It’s hard to believe we are already more than halfway through 2015. While June and July can be slower months for business, it’s an opportune time to assess your company’s processes and perform a midyear payroll review.
Following are three actions a business owner, HR specialist, or payroll processor should assess before any problems build up:
Small Business Midyear Payroll Review
- Record Check-Up. It’s strongly recommended to have organized tax records this time of year so your year-end becomes more accurate and streamlined. One area to evaluate is your company’s Form I-9, or Employment Eligibility Verification Form, for each of your employees. Verify that the employer and employee have each signed the correct sections and that the completed form is properly retained. For example, I-9 Forms for ex-employees must be kept for either three years after their date-of-hire or one year following the date employment ended, whichever is later. You could also take this slower time of year to remind employees they can adjust their Form W-4, especially if they have had significant life changes since January 1st, in order to minimize surprises with their federal taxes next April. Our W-4 Assistant can help point them in the right direction.
- Payroll Rate and Tax Review. Other than January 1st, some states or municipalities update minimum wages, FUTA percentages, and/or other tax rates effective July 1st. If you are responsible for knowing the rates for processing your company’s payroll, make sure there have not been any changes that you may have overlooked.
Since two quarters have come and gone, now is also an advantageous time to review your payroll tax filings in case any corrections need to be made for the last two quarters of 2015. The IRS takes late and inaccurate payroll tax filings very seriously and, even if you outsource, the employer is still responsible for all filings. Because of the IRS’s aggressive stance on holding employers accountable for payroll taxes, noncompliance could include steep monetary penalties, repayment of back taxes, and even jail time.
- Affordable Care Act Compliance. Under the Affordable Care Act, know that after June 30, 2015, employers are barred from repaying employees for their health insurance premiums. Employers caught doing so face penalties of up to $100 per day per employee for each infraction. Review your payroll and HR records to confirm that you are no longer reimbursing staff for these related costs. Midyear is also a good time to put procedures in place to make sure you are easily capturing and tracking data needed for 2015’s year-end 1095 Forms. Form 1095, the IRS’s Health Insurance Marketplace Statement, is required for employers with over 50 full-time employees and helps determine eligibility for the Health Insurance Premium Tax Credit.
Successful, business-savvy companies stay ahead of the game throughout the year. By performing a midyear payroll review, you’re not waiting until a hectic end-of-year to get organized or verify compliance. By not doing so, it could lead to a costly tax season and expensive penalties from the IRS.
Contact Abacus Payroll, Inc.
Relieve your tax burden by outsourcing to Abacus Payroll, Inc. Our specialists will make sure all new hires are in compliance with their I-9, W-4, and Act 32 Forms, plus we are continuously up-to-date on all payroll, wage, and tax rate updates, making it one less item you need to worry about. Contact us today for a quote.