As a growing startup, Payroll compliance is a critical component of running a successful business. It requires careful planning and monitoring of various payroll-related regulations, laws, and processes. Without proper compliance, your business could face hefty fines, penalties, and other sanctions. Therefore, it is important to ensure that you are up-to-date with all payroll compliance regulations and processes.
In this article we will describe the five simple steps to ensure Payroll compliance. Before that we will define what Payroll Compliance is, why it's important and the common Payroll compliance issues you are likely to face in your business. We will also explain the factors attracting penalties for non-compliance and the easiest and quickest way to avoid this and ensure compliance from Day 1 of running your business.
What is Payroll Compliance?
Payroll compliance is the process of ensuring that your business adheres to all payroll laws and regulations. In simple terms, it is a set of laws that employers must follow to pay their employees correctly and on time.
This includes laws and regulations regarding employee wages, taxes, deductions, benefits, and other payroll-related matters. It also includes ensuring that all payroll processes are conducted in accordance with applicable laws and regulations.
This article outlines five steps employers can take to ensure they remain compliant with payroll laws.
Why is Payroll Compliance Important?
Payroll compliance is important for a number of reasons. First, it ensures that your business is in compliance with all applicable laws and regulations. This can help minimize the risk of fines, penalties, and other sanctions from regulatory bodies. Additionally, compliance with payroll laws and regulations can help ensure that employees are treated fairly and that the company is providing them with the necessary benefits. Finally, compliance can help to ensure that payroll processes are conducted accurately and efficiently, which can help to save the company time and money.
Common Payroll Compliance Issues
There are a number of common payroll compliance issues that businesses must be aware of. These include:\
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Failing to withhold taxes from employee wages;
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Failing to properly classify employees (e.g., as exempt or non-exempt);
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Failing to provide required employee benefits;
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Failing to file payroll taxes on time;
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Failing to properly document payroll information; and
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Failing to use updated payroll software.
Five Steps to Ensure Payroll Compliance
To ensure payroll compliance, there are several steps your business can take. These include:
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Staying up-to-date on the latest payroll laws and regulations.
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Implementing an all-in-one Accounting, Compliance, HRM and Payroll application managed by Payroll experts to help you stay on top of compliance.
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Performing regular payroll audits to ensure compliance.
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Educating employees on payroll compliance issues.
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Knowing your compliance track-record by having real-time visibility into org-wide financial transactions dashboard
Penalties of Payroll non-compliance
There are many factors that determine the penalties that will be levied for payroll non-compliance. A few of the common factors include-:
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Type of violation
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Frequency of the violation
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Whether the violation was intentional or unintentional
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How long the employer has been non-compliant
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Impact of the noncompliant action (such as on affected employees)
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Depending on the severity of the violation, an employer can face criminal prosecution and imprisonment.
Conclusion
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Payroll compliance is essential for any business to ensure accuracy and fairness in compensating employees.
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Implementing and following a payroll compliance solution that brings Accounting, Compliance, HRM and Payroll all on one application managed by Payroll experts is the fastest way to ensure Payroll compliance
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Payroll Compliance helps protect businesses from costly penalties.
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Properly tracking and managing payroll information is an important part of any business’s operations.
Entries AI is an all-in-one Payroll expert managed unified business application. It combines Accounting, Compliance, HRM and Payroll automation on one application managed by expert Accountants and Payroll professionals.
Entries AI offers growing startups one platform to manage Procure to pay, Order to cash, expenses, spends, employee self-service, HRM, Payroll, Financial Accounting, Business Reporting, Accounts Receivable/Payable and Connected Banking. It brings all employees, vendors, suppliers, banks and accounts on one platform. The best part is this cutting-edge tech is entirely free for growing startups when they sign-up for Entries AI Payroll services. Know more about what Entries AI can do for you.