PAYROLL TAX AND WAGE COMPLIANCE RULES
by Karla Hopkins, CPA
Outsourcing your payroll to a service company has the potential to cause compliance issues. Whether you pay your payroll taxes yourself or rely on a service company to remit them for you, you are ultimately and always responsible - even if the payroll company makes errors.
Regularly assure yourself that all payroll taxes are being paid with the following steps:
1. Hire only bonded service companies
2. Do not allow the payroll service company to sign tax returns
3. Always confirm that the payroll company has deposited your payroll taxes by
Regularly assure yourself that all payroll taxes are being paid with the following steps:
1. Hire only bonded service companies
2. Do not allow the payroll service company to sign tax returns
3. Always confirm that the payroll company has deposited your payroll taxes by
logging into the IRS website yourself
4. Do not allow tax correspondence to be sent to the payroll company have it
4. Do not allow tax correspondence to be sent to the payroll company have it
sent to you
5. Request that the IRS provide you with a transcript of the company's tax accounts
5. Request that the IRS provide you with a transcript of the company's tax accounts
on a regular basis
Final Wages - When must you pay them to a terminated employee?
While state laws vary, the best strategy is always to deliver the final paycheck at the time of termination. It is much easier to reconcile a manually prepared final check than to fight over the check in court. Disgruntled employees will often put in the time and effort to take you to court over noncompliance.
Basic rules for New England states are as follows:
If an employee quits If fired or laid off
Massachusetts Next Payday Immediately
Maine Next Payday Next Payday
New Hampshire Next Payday Next Payday or
Final Wages - When must you pay them to a terminated employee?
While state laws vary, the best strategy is always to deliver the final paycheck at the time of termination. It is much easier to reconcile a manually prepared final check than to fight over the check in court. Disgruntled employees will often put in the time and effort to take you to court over noncompliance.
Basic rules for New England states are as follows:
If an employee quits If fired or laid off
Massachusetts Next Payday Immediately
Maine Next Payday Next Payday
New Hampshire Next Payday Next Payday or
within 72 hours
Rhode Island Next Payday Next Payday
When does the workday begin and end?
Technology now allows employees to do work at remote locations in small increments, but is this compensable time? Is every response from your smart phone to an employer, customer or vendor time that should be paid? Regulations allow employers to disregard insubstantial or insignificant periods of time beyond the employees' regular work day if it is not practical for this time to be recorded for payroll purposes.
When you log in to your workday via your computer, what about the time it takes for your computer to wake up in the morning, is this compensable time? The FLSA says “yes”.
Rhode Island Next Payday Next Payday
When does the workday begin and end?
Technology now allows employees to do work at remote locations in small increments, but is this compensable time? Is every response from your smart phone to an employer, customer or vendor time that should be paid? Regulations allow employers to disregard insubstantial or insignificant periods of time beyond the employees' regular work day if it is not practical for this time to be recorded for payroll purposes.
When you log in to your workday via your computer, what about the time it takes for your computer to wake up in the morning, is this compensable time? The FLSA says “yes”.
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