Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems, about how employers can achieve cost savings through electronic payment options.

If you’re like a growing number of businesses, you may find yourself in an all-too-familiar situation. You want to streamline the payroll process and increase your bottom line by participating in an electronic payments program, but not everyone in your company has a bank account or is eligible for direct deposit and so you continue to pay the costs associated with check printing, processing and in some instances, delivery. You’re not alone. Right now there are approximately 10 million households in the United States that don’t have a bank account — we call them the unbanked.

But there is a solution. Paycards offer a viable payment option that allows employers to electronically pay unbanked workers much like they would pay those participating in direct deposit. And, employers can achieve similar cost savings.

How it works

The structure of paycards is actually very simple. An employer establishes a banking relationship with a financial institution. Employers can set up individual accounts for each employee, or a single aggregate account with sub-accounts for each employee. Funds are deposited into the account each pay period. Employees are given a paycard, which allows them to access their wages using an ATM or by using the cash-back feature available at many point-of-sale terminals throughout the United States. Depending on the type of paycard, purchases may also be made using a PIN or signature.

Types of paycards

Different types of paycards can be set up for your employees. The first type is branded cards, which may also be referred to as “signature” cards because they can be used with a PIN or a signature. These cards typically have the Visa/MasterCard branded logo on them and are issued by their respective partner banks. As such, they follow the bank’s process and fee schedule.

Another type of paycard is the vendor branded card. These cards are issued under specific vendor logos and are subject to the vendor’s processes and fee schedules. Unlike branded cards, all transactions on these cards are PIN verified.

The far-reaching benefits of paycards

In addition to the obvious “green” benefits associated with switching over to a completely electronic payroll system, there are also many more advantages to paycards that are enjoyed by companies and employees alike.

Benefits to employers

  • Offers a cost-effective way to expand electronic pay to all employees, including unbanked workers

  • Reduces costs associated with check printing, processing, delivery, account reconciliation and stop payment fees
  • Increases the security and reliability of distributing wages even in the event of an office closure or natural disaster
  • Ensures compliance with legal requirements regarding termination pay
  • Uses standard ACH, so the hassles and costs associated with changing systems are not necessary
  • Meets obligation to pay workers wages “without discount” as required many state wage and hour laws

Benefits to employees

  • Requires no credit checks or bank accounts to participate
  • Offers peace of mind knowing wages are safely, promptly and accurately deposited onto paycard
  • Eliminates any check cashing, bank service charge or money order fees
  • Allows cardholders to make purchases, pay bills by phone, online or mail or use cards to make withdrawals at ATMs 24/7
  • Eliminates waiting for paychecks to arrive by mail, standing in long lines at the bank and special trips to pick up checks

How to start a paycard program at your company

  1. Choose a paycard program provider/vendor
  2. Choose the type of paycard you will offer
  3. Decide whether you want an individual account for each employee or an aggregate account with sub-accounts for each employee
  4. Put a plan in place for how and when it will roll out and how you will enroll employees. Make sure you have written policies and procedures and designated roles and responsibilities
  5. Get your employees excited and onboard by developing brochures, posters, etc.
  6. Launch your new paycard program

About Heartland Payment Systems

Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll and related business solutions to more than 250,000 business locations nationwide. A FORTUNE 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more detailed information, visit HeartlandPaymentSystems.com or follow the company on Twitter @HeartlandHPY and Facebook at facebook.com/HeartlandHPY.

Insights Banking & Finance is brought to you by Heartland Payment Systems

Published in Cleveland

Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems®, about how implementing an Employee Self-Serve portal can save employers time and money.

A company’s payroll department can spend a huge amount of its day addressing employees’ payroll questions, sending payroll forms and updating payroll information.

Disruptive, time consuming and ultimately costly, these chores can be alleviated with a convenient system that not only enhances payroll productivity, but empowers your employees.

That system is an Employee Self-Serve (ESS) portal.

ESS is a convenient, secure and user-friendly resource that provides all your employees online access to personal data — including their payroll information. Employees have the ability to view and print payroll vouchers and W2s and view their paid time-off balances — reducing routine staff inquiries and easing the burden of distributing payroll vouchers to your work force. Employees can also use this portal to update bank account details.

What’s more, ESS portals eliminate the need for postage and paper printing of payroll forms, offering substantial cost savings. ESS has become increasingly popular as more businesses “go green” in an effort to reduce paper and energy waste.

Companies like the international coffee chain, Starbucks, deployed an ESS portal as a means of providing information to its employees, but quickly realized how much more it could be doing using this technology. The organization enhanced its systems so all individuals can complete just about every transaction via ESS.

And it’s not just the large companies. Many small and mid-sized businesses have been adopting secure and private ESS systems because they provide:

Ability to update personal information. Companies can give their employees permission to review and make changes to their personal data (name, address, next of kin, etc.), W4 elections and voluntary deductions, as well as view their payroll stubs and W2s. Encouraging employees to enter personal data through the self-service portal is one way to leverage technology in order to increase productivity in payroll.

Electronic time sheets. Electronic time sheets improve the payroll efficiency of employees who use computers, and they are especially useful for companies with multiple worksites. Electronic time sheets improve accuracy and, according to some reports, can cut handling time.

Savings. ESS systems can be economically implemented over the Internet or a company Intranet. Internet-based payroll solutions can facilitate cost savings by allowing companies to reduce the IT resources needed to support the payroll function. A Web-based payroll solution eliminates the need to purchase and maintain specialized hardware, thereby eliminating maintenance costs and assuring that the latest features are available to all employees. Additionally, ESS can save time and dollars associated with updating materials for employees, and in the cost of printing payroll forms.

24/7/365 access. Round-the-clock access to ESS is an added plus for companies that provide services to a diverse and often dispersed work force.

In today’s volatile business climate, your payroll department is no doubt being asked to do more with less. Implementing ESS is one way to achieve that goal and provide real value to employees in an effective and low-cost manner.

Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll and related business solutions to more than 250,000 business locations nationwide. A FORTUNE 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more detailed information, visit HeartlandPaymentSystems.com or follow the company on Twitter @HeartlandHPY and Facebook facebook.com/HeartlandHPY.

Published in Cleveland

Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems®, about how businesses can ensure they don’t miss out on savings from the Temporary Payroll Tax Cut Continuation.

If you need a break from political discourse, don’t be too hasty. One of this year’s trending topics for political debate among members of Congress and presidential candidates is something that you’ll want to tune in to.

In late December 2011, Washington announced an extension of the reduced payroll tax rate that went into effect in 2011. The topic became hot several months ago because of the then-impending extension deadline of Dec 31, 2011, and continues to pick up steam as a result of a proposed full-year extension.

Although it may be a point of contention among politicians in this, an election year, the extension works to your favor as a business owner, and to the favor of your employees.

The initial payroll tax rate reduction was proposed as a one-year “holiday” and provides employees with a 2 percent reduction in the Social Security tax withholding rate. That reduction dropped the tax rate from 6.2 percent to 4.2 percent of wages. The Temporary Payroll Tax Cut Continuation Act of 2011 has added two more months to the reduced Social Security tax rate.

The cut has meant more money in the pockets of working Americans. And, as an employer, you pay in to the tax based on the rate paid by your employees, so you’ve enjoyed a savings as well.

The business of implementation

If you process payroll in-house, the payroll tax cut will require some adjustments in your bookkeeping. To avoid having to make adjustments after 2012 comes to a close, you should work with a tax specialist sooner, rather than later.

For businesses that process through a payroll service, make sure to find out if the company is processing on compliant software. If the payroll service is using outdated technology, it may face some challenges processing the change.

For payroll service bureaus that are up to date on the requirements for processing payroll for 2012, implementing the changes is virtually seamless for your business.

There are several key dates in 2012 to keep in mind in the implementation of the tax reduction extension:

  • Jan 31: Employers should have begun implementation of the tax reduction. If you haven’t done so by Jan 31, it means you have over-withheld.
  • Mar 31: Employers who over-withheld in January need to make an offsetting adjustment prior to this date.
  • Apr 30: Quarterly employment tax returns for the first quarter are due by this date.

One thing to note is employees earning more than $18,350 in wages during the two-month period are subject to the “recapture” provision. This means these employees will pay an additional income tax of 2 percent on those wages they earn during the first two months of the year.

Why it’s a bright spot

Right now your business is experiencing a savings, which is a good thing for your bottom line. As it was intended to do, the temporary payroll tax cut frees up some of your funds to be reinvested in your business for things like new jobs, inventory and capital improvements.

Don’t miss out on these savings by not being compliant. Be sure you or your payroll specialist is following the tax calendar as it applies to your payroll taxes. Otherwise, the money you are saving from this payroll tax holiday could cost you in unnecessary fines.

Washington continues a dialogue about a possible full-year extension for the Payroll Tax Cut, so be sure to follow this hot topic.

About Heartland Payment Systems

Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more detailed information, visit HeartlandPaymentSystems.com or follow the company on Twitter @HeartlandHPY and Facebook at facebook.com/HeartlandHPY.

Published in Cleveland

Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems®, about how businesses can maintain compliance when filing payroll.

Last spring, the U.S. Court of Appeals for the 8th Circuit ruled that two owners of a trucking company and its subsidiary were personally liable for more than $2 million in payroll taxes that were not paid to the government, allegedly due to the misconduct of their businesses’ bookkeeper. The bookkeeper embezzled $10,000 from the companies, and had not paid payroll taxes for 13 consecutive quarters for one company and 17 quarters for the other.

The owners sold the assets of the trucking company several months later, and paid approximately $5 million to its employees and creditors. They did not, however, remit the outstanding payroll taxes to the government — and the IRS assessed more than $2.3 million in penalties against them.

This example underscores the significant consequences business owners may face when their businesses fail to pay the payroll taxes they withhold from their employees’ paychecks over to the government. As we approach filing deadlines for 2011, it is imperative you to file your payroll taxes on time, correctly and with the right agency in order to ensure you don’t get penalized or put your company’s existence in jeopardy.

To help ensure processing and filing compliance, there are many payroll tax solutions available that calculate your payroll-related taxes, manage monthly or quarterly employment tax reports and handle year-end paperwork. In addition, such professional services can answer essential questions and offer education about federal, state and local tax compliance. Having the appropriate system in place can make all the difference in growing your company, maintaining compliance and being more responsive to the needs of your employees.

Year-end reminders

To help you better navigate year-end payroll processing and prepare to process payroll in the next calendar year, follow these helpful guidelines:

  • Verify employee demographic data. You can be penalized for inaccurate or missing W-2s that your organization produces or fails to file.
  • Check employee wage and benefits data. Make sure you have correctly withheld taxes for the value of any taxable fringe benefits.
  • Ensure employee contributions, such as those made to 401(k) plans, have not exceeded IRS limits.
  • Check that all state, federal and local taxes were withheld correctly.
  • Run month-end for December 2011. Payroll taxes for December 2011 are due on Jan. 17, 2012
  • Run quarter-end reports for the 4th quarter. Be sure to file form 941 by Jan. 31, 2012.

Tax changes

Below is a list of key tax changes that went into effect in 2011 that may impact your business:

  • Value of health care benefits must be included. A new requirement states that businesses need to include the value of the health care benefits they provide to employees on W-2s. Although this was originally required beginning with W-2s for 2011, a one-year delay was announced in October. Employers may voluntarily report the value of health care benefits they provide on 2011 W-2s, but this will not be mandatory until the 2012 filing. The amount reported is not considered taxable income.
  • Penalty for nonqualified distributions doubles. Another health care requirement stipulates that the penalty for nonqualified distributions from health savings accounts will be doubled to 20 percent.
  • Penalty for improper filing increases. W-2 and 1099 penalties for failure to file correct and timely returns have increased. Penalties range from $30 – $250 per incorrect return. Employers need to file on time and file correctly to avoid issues.

While there’s no way around your obligations related to payroll taxes, by partnering with a reputable provider you can run your year-end payroll processing efficiently — avoiding costly mistakes.

Mark Strippy is Executive Director, Payroll Services at Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States. A Fortune 1000 company, Heartland delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, Web-based payroll, check management and related business solutions to more than 250,000 business locations nationwide. For more information, visit HeartlandPaymentSystems.com.

Published in Cleveland

Running a business can be stressful enough. So you rely on the companies you work with to hit the mark on operational essentials, like processing payroll. But sometimes these are precisely the things that bring you the most stress.

Smart Business spoke to Mark Strippy, Executive Director at Heartland Payment Systems®, about why now is a great time to put the best possible payroll processes in place to relieve some stress heading into the new year.

Catalysts to change

There are several circumstances motivating business owners today to seek a new payroll service provider. Not surprisingly, service and expense are among the top reasons a business owner chooses to make a change. Some owners are left feeling like a number, while others feel the spotty support they receive isn’t worth the price of the service.

Other reasons are more specific to the payroll industry. For example, compliance is a fundamental component of payroll processing. Although, as a business owner, you stay on top of compliance regulations, you trust your payroll processor is current on compliance standards, and applies the appropriate procedures to processing payroll for your business. If your processor falls short on compliance, it can greatly impact your business.

Technology has a critical role in optimizing business operations — and payroll is no exception. A business owner processing with antiquated technology might be shopping around for a new processor because their business is not getting what it needs. As technology advances, businesses are reaping the benefits of more streamlined, more accurate payroll processing. By transferring your business to a company that offers leading-edge payroll technology, you could be saving yourself — and your staff — a lot of time and money.

Timing matters

By signing on with a new payroll processor in the fourth quarter, you can impact how smoothly that transition goes. That’s because, ideally, you would want to have your payroll ready to switch over on the first day of the new year.

There are several reasons this works to your advantage:

1)   Each year we hit reset on payroll at the stroke of midnight on New Year’s Day. At this point, there are no year-to-date earnings, taxes or deductions. Also, any termed employees will not need to be carried over or converted to the new system.

2)   Most benefit programs hold open enrollment in the fourth quarter for coverage to begin on the first of the year. It’s a great time to get the new plan in sync with the payroll application.

3)   By converting for the first payroll in the first quarter, there are no previously impounded tax dollars that need to be returned by the previous payroll processor. Your employees are perhaps the most important component of the success of your business, so you want to trust they are being taken care of. One way to know you have the right payroll provider is when the service they provide is seamless for you and your staff. If it is time for your business to make a change, consider making it before January 1. You may find it’s one of the least stressful decisions you make this year.

Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll, check management and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering them useless to cybercriminals. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.

Published in Cleveland

The notion of becoming environmentally sustainable is a popular and increasing trend among businesses today — a trend that can have a meaningful impact on your business financially and from a socially responsible perspective as well. So it’s really not a question of should you go green with your payroll, it’s really a question of when.

Smart Business spoke with Mark Strippy, Executive Director at Heartland Payment Systems®, about the benefits of a Web-based payroll solution.

Is now the time for your business to go paperless with its payroll?

According to the American Payroll Association, every year more than 146 million workers in America receive a paycheck. That's more than 3.5 billion paychecks per year. By providing paperless payroll you reduce or eliminate the production of paper reports and direct deposit vouchers — helping your business save in paper waste, water and energy.

Other benefits of Web-based, paperless payroll to help you save resources and gain efficiencies include:

  • Direct deposit, payroll cards and online pay statements mean you never have to make a special trip to your other business locations to drop off paychecks.
  • You can submit your payroll data according to your schedule — whether it is early in the morning or late at night — through a Web-based payroll system. And you can submit it from anywhere.
  • Payroll reports are available when you need them, not when the courier shows up. Reports can be emailed to your CPA and bookkeepers — creating additional efficiencies and security.
  • Online pay statements allow your employees to keep track of their earnings 24/7/365.
  • Direct deposit is a secure, convenient way to pay your employees, giving them immediate access to their funds on payday — even if they’re on vacation.

Plus, by using a Web-based green payroll solution, you won’t have to archive paper copies of payroll reports, W2 checks or vouchers. All data is stored online and should be protected by the payroll company’s data security policies and procedures.

Most payroll companies today charge additional fees for printing and delivery costs. However, Web-based access to the employer/employee data should be free (or provided at a significantly reduced price) compared to payrolls that are delivered via courier — so there will be savings by switching to this greener option. And you can reinvest that savings back into your business for other improvements.

Remember, too, greening a business shows that the owners care about people and the environment. By reducing waste and energy, a business demonstrates that it is socially responsible.

If you’re ready to make the switch to more environmentally friendly payroll — that also saves you money and time — you need to make sure the payroll company/service that you use is able to provide a secure Web-based set of tools to provide you and your employees access to standard payroll reports, and a report writer for customized reports. The employees must have access to an employee self-serve (ESS) Web application with the ability to enter and modify demographic information as well as to review and print payroll specific information.

Today, “green” is everywhere. By greening your payroll you can turn a responsibility into an opportunity to gain efficiencies, save money and provide a perk for employees.

Now is the time.

Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, Web-based payroll, check management and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering them useless to cybercriminals. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.

Published in Cleveland

Business owners now have a new resource to help them better manage their payroll. The Merchant Bill of Rights Payroll Act is designed to promote fairness and transparency in payroll processing. It educates business owners about the many facets of payroll and what they should expect from their processor.

“Payroll is more than just paying employees. It’s a critical business function that — if not managed properly — can be a significant drain on a business owner’s time and resources,” explains Mark Strippy, executive director of payroll services at Heartland Payment Systems®, one of the nation’s largest payments processors.

“That’s why we created The Payroll Act. By educating business owners about the fundamentals of payroll processing as well as what they should expect — and deserve — from their processor, this tool helps them make well-informed business decisions that can significantly impact their payroll-related expenses and operations.”

Smart Business spoke to Strippy about how owners can ensure they receive the payroll services they need.

What is the Payroll Act?

The Payroll Act is an extension of The Merchant Bill of Rights (MBOR), a public advocacy initiative introduced by Heartland in 2006 to promote fair credit, debit and prepaid card processing practices on behalf of owners of small and mid-sized businesses. The MBOR proposes 10 fundamental rights to protect business owners, enabling merchants who don’t have the resources of large purchasing organizations to effectively manage their costs, determine which processor best meets their needs and ultimately realize significant savings.

What are some of the fundamental rights to protect business owners?

1)   Full disclosure of all fees associated with your payroll processing

2)   Delivery of accurate, timely paychecks for all employees

3)   Access to your payroll any time via secure Internet technology

4)   Compliance with 100 percent of federal, state and local payroll legislation

5)   Knowledgeable service support — available when you need it

6)   Detailed, accurate reporting

How can business owners make sure they are receiving the best service possible?

Don’t forget to do your homework. Ask fellow business owners, chamber of commerce or trade association members if they use a payroll processor. Find out what services they receive and if their provider meets or exceeds their needs. Also ask them what their frustrations are.

To learn more about the Merchant Bill of Rights Payroll Act, visit http://MerchantBillofRights.org/PayrollAct.

Heartland Payment Systems (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll, check management and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals.

For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.

Published in Cleveland

Outsourcing payroll is a smart decision for business owners looking to relieve themselves of the time and labor-intensive complexities of processing payroll. And the beginning of the year is an ideal time to make the change. In fact, more than half of small businesses decide to outsource their payroll each year starting in January when year-end calculations and reporting are complete, expediting an easy and smooth transition.

Smart Business spoke to Mark Strippy, Executive Director, Payroll Services, Heartland Payment Systems, for some tips to help you get started “shopping” for a processor.

1. Determine your business needs. Consult your payroll manager, human resources department, accounting personnel and IT staff to understand the functionalities all disciplines need.

2. Evaluate the features and benefits. Meet with several payroll service providers to determine how they work. Do not pick a processor based on price alone; instead be sure they can provide all the services your business needs. For example, your business might need help with 401(k) or worker’s compensation, so be sure the provider can handle those services as well as basic payroll.

3. Do your homework. Ask fellow business owners, chamber of commerce or trade association members if they use a payroll processor. Find out what services they receive and if their provider meets their needs. What are their frustrations?

4. Compare costs. Many processors nickel and dime their customers by charging for items such as additions or deletions of employees, while others offer fixed rates for the length of the contract without incremental fees.

5. Look for a payroll service provider that guarantees confidentiality and information security. There are a variety of payroll submission methods — such as by phone, fax, e-mail and over the Internet — and you should be comfortable with how sensitive payroll data is transmitted. Choose a payroll service provider that protects your employees’ data.

6. Check if the payroll service provider can assume tax filing responsibilities. A payroll service provider should prepare quarterly and annual employee tax filing and assume liability for accurate and timely submission.

7. Be sure the payroll products and services are user-friendly. In addition to making sure the program is easy to use, investigate what type of support is available — such as a help desk and professionals who can assist with program troubleshooting.

Payroll planning, tax reporting, year-end calculations and many other tasks associated with payroll can be complicated and time-consuming, especially for small businesses. Although outsourcing payroll takes the burden off the business owner, it is important to recognize that not all payroll processors are created equal. All businesses need to be diligent in selecting their processors to ensure they get the best payroll bang for their buck.

Heartland Payment Systems, Inc. (NYSE: HPY), the 5th largest payments processor in the United States, delivers credit/debit/prepaid card processing, payroll, check management and payments solutions to more than 250,000 business locations nationwide. Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.

Published in Cleveland

Smart Business spoke to Mark Strippy, Executive Director, Payroll Services, Heartland Payment Systems, about how businesses can avoid the expense and headaches of common payroll mistakes.

Payroll is likely one of the biggest expenses your business incurs — and one that can cause the most headaches. Whether you have one employee or hundreds, you have a legal obligation to pay your employees accurately and on time. While that’s intuitive, there are many other not-so-obvious legal payroll requirements that may not be.

These 10 tips will help you avoid some common payroll mistakes.

1. Note important payroll deadlines

Report and deposit your payroll taxes to federal, state and local agencies on time. Late deposits can result in penalties and interest charges.

2. Classify employees appropriately

Classify your employees into the appropriate categories such as temporary employees, consultants and other independent contractors to ensure payroll reporting for tax purposes is accurate.

3. Report and calculate overtime pay

Here’s where the proper classification of “exempt” and “non-exempt” employees is really important because it can be costly. According to the Department of Labor, litigation claiming non-exempt employees who were treated as “exempt” employees and, therefore, not entitled to overtime — but should have been — continues to increase.

4. Distribute 1099 forms on time

Give your independent contractors who earn more than $600/year a 1099 form by January 31 of the following year. This will help you meet your filing deadline and avoid late penalties — $15 for every 1099 form that is 30 days late, $30 for every form filed by August 1 and $50 for all 1099 forms filed after August 1.

5. Double-check data entries

Data entry mistakes — including incorrect hourly wages and the wrong number of employee hours per pay period — cost companies millions of dollars annually. In addition to potentially increasing expenses if workers are paid for hours they didn’t work or at a higher hourly rate than they should be, this can result in government penalties. Be sure to double-check your entries for accuracy.

6. Send court-ordered payments to the proper recipient

If you don’t follow court-ordered garnishments such as levies or child support, you may be prosecuted and could be fined up to $1,000 — or even imprisoned.

7. Don’t rely solely on your software program

Be sure to enter all of the necessary payroll data. Your payroll program is only as good as your input. It can’t perform accurate calculations without all of the necessary information.

8. Save payroll records

Keep time sheets, cancelled checks and W-4 forms — in a safe and accessible location — for four to six years. Failure to do so could lead to criminal penalties and/or civil actions.

The Wage and Hour Division of the Department of Labor must be able to inspect your records within 72 hours of notifying you.

9. Maintain payroll confidentiality

Keep your payroll information within the payroll department and the senior management team. Failure to do so could lead to criminal penalties and/or civil actions by disgruntled employees.

10. Train more than one employee in payroll functions

Have more than one employee trained to do payroll in case the employee who is primarily responsible is out of the office. The IRS, the state and employees need to receive payments on time. Also, have a manual backup system in case a computer fails.

Following these tips can help you foster and maintain employee satisfaction — as well as prevent headaches with federal, state and local agencies. You can also avoid payroll mistakes by outsourcing. If you’re considering outsourcing, turn to Heartland. We’ll take away your payroll processing worries so you can focus on operating, improving and growing your business.

Heartland Payment Systems, Inc. (NYSE: HPY), the 5th largest payments processor in the United States, delivers credit/debit/prepaid card processing, payroll, check management and payments solutions to more than 250,000 business locations nationwide. Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.

Published in Cleveland