1-
Business or Personal?
A great
admin might want to help you in any way they can, including personal
errands. But time spent having
your admin fetch your dry cleaning and drug store prescriptions is not
deductible as a business expense, even if it makes you more productive at
work.
Be sure
you separate your business payroll from personal payroll to avoid tangling with
the IRS on this issue.
2-
New Hire Report
It’s not
every day that a small business needs to hire additional help, and the New Hire
Report is easy to overlook. It’s
due to your state within a certain number of days of your new employee’s hire
date. Some payroll companies will
file it for you, and some won’t, so it’s best to check so that you don’t make
the common mistake of forgetting to file this report.
3-
Worker’s Compensation
When you
have employees, you need worker’s compensation. When you bring on your first employee, you’ll need to overcome
this learning curve of figuring out what you need.
Even if
you’re a veteran employer, you may have coverage holes in your worker’s
compensation coverage. Do
you have employees who work at home?
Are you sure they are covered? In some states, employees have to be
specifically named in the policy before they are covered to work at home.
Be sure
you ask the right questions so there’s not a risky gap in this essential
protection for employers.
4-
Posters
There are
both state and federal notices that must be posted for employees to be able to
read. California is especially
zealous and liberal about issuing fines (up to $17,000 per location) for
employers that do not have their posters, well, posted on workplace walls.
5-
Employee versus Contractor
The proper
classification of a worker as a W-2 employee or a 1099 contractor has long been
an area of scrutiny for the IRS. The
IRS has rules as well as court cases that have established the guidelines that
exist in this area.
If you
classify a worker incorrectly as a contractor when they should be an employee,
then you can be held liable for paying employment taxes on that
contractor.
6-
Bonuses
Bonuses
can often be a spur of the moment thing or something that’s done at the very
end of the year when we’re occupied with the busy holiday bustle. It can be easy to forget that the
bonuses need to be run through payroll like all other wages so that the proper
deductions and taxes can be calculated.
Use these
six items as a checklist to avoid these common mistakes as well as reduce your
business risk in the payroll compliance area.
