Payroll is a large responsibility for companies of all sizes and within all industries. Employees expect to be paid in a timely manner and without having to put in much effort. To improve efficiency with this task, many businesses have implemented payroll ACH, which enables leaders to directly deposit funds via secure channels. Cachet has compiled some tips and tricks to ensure this practice remains safe and effective for all organizations:
Always have a backup
Not only should companies have a second business bank account dedicated solely to payroll, according to Forbes, but organizations should also keep another payroll ACH provider has a backup to their primary partner. The former ensures money for payroll and payroll taxes are separated from general business funds. The latter protects executives' and employees' interests should a security issue occur. Having a backup is a strong way for organizations to protect their assets no matter what the situation.
Understand employee classifications
When completing payroll, it's vital for business leaders to understand the different categories workers fall into. To begin, companies have to separate regular employees from independent contractors. Since independent contractors are technically self-employed they aren't entitled to the same benefits as other employees. For example, employers are not responsible for withholding Medicare, Social Security, federal income and applicable state and local taxes for independent contractors, according to the Houston Chronicle. Instead, these self-employed workers have to complete that task on their own tax returns.
In addition, companies have to separate their employees into overtime exempt and non-exempt under the new Fair Labor Standards Act. This law essentially clarifies what elements qualify workers for additional pay depending on hours worked and salary earned.
Automate federal and state taxes
Organizations have many obligations when it comes to payroll taxes. With Medicare and federal income costs to maintain – in addition to many others – companies have a lot on their plate. To eliminate the stress of keeping track of all of these taxes on a monthly basis, businesses should ask their service bureau or payroll providers about automating the process of calculating and depositing federal and state taxes, according to Fox Business. These service providers can ensure the funds are sent in a timely manner and in compliance with important government regulations. By automating this step, companies can avoid costly payroll tax penalties tied to late or incorrect deposits.
When it comes to payroll, business leaders have many tasks to keep track of. By securing a backup payroll ACH partner, understanding employee classifications and automating tax deposits, companies can ensure their process is both efficient and effective.
The upcoming Adaptasoft CyberPay Users Group Conference – held in Phoenix, Arizona from Sept. 13-16 – will feature a session on product updates as well as tips and tricks of the software. Cachet will be on hand to lend its own advice for those parties looking to partner with a payroll ACH provider.