Running your own business means you’re often an “everything” kind of person. Managing payroll by yourself is one of the many hats you’ve had to wear.
Managing payroll correctly can be tricky. This is especially with all the day-to-day challenges you’ve already got going on.
With no formal payroll experience, you can make several mistakes. These mistakes may have serious consequences.
Keep reading to learn about the top three payroll questions you need to be answered. Knowing the answers to these questions can keep you out of tax trouble with the IRS.
1. What Are the Different Types of Payroll Taxes?
Payroll taxes refer to taxes employers withhold from their employee’s wages or salaries. These taxes can be classified into three main categories:
Federal payroll taxes include Social Security, Medicare, federal income tax, and the Federal Unemployment Tax Act (FUTA). State payroll taxes may vary from state to state.
It may include unemployment taxes, disability taxes, and income taxes. Local taxes are assessed by cities or counties. It may include income taxes and taxes for public services.
2. What Should Employers Do When Paychecks Are Incorrect?
When paychecks are incorrect, employers should act quickly. This is to ensure that the issue is resolved. They must review and audit employee payroll records to identify errors and mistakes.
They should then notify the employee as soon as possible. Also, they should arrange for a revised check or adjustments to the employee’s bank account.
Employers may also need to explain the cause of the discrepancy. They should also offer reassurance that similar errors won’t happen in the future.
Sometimes, the employee may have underpaid wages or has had money taken out of their paycheck. If this happens, the employers are required to reimburse the employee for the amount immediately.
In addition, employers should take steps to ensure payroll accuracy moving forward. This includes using automated payroll software and double-checking the accuracy of each item before issuing paychecks.
Employers can also outsource payroll tasks to payroll services or outsourcing companies. This can help employers to process payroll on time and accurately.
3. What Optional Benefits Are Available through Payroll?
Optional benefits through payroll include health care coverage. This can include coverage for:
Retirement benefits such as 401(k)s or other defined contribution plans are also an option. Other alternatives can include life insurance, disability insurance, and flexible spending accounts. Depending on the employer’s location, some may also offer access to commuter benefits or disability insurance.
Additionally, employers may provide some employees access to 401(b) plans. Work-related expense reimbursements, tuition reimbursement, and paid time off may also be optional benefits.
Answering Most Asked Payroll Questions
Payroll questions are important to every business. By understanding the answers to the 3 most popular payroll questions businesses can be more efficient and compliant.
These questions may include knowing the types, what to do with incorrect paychecks, and the benefits available through payroll.
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