Many people dream of becoming entrepreneurs, and often the biggest...
Letting technology do the heavy lifting for certain monotonous tasks...
Expanding your team and capabilities is critical to...
A Chief Financial Officer (CFO) isn’t just a...
March 25, 2022
The IRS estimates that 40% of small to medium-sized businesses face penalties due to payroll errors. Nevertheless, small business owners spend a ridiculous amount of time on payroll and tax compliance management.
In this blog, which is part two of a series — click here for part one — we’ll wrap up our list of the most common payroll errors, their consequences and how you can avoid them.
Every business with employees must deposit taxes withheld from employees’ pay, along with the employer’s share of those taxes, via electronic transfer by specific deadlines. Failing to deposit taxes correctly or on time may cause the business owner to be fined by the IRS.
The IRS determines these penalties by multiplying the amount of the unpaid tax by a percentage rate based on how many days late the payment was submitted. For payments 1-5 days late it’s 2%; for payments 6-15 days late it’s 5% and for payments 16 or more days late it’s 10%.
An estimated 7% of U.S. workers have their wages garnished annually, per ADP Research Institute. Wage garnishment can stem from many types of debt, like unpaid federal and state taxes, alimony, child support, student loans and medical bills.
Upon receiving a garnishment order, usually from a court or government agency, the employer is responsible for calculating the garnishment amount, withholding it during the payroll process and forwarding payments to the proper agency or creditor. The garnishment can’t stop until the employer receives a release.
While court-ordered garnishments are sometimes unclear or confusing, they must never be ignored. If you have questions about how to comply, the best practice is to contact a CPA who will be familiar not just with federal rules but the rules in your particular state.
Under state and federal wage garnishment laws, creditors have the right to seek recompense from the person’s employer if the employee fails to make their payments. In many states, the employer is liable for as much as the full amount of the debtor’s outstanding debt.
While there is no federal law requiring employers to provide pay stubs to employees, the majority of states have their own pay stub laws requiring employers to furnish regular statements in regard to pay and withholding.
These laws address how pay stubs must be provided, meaning whether paper or electronic; what information must be provided on the pay stub; whether employees can opt-in or opt-out of electronic delivery; and penalties for employers that don’t comply.
To ensure your business is compliant with applicable regulations, check the website of the department of labor for your state.
All employers are expected to stay compliant with employment tax laws including federal income tax withholdings, Medicare and Social Security taxes and federal unemployment taxes. This entails staying abreast of rules that are constantly evolving.
Employers must also comply with their state’s labor laws, in regard to matters such as equal pay, paid family and sick leave and exempt salary thresholds, and these laws also tend to regularly change.
While complying with continually changing rules and regulations can be intimidating, the alternative could lead to penalties being assessed.
Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.
Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.
Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.
Expanding your team and capabilities is critical to sustaining growth—but the question often arises: Should you build an in-house department...
A Chief Financial Officer (CFO) isn’t just a numbers person anymore. Modern CFOs play a pivotal role in shaping strategy,...
Once your annual revenue surpasses $10 million, you attract more attention from regulators, partners, and customers, especially regarding data privacy....
Hiring is one of the most pivotal processes in any organization, particularly for a medium-sized business looking to scale. Yet...
At Escalon, we are committed to keeping our clients informed about the latest trends, challenges, and opportunities across the industries...
Growth in headcount brings exciting opportunities for a business, but it also poses a key challenge: How do you maintain...
Rapid expansion and remote work trends have empowered medium-sized businesses to hire talent nationwide. Yet with multi-state operations come multi-layered...
Growth often hinges on capable leadership at every level. Yet many medium-sized businesses focus on filling immediate management vacancies rather...
Reaching $10 million in Annual Recurring Revenue (ARR) is a major milestone, but scaling further brings new operational hurdles. From...