Okay, it is true that the term payroll compliance, is not exactly what you would describe as a hoot. However, in case you have ever faced a tax penalty, missed some deadline to file something, or an employee complained about his/her cheque, you have already seen how crucial it is.
Although the selling and achieving revenues are the main aspects of good business, there is more to what running a successful business entails. Behind the scenes, it’s the systems you build and especially around compliance, that keep your company running smoothly. And there are hardly systems that are more important than payroll.
However, what is payroll compliance? Why, then, should the growing businesses care? We need to break it down.
Payroll Compliance
Simply put, payroll compliance is to ensure you are thorough in ensuring that your payroll is accurate, it is paid out on time and within all the local, state and federal laws. It encompasses all including classifying workers properly, determining the right amount of tax to be paid, to be filled with the appropriate form, and to be abreast with the evolving labor laws.
The following are only a few examples of payroll compliance:
- Accurate employee classification (employee vs. contractor)
- Laws which govern minimum wages and overtime Minimum wage and overtime laws
- Payroll taxed deductions and submissions
- Benefits reporting
- On time provision of pay stubs and final paychecks
- Reporting and recordkeeping
And what is more, the kicker is real. Not only do the rules tend to differ state to state, but they are apt to be changed more frequently than you would suppose.
Why Non-Compliance is A Silent Business Killer?
Failure to comply may lead to fines, penalties, lawsuits as well as closure of businesses. However, besides the financial risk there is a damage of ranking and trust of employees. Nobody would like to have a job in a company that does not pay the employees properly and involves taxes in an irresponsible way.
Small business and startups are targets particularly. Many are working with thin staffs and scant knowledge of HR, so something is bound to fall through the cracks. Regrettably, being new to this does not help at all and is not awarded with passes by regulators.
How Compliance Services of Payroll Can Help?
It is risky trying to manage payroll compliance manually especially as your business expands. That’s why many companies are turning to payroll compliance services that take the guesswork out of the process.
Then what do those services exactly do?
- Automate Payroll Taxes: Withhold the correct amounts, file on time, and generate tax forms (like W-2s and 1099s).
- Keep Up with the Law: Pay attention to new changes made to the regulations so that you do not have to.
- Avoid Costly Misclassification: Make sure that you do not harm yourself with expensive mistakes when categorizing employees and contractors.
- Support Multi-State and Remote Teams: Manage the payroll regulations across states.
- Set up Audit-Ready Records: Save the payroll in a secure place in case of an audit or a review.
This support enables you to concentrate on growth because you know your back office is complaint and efficient.
Investment in Payroll Compliance System
Are you still on payrolls the hard way or still on un-updated software? That may be okay if you’re a one-person operation. But once you start hiring employees and especially across state lines or internationally, it’s time to invest in better systems.
These are some of the pointers that you are in need:
- You’re not sure if you’re classifying workers correctly
- You already failed to file your taxes in time
- You are going to new states or countries
- You have been fined or cautioned against breaking the labor laws
- You are not doing payroll preparation in a matter of few hours per week
If any of these sound familiar, using payroll compliance services could save you time, money, and future stress.
Is Compliance Just Legal?
This is the reality, it is not only mandatory to be compliant to avoid penalty fines, but also to come up with a reputable and professional business.
Your employees rest assured that they will receive their fair payment in an on time manner. Investors need to be sure that your company is on a legal ground. And partners, vendors, and clients are to deal with companies that are clear and well-organized.
Having payroll correct would give the message that it is not only about growth but it is a company to reckon with.
Final Thoughts
The rule of compliance may lack style but among the business heroes, it remains silent. The worst thing which you can do is neglect the compliance of the payroll in case you are really serious about creating a strong foundation of your company.
Instead of trying to juggle it all yourself, look into trusted compliance services of payroll that can handle the heavy lifting. Not only will you insure your business against risk, you also won really be able to sleep at night, not having to worry that you are doing it right!
Since, in the long term, payroll correctness is bigger than checks, it is credibility, compliance and confidence.
Also Read-The Role Of Payroll Compliance In Business Success
