Payroll Tips

Our annual Payroll Basics workshop took place last week.  Below are some takeaway items provided by the instructors:

1. Ensure you properly classify individuals as Employees or Independent Contractors.  This can be done by utilizing the IRS tests that include Behavioral Control, Financial Control and Relationship of Parties.  Improperly classifying an individual as an Independent Contractor when they should be classified as an employee will result in the employer being responsible for back taxes, penalties and interest.
2. Create a timeline of all the important deadlines for employee related documents such as I-9, W-4, A-4 and E-Verify.  Additionally, monitor to ensure all 941s, A1-QTRs, W-2s and 1099s are filed timely. There are stiff penalties if these forms are not completed in entirety and timely.
3. Verify the exempt vs. non-exempt status of your employees to ensure they are properly classified.  Be sure you are following all FLSA rules associated with the docking of non-exempt and exempt employees wages.
4. Review IRS Publication 15-B to ensure you are taxing all appropriate fringe benefits.
5. Conduct an internal review on the segregation of duties within your payroll and human resources department.  To protect your organization, ensure one person is not able to set up an employee, establish a rate of pay, process their bi-weekly pay, and issue a paycheck.
6. Arizona Minimum Wage increases to $7.80 effective January 1, 2013