No matter what the size of the business, a business owner needs to make sure they’re compliant with the rules and regulations of their industry. Failure to comply with these laws can result in steep civil penalties, such as fines for failure to comply with minimum wage or overtime requirements. To avoid getting in hot water legally, it’s important to be sure you keep your financial affairs organized with proper payroll compliance.
So, what exactly is wage compliance? This term refers to an employer’s responsibility to follow laws and regulations affecting a given business. These laws and regulations include federal, state, and local laws. There may also be union regulations you need to follow, depending on your business. Complying with all these regulations is a full-time job. It can be made easier by regularly staying up to date with current laws, updating company policies and employee handbooks with legal guidance, regular staff training and maintaining a corporate culture that supports a safe, legal and welcoming workplace.
Regular Accounting Maintenance
One of the best ways to ensure payroll compliance is regularly conducting a payroll audit. In brief, it’s an audit to make sure you’re sending out the right amounts of money for wages, taxes, benefits, garnishments etc., and have the records to show it.
To perform a payroll audit and be sure you’re meeting wage compliance requirements, follow these steps:
- Check your employee lists, pay rates and hours works to ensure bona fide staff are getting the correct pay.
- Confirm staff pay rates and hours worked.
- Verify variable payments, such as bonuses, for proof of authorization.
- Scrutinize off-cycle payroll to confirm its legit.
- Compare your payroll records to your general ledger to ensure there aren’t any losses in translation and all taxable wages and deductions were calculated correctly.
- Reconcile your internal payroll records with employment tax forms 940 and 941.
- Check to see if you have any outstanding tax liabilities.
- Consider ways to improve your payroll process, like streamlining or adding required info for timesheet approval, bonus authorization and payroll record access.
Check the U.S. Department of Labor website and your state’s labor department website to check the current laws.
A regular payroll audit conducted at least twice a year will help make sure you’re meeting all your requirements. But if you’re still concerned, there are additional measures you can take. If your business has recently hired new staff, it’s good to make sure all your new hires (and while you’re at it, your existing staff) are properly set up. You want to make sure your records reflect the correct personal, pay, deduction, benefit and banking information. For new hires specifically, make sure their onboarding paperwork is fully filled out.
Payroll software can help ensure compliance, but it’s only as effective as the information you put into it. If you’re using payroll software, make sure all the necessary data is being entered. Finally, make sure to regularly update these records with any changes.
Make Payroll Compliance Easier with Payroll Vault
Making sure you’re crossing all your T’s and dotting all your I’s on your payroll can be a daunting task, especially if you’re more focused on the actual product or service you and your staff produce. If you want to ease the burden payroll management brings, Payroll Vault is able to lighten the load. With our suite of payroll services, we’re dedicated to ensuring you comply with all relevant laws and regulations, providing custom reporting so all your records are in order, and staying in touch with you so we’re available whenever you need payroll or administrative help. Find your nearest Payroll Vault or contact Payroll Vault - Hampton Roads and meet with our team to find out more.