCycle does NOT do that (we charge a flat monthly fee) - but most do. So how frequently you pay may impact your cost of doing business, as well.
  • Re: Event Apr. 2:   Payroll
    soapinmama Newbie
    Currently Being Moderated
    Does your system calculate sick time, personal time and vacation balances? If so, how is this calculated and how often is the process audited?
    • Re: Event Apr. 2:   Payroll
      soapinmama Newbie
      Currently Being Moderated
      With your system, does it also have a time and attendance tracking?
      • Re: Event Apr. 2:   Payroll
        soapinmama Newbie
        Currently Being Moderated
        Can you export the yearly information into other systems such as Quicken or TurboTax?
        • Re: Event Apr. 2:   Payroll
          soapinmama Newbie
          Currently Being Moderated
          Having remote employees in various states ... does your system allow for this?
          • Re: Event Apr. 2:   Payroll
            Kathleen_Pay Newbie
            Currently Being Moderated
            Multi-state payroll is a big challenge for employers who have to contend with it. Understanding that this is a big need for our small business customers, PayCycle does indeed allow for employees to live in states other than the primary work state. We call these "commuter employees". We also allow for an employer to have multiple work locations in different states and we handle the multistate calculations, tax payment reminders and forms for employers in both of these situations.
        • Re: Event Apr. 2:   Payroll
          Kathleen_Pay Newbie
          Currently Being Moderated
          PayCycle does have an exporting feature. We currently export to most major accounting softwares, including Quicken, QuickBooks, QuickBooks for Mac, QuickBooks Online, Microsoft Money, Peachtree, and a few others. In most cases, you can export your payroll information with a click or two of the mouse. The accountants for our small business customers especially like this feature, because it means that the accounting software and the PayCycle payroll account records match and this eliminates the need for big year-end reconciliation tasks between the two systems.
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated
      Yes, PayCycle calculates vacation, sick and personal time balances for customers. We allow customers to set up policies based on hours worked, anniversary date, or calendar year plans. Once these are set up, PayCycle keeps track of the balances being earned and the hours used/taken for the employee.

      We provide the balances to employers online, in a report, so it is easy to keep track of where your employees are. We also warn if an employer is granting vacation or sick time hours to an employee who doesn't have a sufficient balance available (however, we do allow negative balances -- this is at employer discretion).

      This easy way of tracking vacation and sick as a part of payroll takes out much of the guesswork and discrepancies that arise through other tracking methods.
  • Re: Event Apr. 2:   Payroll
    CommunityTeam Novice
    Currently Being Moderated
    Community, please join me in welcoming Kathleen Echeverria from Paycycle.
  • Re: Event Apr. 2:   Payroll
    gseevers Newbie
    Currently Being Moderated

    I am curious about the distinction between a contractor and employer?
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated
      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.
  • Re: Event Apr. 2:   Payroll
    CommunityTeam Novice
    Currently Being Moderated
    Don't forget to refresh your screen so you can see Kathleen's latest response. Have a payroll question? Simply login and ask a question now. Questions will be put in a queue. Kathleen may not be able to get to all questions, but she'll try.
  • Re: Event Apr. 2:   Payroll
    antiques4me Newbie
    Currently Being Moderated

    Half way through the year, I switched from writing checks to an online solution. I'm not looking forward to tax time. Does your solution offer capabilities to easily manage federal and state tax?
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated
      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
    Bluesuit Apprentice
    Currently Being Moderated

    What trends do you see in how businesses are managing payroll these days?
    • Re: Event Apr. 2:   Payroll
      Kathleen_Pay Newbie
      Currently Being Moderated
      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
    CommunityTeam Novice
    Currently Being Moderated
    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 Newbie
    Currently Being Moderated

    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.

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