Do I Need a Payroll Company?

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While on one hand doing payroll in house may seem like a great way to cut costs and keep things close to the company, the harsh reality is that payroll is an extraordinarily complex process that is regulated by fairly stringent legislation.

Employer Solutions Plus wants to help you navigate the pros and cons and aide you in making an informed decision on how to manage your company’s payroll processing.

Risk vs Reward:

Short term savings could end up costing you should there be any issues with the taxation of wages. The IRS regulations around payroll are complex, ever changing, and mistakes are not easily reversed. Not only do these mistakes cost you the value of the mistake (for instance, $1000 in additional wages) but they also result in penalties, fines and should they be large enough may require you to hire counsel and/or an accountant to sort things through.

So let’s assume that you are a CPA who happens to have the knowledge of what it takes to overcome this first challenge. That’s fantastic – on the road to saving some cash. That is if you’re willing to take on the myriad of responsibilities that come with payroll. It is not just writing checks and managing taxes. Payroll administration is not that simple. It often also includes the following processes:

  • State-level Summary Filings
  • Quarterly Financial Reporting
  • Issuing Annual W-2s
  • Processing W-9s
  • Paying out withholdings to government agencies
  • Managing Employee Contributions to:
    • Pensions
    • IRAs
    • 401ks
    • FSAs/HSAs
  • Supplemental Insurance Policies
  • Managing unemployment assessments
  • Handling state disability and family leave assessments
  • Tracking hiring/firing and notifying the government
  • Handling Administrative Wage Garnishments

While this list is long, it’s also demanding, meaning that the individual who handles payroll will have a full time (if not full time plus) job. When you consider the risks of in-house payroll coupled with the cost of bringing on 1-2 employees to manage it for multiple employees, we would wager that it no longer seems like an appealing solution.

Employer Solutions Plus can help you find a payroll processing solution that fits your business needs, size and budget. Contact us today to find out how we can get you on the fast track to better processing!

What is Back Pay?

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Back pay is utilized when there is a discrepancy with an employee’s compensation. The actual amount is referred to as back pay – the sum of what the employee should have been paid, less the amount paid out. There are several instances where an employee may be eligible for back pay.

  1. Retroactive Increase. Perhaps an employee had been performing tasks above and beyond their normal job requirements to prove they were ready to take on more responsibility. The successful completion of these tasks resulted in a promotion, at which point the employer provided the employee with back pay at the new rate for the time that he or she had truly been in the new role.
  1. Terminations & Lay Offs. If an employee was fired or laid off and did not receive compensation they are owed and/or were fired under false pretenses, in certain circumstances they are eligible to pursue back pay. If approved in court, the company will be ordered to pay back pay and possibly damages and court costs as well.
  1. Incentives. Many start-ups will leverage back pay as an incentive for employees. Since these businesses generally are working with a fixed amount of capital yet seeking talent at the upper echelon of the spectrum, they need to get creative with salaries. By promising back pay under certain pretenses, the employer may get a higher quality candidate who is intimately bound to the financial success of the company. It results in a mutual benefit should the company see success.
  1. Error in Payroll Processing.
    If there was a clerical error in processing payroll that resulted in an employee receiving less than they should have, the company will be required to provide that individual with back pay for the time the issue occurred.

We love to share tidbits about the business world – covering topics that may or may not present themselves in your workplace is something that we feel is valuable. We hope you do too! Stay tuned in to our blog for other informative pieces and check out our archive to see topics we have covered in the past!

Have a topic you want covered? Shoot us a note!

What is the Average Cost of a Payroll Company?

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So, you’ve realized that in-house payroll processing requires you to hire an onsite payroll staff, buy and maintain payroll software, oversee the payroll department and ensure your business stays up to date with the ever-changing details surrounding payroll compliance. Ouch! How much is it to “hand that headache off to someone else?”

If you’re wondering what the average cost of a payroll company is, unfortunately there is no easy answer. It’s going to depend on a lot of details specific to your company. To give you an idea, here is how that number is often determined by a service provider:

Basic Costs

Basic services of payroll usually include calculating payroll and tax obligations for each employee, printing checks, depositing into employees’ accounts, project management and reporting.

The frequency of payroll each month and the number of employees is the largest factor in determining the basic cost of services.  Paychecks can be issued on a weekly, bi-weekly, or monthly basis and weekly payroll distribution will often cost more than monthly (because the payroll tasks outlined above need to be performed 4-5 times per month versus 1). You can pay as little as $25/month for basic costs if you have a small number of employees and as much as $150.00/month if you have a larger company, depending on your basic needs and frequency.

Tax filing assistance is usually offered at little to no charge at the year’s end, too.

Delivery Method & Additional Costs

The delivery method each pay cycle also plays a significant role in cost, especially if you have a lot of employees. Will paychecks be mailed to you at the end of each pay cycle, to distribute on site? Or will you need each check mailed to each individual employee? If your service provider has a special program that permits you to print and distribute checks internally, you can eliminate postage and handling costs all together.

Also, adding new employees may come with administrative fees per employee, or put your business into a new bracket for basic services. Basic services usually cover a certain number of employees, as there is a big difference between processing payroll for 5 employees each month and processing 25 employees each month.

Keep in mind that a payroll service provider will be an expert in payroll and will likely get the job done a lot more effectively and efficiently than you can each pay period. If you only have one employee, outsourcing could still be the better option. Getting fined for a missed payment or reporting error could end up costing more than the fees incurred by hiring someone else to handle it – and in most instances the payroll company will take full responsibility for errors!

Employer Solutions Plus represents a number of payroll companies in order to find the perfect fit for each of our clients. Call us at 727-698-6207 to learn more.

Payroll Software or Payroll Company – Which One Does My Business Need?

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Do you remember the days of only having to cut one check per month to yourself as the business owner? As your business grows, so does the number of employees which makes payroll (and other employee management tasks) difficult to stay on top of.

It’s at this time you begin to consider your options for operating more effectively and efficiently. Do I need payroll software or a payroll company?

Here are some things to consider with each:

Payroll Software

  • Payroll software helps ensure your employees are paid accurately and on time through automating the payroll process.
  • Reputable software is continually in the development/upgrade phase with new functionality and enhancements being added periodically; they’ll also keep up with compliance surrounding payroll legislation. This means that you won’t have to buy new software each time a new law is passed or a certain method is required for reporting.
  • You can stop writing paper checks with payroll software; payroll can be deposited directly into each employee’s personal account.
  • Each business has specific needs, which is why there are so many different types of payroll products available. There’s no “one size fits all” software.
  • Payroll software is often an affordable solution for limiting the amount of administration and operating more efficiently in the workplace. Some software has a onetime cost, whereas others are provided on annual or monthly subscriptions. Some charge per employee.
  • Software doesn’t “do it all.” You will still need an administrator to enter information and oversee payroll. Depending on the complexity of the software, extensive training may be required to use it.
  • Smaller firms with a stable and salaried staff and minimal tax obligations may be better off processing payroll on their own with the help of software (vs. the option of hiring a payroll service provider). But, keep in mind that a payroll error and IRS penalty can grossly affect your bottom line. How likely are you to make an error or overlook something?

Payroll Company

  • For large companies especially, outsourcing payroll to a payroll service provider is anattractive and valuable alternative to in-house processing.
    • A payroll company’s basic services include calculating payroll and tax obligations for each employee, printing and delivering checks, and providing management reports. Paychecks can be issued on a weekly, bi-weekly, monthly, or even yearly payroll basis.
    • Using a payroll service provider can be especially helpful if you have to pay payroll taxes for multiple states – let someone else handle it!
    • Added benefits of utilizing a payroll company can include services such as automatic check signatures, issuing W-2s, and the direct deposit of checks. Not everything is included in the “basic costs.”
    • Filing state and federal payroll taxes for your business is typically offered at little or no cost. However, they likely will not calculate your local or city taxes – inquire about this before beginning any new relationship so that nothing falls through the cracks.
    • Each pay period, payroll data has to be “called in” to the service provider. This can be done over the telephone or internet through online payroll reporting.

Do you know which one is right for your company yet? As we said earlier, there truly is no “one size fits all” approach, which is why Employer Solutions Plus represents vendors in multiple categories.

When comparing the cost of each, you need to look beyond the initial price tag and ask yourself how much time you will spend managing the payroll process each month. As you know, time is money and if payroll is pulling you away from your revenue generating activities week after week it may cost you a lot more than you think to manage in-house!

Contact our team to discover which option is best for your particular business.

HR Salaries Are On The Rise

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Here’s some great news for HR professionals: HR Salaries are on the rise!

While HR professionals’ salaries depend heavily on their employers and locations, as well as their education and certifications, we’re seeing an overall increase within the industry for the second year in a row. Average base pay will increase 3 percent in 2014 according to the seventh annual Compensation Planning Survey by Buck Consultants.

Numbers vary though. Earlier in the year (June of 2013) we shared a blog titled “How Much Does a New HR Manager Cost?” Salary.com stated that the median expected salary for a typical Human Resources Manager in the United States was $88,408. That number is now $88,960 – a smaller increase than what’s predicted in the Compensation Planning Survey, but an increase nonetheless.

If you’re an employer you may be trying to justify the expense of a fulltime HR professional, or an internal HR department. Not every small to medium sized business has the resources to support their own group of HR professionals at $80,000+/year, especially since these positions fall outside of the company’s core competences.

Even large companies may not be able to justify hiring an internal HR team; the amount of employee management necessary within the workplace may be tremendous, requiring a number of professionals to manage payroll, HR, administration, benefits and more.

If you’re currently indecisive about whether to outsource HR help or recruit an internal team, we encourage you to contact Employer Solutions Plus. Our team is skilled at designing cost-effective packages for accomplishing everything you need surrounding employee management. You don’t necessarily need to choose an internal or external department – you could utilize a little bit of both and only hire vendors within a specific area such as benefits or payroll. Each company’s situation is unique and requires a unique solution.

Click here to contact our team.

 

Restaurant Industry: 2014 Minimum Wage Increases

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If you’re within the restaurant or food services industry, you may utilize a handful of minimum wage workers. Were you aware of the various state changes, effective January 1, 2014? The following states are experiencing an increase; don’t forget to update your payroll!

 

STATE CURRENT MINIMUM WAGE NEW MININUM WAGE EFFECTIVE JAN 1, 2014
Arizona $7.80/Hour $7.90/Hour
Connecticut $8.25/Hour $8.70/Hour
Florida $7.79/Hour $7.93/Hour
Missouri $7.35/Hour $7.50/Hour
Montana $7.80/Hour $7.90/Hour
New Jersey $7.25/Hour $8.25/Hour
Ohio $7.85/Hour $7.95/Hour (for restaurants with annual gross receipts in excess of $292,000)
Oregon $8.95/Hour $9.10/Hour
Rhode Island $7.75/Hour $8.00/Hour
Vermont $8.60/Hour $8.73/Hour
Washington $9.19/Hour $9.32/Hour

 

Also, effective July 1, 2014: California will experience a state increase to $9.00/Hour. The current minimum wage is $8.00/Hour.

For additional restaurant resources, visit our “HR Solutions for the Restaurant Industry” section. Contact our team at Employer Solutions Plus if you have any questions: 727-698-6207.

What is Online Payroll Reporting?

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Say goodbye to expensive in-house printing, the never-ending piles of reports on the 15th and 30th, and your ongoing need for additional storage space within the office. This day in age, with all of the technological resources available, there’s no reason to not have anytime online access to everything you need surrounding payroll.

The only problem with technology is that convenience often comes with a price. Online payroll reporting programs are not free – As a small business owner, how can you possibly reap the payroll reporting benefits and programs the much larger companies enjoy? By relying on a valuable payroll partner of course!

When you outsource your company’s payroll tasks to a payroll company, or a PEO, you not only gain their expertise, but also gain their technology.

Online payroll reporting will offer most if not all of the following benefits (depending on the program):

  • 24/7 Access: Your files are available 24 hours a day, 7 days a week. Out of office or on the go? No problem! Check in at any time.
  • Multiple User Access: Just because a payroll company or PEO is managing your payroll, doesn’t mean that you can’t have direct access to all payroll information. Online payroll systems grant multiple users access, whether it’s you, or your accountant, that is in need of more information.
  • Taxes: Federal, State and Local Taxes are calculated, paid and filed for you.
  • Easy set-up for direct deposit and ability to print checks in-house.
  • Support: Online payroll reporting is relatively simple and self-explanatory, but when you work with a professional payroll company or PEO, help is never more than a phone call or click away.
  • Quick and easy access to past files. No need to dig through the basement or closet for 2008’s payroll information. Just select the tax year and click to access records!
  • Great search functionality: Look up an individual employee’s information by name or employee number.

Are you interested in a more efficient and effective way of managing payroll? Please contact us to learn more about the payroll administration solutions available at Employer Solutions Plus.

5 Common Payroll Mistakes

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Many business owners see payroll as one nasty task … why? Because one tiny mistake can quickly become a costly error if you are not in compliance or you’ve missed a state or federal filing deadline.

Here are 5 common payroll mistakes that business owners face:

  1. Deadlines. Do you know all of the deadlines for federal, state, county and municipal tax deposits? They don’t all often fall on the same exact date each year. One of the most common payroll tax mistakes is missing deadlines!
  2. W-2 Errors.W-2’s are long, intimidating forms. Do you know what goes in each box? Do you know which boxes need to be completed and which ones you’re free to “skip?”
  3. Having Only One Payroll Professional. You may believe that having one dedicated fulltime payroll professional in the office is the much more attractive solution versus outsourcing. But, do you have a backup employee on-site that is adequately trained in the event that something happens to your current payroll manager? What if she or he falls ill, needs to take a vacation or unexpectedly leaves your Company? Payroll service providers keep payroll services in motion, even when your employees are off-site or away.
  4. Filing. Where does your office keep time sheets, cancelled checks, W-2s, specific employee records and more? If an IRS auditor asked you to pull up payroll data from 5 years ago, would you be able to retrieve it?
  5. Misclassification. Your company may be in the growth phase, and it’s often within this phase that we see a growing number of independent contractors. But are they really all IC’s? If they are misclassified and meant to be filed as employees, businesses can be held liable for employment taxes following an IRS audit. (For more information on misclassification, join us next week. We will be diving deeper into misclassification in our next blog)

Leaving payroll to the professionals will eliminate all of the above-mentioned payroll mistakes, and will deliver peace of mind surrounding payroll tax compliance. And, it’s not too late to consider payroll outsourcing for 2013. In fact, many payroll service providers provide a flexible integration process, regardless of what time of year it is.

Whether your company decides to engage in a payroll-only solution or a full-suite administrative outsourcing solution such as a Professional Employer Organization, your company is sure to save time, money, and headaches.

Employer Solutions Plus provides its clients with a variety of payroll administration solutions. To learn more, simply contact us.

Selecting a Payroll Service Provider

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The time has come. You want to avoid tax penalties that can easily affect your bottom line, and stick to what you do best, which is not payroll! Selecting a payroll service provider will streamline the payroll process and significantly limit your personal investment of time and effort toward administrative tasks.

But where does one begin? There are countless options for outsourcing when it comes to payroll. Employer Solutions Plus recommends the following when selecting a service provider.

First, make a list of payroll-related services you believe your company needs. Below is a list of examples:

  • Calculation of payroll and tax obligations for each employee (how many employees do you have?)
  • Direct deposit
  • Automatic check signatures
  • Check printing
  • Quarterly and annual tax form preparations
  • 401k/Section 125 fund plans
  • Integrated or specialized software

When meeting with a payroll service provider:

  • Ensure the company offers all payroll services requested
  • Request client references
  • Request a written contract stating who is responsible for penalties due to late or non-filed taxes
  • Confirm how local taxes are calculated and who is responsible for paying them
  • If you are filing electronically yourself, what assistance will be provided by the payroll company?

Pricing: Beware of the fine print! Payroll service providers typically charge a standard fee per pay period in addition to a small fee per check issued, but employers may find themselves faced with additional fees when it comes to year-end W2s, set-up fees, adding employees, dropping employees and more. Be sure to request a proposal that outlines any and every cost including future costs for services that are not needed at this exact time.

A PEO may be a more cost effective solution than a payroll-only service provider if you have other HR and employee administration related tasks to be outsourced, since PEOs often build payroll administration into their all-encompassing HR support contracts. Whether or not your company can benefit from PEO services can be determined upon an analysis of your employee management needs. If a PEO solution is in fact a good fit, Employer Solutions Plus has a separate list of recommendations for selecting a PEO.

Running through this process with multiple service providers is a lot to handle on top of your current day to day operations, which is why Employer Solutions Plus manages the entire vendor selection process on behalf of its clients.

Employer Solutions Plus is skilled at determining which payroll outsourcing solution is the best fit for your company – whether that is a payroll-only solution, or a comprehensive full suite employee administration solution such as a PEO.

We represent multiple providers in each product category– This allows us the flexibility to customize a cost effective solution to meet the individual needs of our clients.
Please contact us today to learn more about payroll administration solutions.

Wage & Hour Compliance in Tampa

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Are you a Tampa business owner foggy in the field of wage and hour compliance? You’re not alone.

The United States Department of Labor Wage and Hour Division (WHD) oversees the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.
But, some states have minimum wage rates higher than those outlined in the FLSA, while others have minimum wages rates that are the same or less than those outlined in the FLSA.

Did you know:

Nationwide: Non-exempt workers are entitled to a minimum wage of not less than $7.25 per hour. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.

State of Florida: Minimum wage is increased annually based upon a cost of living formula and is currently $7.67 per hour with a minimum wage of at least $4.65 per hour for tipped employees, in addition to tips.

Employees who are not being compensated fairly have the right to file a complaint about an employer’s alleged noncompliance with lawful minimum wage requirement as well as inform any person about the employer’s alleged noncompliance. Employee rights are protected under the State Constitution, but, who’s protecting you, the employer?

Many Tampa businesses rely on the support of a professional employer organization (PEO) when it comes to wage and hour compliance. In addition to HR administration, benefits, payroll, and insurance, PEO clients gain increased protection from ever-changing wage and hour compliance.

Partnering with a PEO gives you the advantage of working with a well-informed team of HR professionals each and every day, and PEOs often bring more streamlined and integrated technology to the table, for improved wage and hour reporting. Many PEO’s also provide EPLI Insurance to help protect employers against wrongful lawsuits pertaining to wage and hour disputes.

To learn more about PEO and wage and hour compliance solutions in Tampa, contact Tampa-based Employer Solutions Plus at 727-698-6207.