Payroll is an essential part of every business; unfortunately for many small businesses without experience, the process is also full of pitfalls and risks. Here are some of the most common mistakes businesses make. If you think you might be making these mistakes or you’re not sure how to properly administer payroll, consider the help of a small business payroll tax expert.

1: Improperly Classifying Employees

If you’re confused about how to classify employees in a small business, you’re not alone. Unfortunately it’s also a place where many small businesses fall short, especially for businesses that don’t just have traditional full- or part-time employees.

In 2015, the Department of Labor found that as many as 75% of businesses had misclassified employees; the most common mistake made is to classify an employee as a 1099 contract worker when they should actually be an employee. The former must pay both the employee and employer portion of taxes, while the latter you withhold employee taxes from a paycheck and pay the employer portion.

Independent consultants (1099 contract employees) can offer a lot of flexibility and benefits, but it’s critical that you know the guidelines for when this applies to your employees. Whether you did it intentionally or unintentionally, when the IRS finds the mistake you are going to have to pay all the back taxes for both you and the employee, and will likely get hit with some hefty penalties and interest charges as well.

Avoid this mistake by consulting a payroll tax expert and classify your employees properly. If you’ve already made the mistake, voluntarily reporting it can reduce the penalties.

2: Withholding the Wrong Amounts

The amount of taxes that each person owes is unique to his or her situation and varies based on things like exemptions and number of dependents. It can also change from year to year as the IRS updates the tax code or when Congress passes legislation. As an employer you need to make sure you are withholding the right amount from an employee’s paycheck for income taxes, Social Security and Medicare, and that you are paying employer share for the latter. The most common mistakes people make in the process include:

• Incorrect deductions from employee salaries
• Failing to withhold all applicable state and federal taxes
• Withholding from employees that should be exempt
• Mishandling pre-and post-tax deductions
• Sending out W2s with mistakes

This is a mistake that can also lead to some expensive fines, and may also subject you to government audits in the future.

Check out part 2 on the blog next month for some additional mistakes that you may be making. If you don’t have someone who can keep up to date on all the tax laws and payroll requirements, you can hire a small business payroll consultant to provide you with the expertise to avoid these mistakes.

Ready to process payroll? If you’re like many small business owners, doing another payroll is about as much fun as plucking arm hairs out one by one. In addition to being time-consuming, though, payroll can be confusing and difficult, and doing it wrong can have serious consequences for your business. Since you can’t just choose not to process payroll, here are a few reasons it would be beneficial to outsource it.

1: Time Savings

In 2015 more than half of all small businesses reported spending 3 or more hours a month on payroll (11% report that it takes them 10+ hours every month), a number that has likely increased since that time with changes to payroll taxes and other employment laws. In addition to that time, 58% of businesses reported spending over 40 hours a year on tax preparation. While not all of that is related to payroll taxes, it requires a significant time commitment to prepare all the required quarterly and annual payroll filings. The time increases if you have little or no knowledge of tax laws, and could be taken off your plate entirely if you simply outsource it to a payroll and tax firm.

2: Cost Savings

It might seem like keeping your payroll in-house would save you money, but about one-third of all employers make some type of payroll reporting error, according to the IRS, which costs companies billions of dollars annually in fines and fees. That alone should be enough to make small business owners seriously consider the benefits of paying someone else to do payroll (and get it right).

Other costs that an outsourced payroll agency can help with are time spent calculating payroll, signing and distributing paper checks, generating reports, reviewing and auditing timecards to avoid errors in things like paid time off, and paying the appropriate taxes.

3: Avoiding Legal Headaches

One of the most common errors in payroll is the misclassification of employees—for example, classifying someone as a 1099 contract employee (withholding no taxes) instead of a full employee (withholding and paying all taxes). Classification rules can be confusing, so having someone look objectively at your employee pool to determine classifications can save you a lot of headache down the road.

Another potential legal issue many small businesses run into is changes in tax withholding amounts. The tax laws have changed significantly in the last two years, so you may not be withholding the right amount from your employees’ paychecks, which could cost them and you at the end of the year. In fact, around 1.8 million small business tax returns (those with income from $200,000 to $1 million) were audited in 2016, and over half—978,564—were assessed some type of civil penalty.

Don’t spend any more time worrying if you messed up on payroll or filed the right forms with the IRS. Outsource your payroll to WTA, Inc. today and let our experienced team help.

Every year come January 1 you can count on New Year’s resolutions (most of which will probably not work out) and IRS tax changes. Businesses need to know what these changes are to be able to calculate the correct taxable wages for employees, so here are some important changes coming for the year.

Changes to the Wage Base

A taxable wage base is the amount of pay for any given employee that will be subject to taxes during a specific period (usually one calendar year). If you have employees in any of the 14 states that updated their wage base, you may need to make adjustments to withholdings. Those states include Alaska, Hawaii, Idaho, Iowa, Minnesota, Montana, Nevada, New Mexico, North Carolina, North Dakota, Oregon, Rhode Island, Washington, and Wyoming. If you have employees in Utah, the state adjusts its wage base according to average wages from July 1 to June 30, while the states of Colorado and New Jersey use a state average weekly wage to make adjustments.

The IRS also updated the 2020 federal Social Security wage base limit to $137,700, with a maximum Federal Insurance Contribution Act (FICA) amount increasing to $8,537.40 (6.2% of wage base). Employers are required to match the employee contributions, so employer rates are increasing as well. Medicare wage base limits remain unchanged, and contributions are also unchanged at 1.45%, with an additional 0.9% applied to incomes over $200,000 for single filers and $250,000 for married couples filing jointly.

Unemployment Insurance Changes

Each state calculates their unemployment taxes a little differently, and those that anticipate a shortfall or excess in their unemployment fund have already stated that they may adjust rates partway through the year, so it’s important to stay updated on the current rates to avoid paying too much or too little toward unemployment insurance. Hiring a qualified payroll and tax administration service can help you stay apprised of changes and avoid costly penalties or errors.

Changes to W-4 Withholding Certificates

The IRS released a redesigned Form W-4 to simply the process of calculating the correct withholding amounts for employees. Rather than relying on withholding allowance calculations, the new form provides employees with a series of steps to return income and deduction amounts for a more accurate calculation. Existing employees that have previously filled out a Form W-4 are not required to complete a new one but may want to if they are not having the correct amounts withheld. Any employee who changes his or her withholdings must use the new form. Employees claiming exemption must also fill out a new form each year. The IRS also offers a W-4 tax withholding calculator to help employees estimate the taxes they will owe and ensure they are having enough withheld from each check to avoid owing a lot next April.

Relocation Expenses Reminder

The Tax Cuts and Jobs Act of 2018 changed relocation expenses to be included in an employee’s wages and subject to taxes (relocation for Armed Forces members are still excluded). If you pay for relocation, make sure you know what is required with the changes or talk to a payroll and tax administration service for advice.

A recent report from the National Association of Professional Employer Organizations (NAPEO) demonstrates the actual value of using PEO services.

According to the NAPEO research, companies realize, on average, a 27% return on investment, or ROI. Companies – especially small to medium-sized businesses – benefit in a variety of ways from working with a PEO. Add a hefty ROI to these benefits and it simply makes good sense to consider outsourcing your HR functions to an expert.

Understanding the PEO ROI Calculation

The NAPEO white paper that reported the new PEO ROI data explained their calculations in great detail. 

Essential, ROI is calculated by dividing the economic benefit of an investment by the dollar amount that was invested. The NAPEO data demonstrated that, for every $1,000 spent on PEO services, businesses derived an average of $1,272 in benefits – a 27.2% return on investment. 

NAPEO analyzed benefits in five categories, including health benefit costs, human resources expenses, workers’ comp costs, and the costs associated with HR staff (salaries and benefits). ROI was especially strong in the areas of health benefit costs and the cost of employing an HR staff.

Additional PEO Benefits Reported by NAPEO

The report detailed other benefits that companies derive by outsourcing their human resources functions, including hiring, employee training, payroll and benefits administration. 

NAPEO reported the most impactful benefits in the area of recruiting, hiring and retaining highly qualified staff members. Company owners and managers also benefit by becoming freed up to focus on managing and growing their business, rather than spending time and effort trying to manage HR functions. 

To apply this research in your own business, consider the report’s findings that employers saved an average of $1,775 per employee, per year. The cost of using a PEO is, on average, $1,395 per employee, per year, for a net savings of about $360. If you have 10 employees, you could save $3,600 per year, while reaping all the other benefits a PEO provides. 

Does a PEO Make Economic Sense for Your Business?

Although not every company will recognize the same level of ROI, the NAPEO statistics are hard to argue with. 

With the potential for reducing turnover, increasing profitability and taking the stress out of HR, it’s worth the time and effort required to research how your company could benefit from working with a PEO.

In Utah, WTA, Inc. assists business owners with a full range of human resources-related services. We provide payroll processing, benefits administration, recruiting, onboarding, training and more. Our team of experts takes the guesswork out of compliance and helps reduce the risk for the employer. Contact us today to learn more about your company can capitalize on the ROI that comes from outsourcing your HR functions to a PEO.

Hiring and keeping great employees is becoming harder and harder to do in today’s economy.

But, unless your company can attract top talent and keep them happy in their job roles, you will struggle to be competitive. High turnover is costly in a number of ways, from the costs associated with onboarding and training to the reputational issues that come with poor continuity for your customers.

No. 1: Develop Comprehensive Job Descriptions

You might have noticed a common thread in your exit interviews, the “this job just wasn’t a good fit for me” reason for leaving.

If your outgoing employees are being honest with you, this is a strong indication that your job descriptions are not providing an accurate portrayal of the role in question. Without a comprehensive job description to guide you, your help wanted ads and job postings won’t attract the right people for the opportunity.

No. 2: Offer an Attractive Compensation Package

If you aren’t willing to offer a compensation package that is at least as good as what your top competitors offer, you won’t be the one who attracts the best applicants.

If money is tight – as it typically is for most smaller businesses – you might think that keeping salaries low will help you stay within your budget. What you might not realize is just how much employee turnover costs you. And, when you don’t have the best people for the job, tasks take longer, which costs you more in extra hours and the problems that errors can cause with your reputation and customer retention.

No. 3: Offer Killer Benefits

Employees across the U.S. are concerned about having comprehensive health care. They also want some flexibility in their schedules and the ability to take time off when they need it or want it.

The better your benefits package is, the better talent you will attract. Word travels through the workforce and potential employees know which companies offer great benefits. If you want them to come in search of a job with you, provide the benefits that top talent values the most.

No. 4: Improve Your Company Culture

Mediocre employees will take whatever jobs they can find. Great employees, however, can afford to be picky about where they work.

In addition to competitive compensation and benefits, employees want to work in an environment where they are valued. They want transparency from their employer and a corporate culture that shares their values.

Spend some time evaluating and working on your corporate culture, corporate social responsibility initiatives and other factors that combine to make an attractive work environment.

No. 5: Enlist the Help of a Hiring Specialist

Few business owners have the knowledge and skills required to source top talent. It’s cost-effective for most companies to enlist the help of a hiring specialist. This allows you to focus on your own priorities and lets the experts do what they do best – find you the right employees.

A professional employer organization (PEO) such as WTA, Inc. can assist you with all of these imperatives. PEOs administer benefits, handle recruiting and hiring, handle onboarding and training, and can assist you in making your company a great place to work. If you are a small to medium sized business in Utah, contact one of our expert team members today to learn how we can help you improve your employee hiring and retention efforts.

In the realm of human resources, compliance issues are some of the most volatile, fraught with risk for the employer at every turn.

Failure to remain compliant in your hiring, compensation, benefits and related human resources functions can lead to substantial penalties and fines. In many cases, it also sets your business – and you, as an owner, officer, manager or decision-maker – up for substantial legal liability.

By outsourcing your company’s HR functions to a PEO, you can reduce these risks significantly without incurring extra costs.

The Ever-Changing Compliance Landscape

Thanks to the ever-changing legal landscape of human resources, you could be fully compliant one week and guilty of compliance violations a month later – and never know.

HR compliance involves not only following the letter of the law but also countless other functions. Verifying worker eligibility, reporting, posting required notices, avoiding harassment and discrimination and complying with compensation and benefits laws are just a few of the issues that are involved in keeping your business compliant.

In addition to federal laws, you must also pay attention to state and local laws that could go above and beyond the federal compliance baseline.

The Risks of HR Non-Compliance

In addition to penalties and fines, non-compliance can expose you to lawsuits, audits, governmental reviews and, in some cases, it could cost you your ability to stay in business. Business owners and managers could, under certain circumstances, even be subject to criminal action.

Although some of these potential risks may sound extreme, the government takes human resources compliance very seriously. At the minimum, you could be facing significant costs to undergo an audit or face a potential legal action.

Why Outsourcing HR Helps Ensure Compliance

Few small business owners or managers are truly HR experts, nor can they typically afford to hire one. However, unless you plan to familiarize with every federal, state and local law that governs human resources – and stay up to date with the ongoing changes – you need another option.

Professional employer organizations (PEOs) are true human resources experts. With an entire contingent of regulatory and government compliance experts on staff, you never have to worry about missing out on a law change or new reporting requirement.

And, as the de facto employer of record for your company, a PEO carries most of the compliance liability on your behalf.

A professional employer organization serving small and medium-sized businesses in Utah, WTA, Inc. handles all aspects of governmental and regulatory compliance as a part of our comprehensive suite of services. Contact us today to learn more about how outsourcing your human resources functions can protect your company and potentially save you money as compared to conducting these functions in house.

Employee training programs are critical for getting (and keeping) your staff up to speed on essential skills and knowledge.

Whether you need to present a training program for compliance purposes, to improve performance, or to impart skills needed for a new work tool or program, getting the message across effectively is harder than it looks. This challenge is compounded by the fact that most employees dread training, often viewing it as little more than an interruption to their workflow, rather than embracing the potential benefits.

Presenting effective training programs requires careful design and engaging presentation. For most employers – especially small to medium sized businesses – seeking professional assistance is the best way to improve training outcomes.

Design Employee Training to Match Goals

Start by identifying three to five major goals that you want training to achieve. What do you want the outcome of the program to be? What points are you attempting to get across to your team? How does the program benefit the trainees? Does it make their life better in some way or help improve the performance of the organization?

Use these main points to guide the design of the program. Ensure that whoever is presenting the training circles back to these goals and refers to them often. This will help reinforce the purpose of the program.

Engage Attendees to Make an Impression

Unless you want your trainees to sleep (literally or figuratively) through the program, you have to capture their attention and hold it.

This does not mean that you need a professional entertainer or comedic genius to present the program. On the other hand, however, sitting still and listening to someone drone on monotonously will challenge the most dedicated members of your team to stay focused and learn.

Getting attendees up and moving is important to. If you don’t plan to include breakout sessions or interactive exercises, take frequent breaks. Building in frequent question-and-answer periods is another way to keep attendees engaged.

Consider Seeking Help from an Expert

Designing and delivering effective employee training programs is truly part art and part science. Having an expert assist you in the preparation of training programs is a great way to improve the experience and the outcomes.

Likewise, a human resources or training consultant can advise you on the best way to present your training programs and engage your team. Making your programs fun, educational and interesting will also help raise their interest and enthusiasm levels for future programs as well.

As a part of our comprehensive human resources services, WTA, Inc. assists companies with the design and presentation of training, including key onboarding functions. We also handle payroll, benefits administration, workers compensation, recruiting and hiring. Contact us today to learn more about our cost-effective services and how we can help you improve your organization’s training programs.

When companies implement a dress code for employees, they typically do so with the best of intentions. Unless you undertake this task with care, however, you could impact employee morale and affect your ability to attract top talent. You could also find yourself embroiled in a legal quagmire, if your code contains discriminatory requirements or if you fail to enforce it consistently.

When Is a Workplace Dress Code Appropriate?

In most cases, companies require a more formal mode of dress for any employee who interacts with customers. As an alternative – depending on your business model – you could consider a uniform approach. For example, you could require in-person customer service staff to wear a branded polo shirt with khaki pants.

In more traditional professional services businesses, such as law firms, formal business attire remains the norm. But what happens when an employee violates the unspoken understanding of what constitutes business attire?

For those employers who deal in less formal business interactions, offering a casual dress code could be used as a recruiting tool, as many potential new hires might see this as a desirable benefit. But, if your employees do not interact with the public, how much can you (or should you) dictate guidelines for appropriate work attire and at what point could these guidelines become problematic for you?

What Can You Include in Your Workplace Dress Code?

You might mentally define appropriate work attire for your company as business casual. But does that term mean the same thing to every employee?

Legally, you have a bit of latitude in how you dictate appropriate work attire, as long as it does not discriminate against any group. Otherwise, you could face legal action for discrimination in the workplace. And, to a reasonable degree, you typically must make accommodations for religious considerations.

In most cases, you are best served to list specific items that are not appropriate for your workplace. This might include t-shirts, shorts, flip-flops, etc. It’s also a good idea to be specific about how violations of your dress code will be addressed.

Could a Company Dress Code Backfire?

If business owners and decision-makers aren’t careful, implementing and enforcing a dress code could become, at best, a human resources nightmare. At worst, the issue could turn into a legal minefield. The biggest risk you face is including any potentially discriminatory requirements. You should have business-specific justification for any dress requirements you institute, such as interaction with customers or safety concerns.

The way you enforce your dress code can also lead to potential problems. You must enforce your rules consistently and equally for all staff members. You must also tread carefully in how you deal with violations, especially for repeat offenders.

The safest way to implement an equitable attire policy is to consult with an HR specialist. As a professional employer organization (PEO), this is just one of the services that WTA, Inc. provides for our clients. Our legal department can help you determine the best approach for your company on this and other potentially volatile HR issues.

WTA, Inc. helps companies by handling every aspect of the human resources function, including payroll, benefits administration, recruiting, risk management and more. Contact us today to learn how our HR services can help your business become more productive and reduce your operating costs.

If you run a small or medium-sized business, hiring and retaining high-quality employees can be a challenge. When you use the services of a PEO (professional employer organization), you can attract the level of talent that will propel you to success.

PEOs provide a suite of value-added services that few smaller businesses can afford on their own. And, in most cases, businesses can actually save money by outsourcing their human resources functions to a PEO.

So, how exactly can a professional employer organization help you up your hiring game?

No. 1: PEOs Allow You to Offer Better Benefits

Great employees demand great benefits, including healthcare, disability and retirement options. Because PEOs oversee large pools of employees, you can offer your prospective talent a truly exceptional package of benefits without increasing your costs.

PEOs also handle all the administration of your benefits. This frees your staff up to handle other priorities while providing exceptional support and responsiveness for your staff.

No. 2: PEOs Are Experts at Recruiting

Sometimes the only way to recruit the best employees is having access to a network of industry insiders. You can pay a recruiter thousands of dollars for this privilege or you can use a PEO and enjoy these same benefits for no additional cost.

When you use a PEO to assist you with recruiting, you can rest assured that your job opportunities will get in front of the right candidates, even those who are especially well-qualified but not necessarily in the active job-seeking process.

No. 3: PEOs Do All the Legwork for Recruiting & Hiring

How much time is involved with posting job ads, fielding responses, answering questions, reading resumes, checking references and conducting interviews? Investing those countless hours each time you need to hire someone is especially taxing for smaller businesses who already have to run lean.

PEOs are set up to handle all of these tasks and more. You still get to make the final hiring decisions, but you save countless hours (and potentially thousands of dollars) when you let an expert take care of the preliminary steps of the process.

No. 4: PEOs Engage Employees with Onboarding & Training

Effective onboarding sets the stage for an engaged and productive employer/employee relationship, but it takes time and effort to get it right. PEOs handle all aspects of onboarding, which also ensures regulatory compliance.

Training is another important part of keeping your staff engaged and productive. Your PEO can handle all aspects of training for you, ensuring that your staff has the necessary tools to perform their roles.

No. 5: PEOs Provide Exceptional Employee Support

Retaining top talent is as important – if not more so – than the recruiting and hiring processes. PEOs provide a variety of services designed to keep your staff members satisfied. This encompasses everything from answering questions about benefits to coordinating vacation schedules and delivering paychecks.

In northern Utah, WTA, Inc. offers a full range of payroll and HR services, from benefits administration to risk and liability management. Contact us today to learn more about how our hiring and recruitment services can help your business succeed.

If you do not offer a 401(k) plan to your employees, it could be hurting your business.

Employees expect the “big three” core benefits – health insurance, paid time off and a retirement assistance plan – to be available no matter where they work. In a recent MetLife study, 60% of respondents said that a 401(k) program (or similar) was a “must-have” benefit.

The benefits of offering a retirement program are significant and, even if you offer matching contributions, you may discover that your company comes out money ahead – especially if you use a PEO to administer your plan.

Why You Need to Offer a 401(k) or Another Retirement Plan

As you can see, the majority of employees want to work for companies that offer a retirement plan. Financial stress about the future is one of the most commonly cited concerns in the MetLife study referenced above and, when you can help reduce those fears, employees become happier, more engaged and more productive on the job.

You may be able to lower your payroll costs by adding this benefit to your current offerings. In fact, many employers find that they can reduce the amount of compensation they offer employees if they increase the type and level of benefits they offer.

Business owners can also take advantage of this benefit to save for their own retirement. This is especially important because few small business owners have a viable financial strategy in place for their own retirement.

Why You Consider Matching Employee 401(k) Contributions

For most businesses, the tax advantages of providing matching contributions are significant – usually significant enough to offset the contributions themselves.

You should, of course, consult a tax attorney or CPA to explore your options and the potential benefits. However, the U.S. tax code is designed to substantially reward companies that help employees plan for a more secure future.

You will attract and retain higher level employees if you offer to match their contributions (up to a reasonable level – typically around 3%). And, if you have the right small business-savvy tax professional, you may discover that matching funds is financially beneficial as well.

Choosing the Right Retirement Plan for Your Business

As a busy entrepreneur and small business owner, you are forced to become an expert on a variety of topics. However, the complexity of 401(k) plans, individual retirement accounts (IRAs) and other retirement assistance benefit programs makes it difficult to navigate without the assistance of an expert.

If you outsource your payroll and human resources functions to a PEO, you don’t have to become an expert on retirement plans to figure out which one is right for you. Your PEO team can outline your options and explain the pros and cons of each type of plans.

But perhaps the best part about working with a PEO is that they administer your retirement benefits for you, along with handling payroll, hiring, onboarding, training and related functions.

WTA, Inc. serves small and medium-sized companies in Salt Lake City and the surrounding areas of northern Utah. Our value-added services, including workers compensation administration and employer liability management, actually save our clients money in most cases, as compared to handling these functions in-house. Contact us today to learn more about how we can assist you through the administration of your employee retirement benefits plan.