Compliance with Payroll Laws and Rules: A Working Guide for Small Businesses

1. Compliance with Payroll Laws and Rules: A Working Guide for Small Businesses • Running a small business is no easy task. Between managing clients, stocks, and everyday operations, monitoring payroll regulations seems like just another task on an infinite checklist. Payroll • compliance is not about avoiding monetary penalties; it's about safeguarding the reputation of your business, finances, and perhaps securing its future as well. In this guide, we will break down why keeping track of tax laws and payroll rules is so important, and how regularly updating QuickBooks Payroll will assist you in doing so. You will then get actionable steps to keep your business compliant, confident, and growing by the end of this guide. • The High Stakes of Payroll Non-compliance • The stakes for non-compliance regarding payroll laws are exceedingly high: • Financial Penalties: Non-compliance could lead to monetary penalties from IRS or state agencies for matters such as late filings or incorrect filings. A single error could cost you hundreds or thousands of dollars in penalties. • Audits and Legal Trouble: Any hint of non-compliance puts a red flag in front of tax authorities and increases your risk in audits, while dealing with lawsuits will take even more time and resources. • Damaging Your Reputation: Widespread violations simply devastate the trust in your name, with clients and associates alike. • Case in point: A small bakery in Texas was fined $10,000 for misclassifying employees as contractors. The bakery's owner had to go into debt just to pay the fine.

2. Why Changing Payroll Laws & Tax Regulations • Payroll laws are not set into stone; it is continually changing with economic positions, political changes, and technological advances. Some fresh examples include: • COVID-19 Relief Measures: The FFCRA eventually created a new paid leave mandate that lapsed in 2021 but could come back under future legislation. • Changes at the State Level: California's AB 5 redefined what it means to be a contractor and thus interferes with businesses across America. • Raising Minimum Wage: More than 20 states adjusted minimum wages in 2023, affecting payroll and time calculations. • Staying informed may require some work, but if you keep QuickBooks Payroll up to date, much of the work on compliance will be done for you. • How Does the Updated Payroll Software Keep You Ahead • You must really know how to update QuickBooks payroll and why it is important. • Tax Calculation Accuracy: An update will provide your software with the latest tax rates and withholding/assessment rules, so mistakes will not be made. • Automated Compliance: Auto-file and e-file features will work to reduce manual errors that occur while filing tax papers. • Reporting in Real-Time: The updated availability of records and up-to-date payroll reports will minimize the hassle during audits and review. • Insider Tip: Schedule update notifications to keep your eye on vital changes. QuickBooks frequently issues patches quarterly. • How-To: Steps to Make QuickBooks Payroll Updates • It is less of a mammoth task than you would believe to keep your payroll software up to date: • Enable Automatic Updates • Go to the Help menu: Update QuickBooks: Click the Options button. • Check box: Automatically download and install updates. Manually Check for Updates • When automatic updates are disabled, go to Help > Update QuickBooks: Click on Update Now. • Review Payroll Settings • Double-check tax rates, employee classification, and direct deposit details after an update. • Bonus: Subscribers of QuickBooks Payroll Tax Service (PTS) get automatic updates of their tax table.

3. Best Practices for Payroll Compliance • In addition to keeping your software up to date, these habits can help protect your business: • Keep Records for 3-7 Years: Payroll records, tax filings, and employee contracts should be maintained in compliance with state and federal laws. • Train Your Team: Staff who have direct payroll responsibility should comprehend the fundamentals of compliance and know how to employ the software correct versions. • Hire Professionals: CPA or payroll specialist partners should be engaged for difficult cases such as worker classification or multi-state filing. • 3 Frequently Asked Questions About Payroll Compliance • How often do payroll regulations change? Changes to federal regulations occur each year, and state and local laws change sometimes quarterly. Hence, keeping yourself updated is the primary way to remain informed. • I am working on old payroll software; is it OK? Working on old software would have a risk of incurring errors while calculating taxes or remaining compliant. Thus, constant updated information is necessary for accuracy. • If I miss my payroll tax filing deadline, what would happen? Late filing would mean penalties, generally at the rate of 5% per month, and interest. File your return so as to restrict any mounting charges.