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10 Most Common Payroll Pitfalls

10 Most Common Payroll Pitfalls. Tracie M. Sawade, CPP Technical Consultant Ultimate Software. Biography. Certified Payroll Professional since 1996 Former Member of APA’s National Speakers Bureau and Current Member Hotline Referral Committee

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10 Most Common Payroll Pitfalls

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  1. 10 Most Common Payroll Pitfalls Tracie M. Sawade, CPPTechnical ConsultantUltimate Software

  2. Biography • Certified Payroll Professional since 1996 • Former Member of APA’s National Speakers Bureau and Current Member Hotline Referral Committee • Former President of the Denver Chapter Payroll Association • Presented at APA’s Congress and Chapter Leadership Seminars, Rocky Mountain Regional and Texas Payroll Conference, Indiana Statewide and Chicago, Denver and Minneapolis Chapters

  3. Agenda • Mistakes Happen • Common Blunders • Minimizing Them • Let’s get started…

  4. Voids and Reversals • Voids • Impact • Quarter/year end • GL and bank accounts • Reversals and adjustments

  5. Voids/Reversals Recommendations • Process voids promptly • Track and compare • Supplemental payrolls • Posting transactions • Validate NO NEGATIVE WAGES

  6. Deductions and Earnings • Incorrect taxation • Impacts • Employee/Organization • Deductions • Earnings • Taxable Fringe Benefits

  7. Taxable Fringe Benefits • What is a taxable fringe benefit? • Examples • Imputed earnings • Group Term Life • Costs

  8. Deductions and Earnings - The Fix • Research proper taxation • FIT/SIT/FUTA • www.IRS.org • W-2 vs. 1099 • What box? • W-2 Instructions • Publications 15 and 15-B

  9. The Fix Continued • Verify set up on system • Test, test, test • Process promptly • Save Your Company Money by Doing it Right the First Time

  10. State/Local Taxes • Employees who move • Did they forget to tell you? • Reciprocal agreements • Correct reporting • Costs • Audits and amendments

  11. State Taxes – What to do • Verify correct set up • APA’s Guide to State Payrolls • BNA, CCH, State sites • Employees who move • Timing/Checklist • Quarterly reminders • Validating with reports • SUI

  12. Blank slide for images and graphics

  13. Wage and Tax Details

  14. Year-end Preparation • Waiting too long • No checklist • Compliance • Lack of testing • Not enough time for critical tasks

  15. Year-end - The Master Plan • Start early • Have you started yet? • Create a plan/checklist • Create a team • Where you can find help • APA’s Year-end course • Vendors/local chapters

  16. Year-end Reconciliation • Waiting compounds issues • W-2 totals <> 941 totals • Too much going on in Q4

  17. Reconciliation – The Key • Create spreadsheet • Taxable wages • Taxes that can be manually calculated • Collect data each payroll/month • Early detection • Pay attention to warning signs

  18. Compliance – It Matters! • Challenges • Healthcare Reform • Hard to interpret • Potential costs • Audits • Fines and penalties • Recommendations

  19. Intercompany Transfers • Multiple companies • Acquisitions/Successor • When do taxes start over? • Tracking/verifying YTD • Costs • W-2cs, amendments • Audits, penalties

  20. Things to Remember • Understand wages and taxes • SS/SUI/FUTA – start over • Tax details • Deductions - YTD

  21. System Improvements • ESS/MSS • Workflow – what is it? • Change management • Dos and don’ts • Potential savings

  22. Steps to Take • Recommendations • What do you do today? • Does it make sense? • Process maps

  23. Successful Implementation • Key to Success • Have a plan • Communication • Change management/training • Manager/employee training • Gaining user acceptance

  24. GL Reporting • Challenges • New earnings, deductions and taxes • Structural changes • Acquisitions • Costs • Time, corrections, labor allocations Recommendations…

  25. Regular Rate and Overtime • Common misconceptions • Does it really make a difference? • Have to pay OT on extra earnings • For some companies makes no difference • But for others it does!

  26. Regular Rate and FLSA OT • Regular Rate of Pay • Based on what? • All earnings to be included • Regular, regular overtime, commission, non-discretionary bonuses, premiums • Add all earnings and divide by total hours

  27. Overtime Example • Reg. Rate = $10/hour/OT Rate = $15 • Hours = 40 regular, 10 overtime • Other earnings = $500 • 40 * 10 = $400 + 10 * 15 = $150 + $500 = $1050 • Right?

  28. FLSA OT – The Right Way • Rate = $10, 40 regular, 10 overtime, $500 other earnings • 50 * 10 = $500 + $500 = $1000 • $1000/50 hours = $20/hour (reg. rate) * .5 = $10/hour (OT rate); $10 * 10 = $100 • $500 + $500 + $100 = $1100

  29. Wrapping It Up Rolling the dice Pay Now or Pay Later Questions?

  30. For More Information • American Payroll Association (Links > State) http:// www.americanpayroll.org • US Department of Labor http://www.dol.gov • Internal Revenue Service http://www.irs.gov • Social Security Administration http://www.ssa.org

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