7 Top Payroll Concerns for Small Business Owners

1. Minimum Wage
Stay on top of changes. Your state could be higher than Federal minimum and you must follow the one more beneficial to employees.

2. Overtime Pay Calculations
Establish your pay week and stick to it (Sunday-Saturday, Monday-Sunday, etc.) Overtime is 1-1/2 times regular rate of pay in excess of 40 hours in pay week. Some states require overtime for any hours worked in excess of 8 hours a day. Check your state regulations.

3. Payroll Processing Accurate and Compliant
Audit (in-house or outside consultant) your processes to ensure accuracy of data entry (manual entry, interface from other system, upload data file). This includes employee hours, additional payments, deductions from employees pay such as medical premiums, union dues, etc. Establish methods to test processes for accuracy. Periodically test calculations of taxes withheld from employees and employer paid taxes for accuracy. Validate reports for accuracy before providing to accounting, tax preparer, etc.

4. Paid Sick Leave
All employers must provide Sick Time (protected leave). Check your state requirements to provide Paid Sick Time, i.e.: OR employers with 10+employees must provide Paid Sick Time but Portland, OR employers with 6+ employees must provide Paid Sick Time. Whichever is more beneficial to employee preempts all other local sick laws. Other factors: when does Paid Sick Time start accruing; when can employee use time; how many hours carry over year to year; is annual cap of hours allowed.

5. Employee vs Independent Contractor
This is a tricky one. Mistakes are commonly made in determining if a worker is an Independent Contractor. IRS has form SS-8 that employer can file asking IRS for determination, which is one way to be truly certain. The common-law test for determining whether a worker is an employee or independent contractor is: when one party retains the right to control the means and methods of a worker’s performance, that party generally is considered an employer and the worker is generally considered an employee.

6. Payroll Taxes Paid & Tax Returns Filed Timely
Using a payroll service provider or an accounting firm to process payroll and make your tax payments on your behalf or advise you of tax payment amounts and due dates is often recommended for companies without trained payroll staff.

7. Affordable Care Act (ACA or Obamacare)
All employers with 50+ full time employees are required to comply with the tracking and reporting requirements stated in the ACA. This is complicated so make sure you work with a professional to make sure you are in compliance.

This is a lot of work for a small business owner, busy running his or her business. T hat is why I shifted my focus to the small business community, who needs assistance to stay accurate and compliant.