If you are paying employees, you should be watching out for any of these. If you’re compliant, great! If not, there are resources to assist you.
1. Are you paying your employees premium time/overtime after 40 hours worked each workweek? (Overtime is calculated weekly regardless of your payroll frequency). Your workweek should be set for each of your employees or groups of employees and an employer should not veer from that. (See the Fair Labor Standards Act (FLSA), and your state rules)
2. Are all of your workers categorized correctly? Are some called independent contractors while others with the same responsibilities are called employees? (See IRS Form SS-8)
3. Are you withholding appropriately from regular pay, as well as bonuses, overtime, lump sums, etc.? Remember that supplemental pay must be taxed, using either the aggregate method or the supplemental rates (See IRS Publication 15)
4. Are you withholding the correct state and local taxes for all your work locations? Remember this includes remote/home workers too. (See: Nexus rules)
5. Do you offer benefits to your employees? Remember that some benefits are mandated by state or municipal laws, for example, transit benefits in New York City, sick pay in various cities.
6. If you have not offered benefits to employees, have you fulfilled all necessary compliance for the ACA? (See IRS Pubs. 15A and 15B)
7. Is your timekeeping system capturing all aspects of your company and union (if applicable) policy? Are your employees regularly bringing anomalies to your attention?
8. Do you have employees who travel interstate? If so, is your recordkeeping robust enough to track days out of state? (See your state withholding rules)
9. If you file and pay your payroll taxes yourself, have you audited all your jurisdictions for your compliance with each jurisdiction’s rules? For example, are you depositing at the correct frequency?
10. If you use a provider to file and pay your taxes, have you verified that the provider is depositing and paying in line with your requirements?
These are questions that any employer, no matter the size, should be able to answer.