Payroll Tips, Training, and News for Small Business

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Payroll Tips, Training, and News

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President Proposes Business Tax Credit for Hiring Veterans

soldiers on payrollPresident Obama has proposed a new tax credit for American businesses who choose to add veterans to their payroll.

With the Returning Heroes Tax Credit, firms that hire unemployed veterans could receive up to $2,400 for every short-term hire and up to $4,800 for every long-term hire. The president would like to expand the Wounded Warriors Tax Credit, increasing the existing tax credit to a maximum of $9,600 for companies that hire long-term unemployed veterans with service-connected disabilities. He also proposed extending the existing credit to a maximum $4,800 for all other veterans with a service-connected disability.

President Obama challenged private-sector companies to hire or train 100,000 unemployed veterans or their spouses by the end of 2013. He also championed the idea of a “reverse boot camp” to help returning veterans successfully transition to the civilian workforce.

Along those lines, the Dept. of Labor pledged to improve career development and job search services at their One-Stop Career Centers. And a “Best Practices” manual may be soon on the way from our government to help private-sector businesses add veterans to their payroll.

In the meantime, if you know someone who is a returning veteran and looking for a job, here are a few resources you can share:

Payroll News: IRS to Change Allowed Per Diem Methods

IRS to Change Allowed Per Diem MethodsThe Internal Revenue Service is planning to discontinue the high-low method for employers to pay lodging, meals, and incidentals to employees, Accounting Today is reporting. The IRS announced that they will publish a revenue procedure in 2011 that outlines general rules and procedures for tracking travel-related expenses, while eliminating the high-low method.

Background: Currently, the IRS offers two payroll methods for employers to pay employees a per diem (per day) rate for travel expenses: a regular federal per diem rate method and the high-low method.

The high-low method is a simplified per diem amount, allowing one rate for all cities listed in CONUS (a list of cities in the continental United States) and a different rate for high-cost localities within CONUS. For more background on per diem payment methods, read the training article “Do You Pay Employees Per Diem?”

Sometime soon the high-low method will be no more. In Announcement 2011-42, the IRS stated they will “discontinue authorizing the high-low substantiation method.” They are also planning to publish a special transportation rate in an annual notice. We’ll keep you posted about these developments!

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Payroll Mystery Solved: Where in the World is Form 941?

where payroll tax form 941If you haven’t seen Form 941 arrive in your mailbox, you can stop looking. It’s not coming.

The Internal Revenue Service is no longer mailing out Form 941, Employer’s Quarterly Federal Tax Return, nor the Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, among other business mailings.

Starting in 2011, the IRS stopped the mailing of certain tax packages. According to the IRS, “the IRS took these steps due to the continued growth of electronic filing as well as to help reduce costs.”

Don’t worry: you can print out a pdf of Form 941. Look for appropriate mailing addresses for your payroll tax return on page 5 of the Instructions for Form 941.

The IRS also offers an e-file program for business taxes if you’re interested in filing your payroll tax returns and other forms that way.

Updated 8/13/2015

Futa Surtax Set to Expire, Adding Confusion for Payroll Managers

payroll_confusionBrace yourself for some confusing news regarding the FUTA (federal unemployment tax): the 0.2% FUTA surtax is due to expire today, June 30, 2011.

Currently, American employers pay 6.0% gross FUTA tax plus a 0.2% surtax, minus a credit for 5.4%, for a net of 0.8%. Now that the surtax expired, the net effective rate for July through the rest of the year will be 0.6%.

In effect since 1976, Congress extended the surtax once already, from January 1, 2010, to June 30, 2011. It remains to be seen whether the government will take any action this time. They could reinstate the 0.2% surtax, reinstate the surtax but let it expire at a later date, or allow the surtax to expire completely. It could show up as part of a jobs bill, or maybe on “Dancing with the Stars.” Who knows?

Meanwhile, what’s an employer to do? Here’s the takeaway: You can update to the 0.6% tax rate and track separately the FUTA wages paid before and after the June 30 deadline. Or, you can keep the tax rate at 0.8%, just in case Congress retroactively decides to reinstate the 0.2% surtax. If you use an outside payroll provider, check with them to see how they are handling this change.

If the government takes no action to reinstate the surtax, expect an updated 940 form for 2011 with an additional line for reporting the payroll wages not subject to the surtax.

Payroll, Other Technology Advances Help Employers Compete

cloud_based_payrollAdvances in mobile technology are enabling small businesses to do big things, according to the article  “Must-Have Mobile Tech Tools for Entrepreneurs” in The Wall Street Journal.

Cloud computing — which gives you the freedom to access your data on any device with Internet access — is helping to level the playing field and put an end to paperwork that ties down business owners.

The article points out several technology advances, including new ways for business owners to run payroll. With cloud computing, employers can use a smart phone or any mobile device to run payroll at their convenience. They can look up employee data, calculate payroll taxes, run payroll, and take advantage of direct deposit to pay their employees.

Other advances in technology help small business owners stay organized while on the go. You can snap a photo of your business receipts and send it to a services in the cloud. You can track your mileage and store unlimited data on a cloud-based server. You can even turn your smartphone into a credit card terminal with “Square,” a card reader for your smartphone.

While some apps are free, prices for payroll software and other cloud services can vary, according to the article.

Try Patriot’s Online Payroll Software free for 30 days! With cloud computing and secure access, you can run payroll anytime, anywhere!

Payroll News: Iowa Latest State to Require EFTs for Child Support

Iowa has now passed legislation mandating employers to remit child support payments electronically. Iowa is now the 13th state to require EFT (electronic funds transfer) child support payments from employers.

Here is the timeline: Starting Dec. 31, 2011, Iowa employers with 1,000 or more employees on their payroll are required to submit support payments electronically. Employers with 500-999 employees have until Dec. 31, 2012 to comply.  Employers with 200-499 employees, as well as employers with 100 or more employees who use a payroll processing agent, have until Dec. 31, 2013 to comply.

You can register your account online at the Dept. of Human Services for Iowa site. On this site, you can make child support payments, receive child support forms electronically, report new hires and rehires on your payroll, and report employee terminations.

If you’re an Iowa employer with fewer than 200 employees and you handle your own payroll, the mandate does not apply. Employers with fewer than 100 employees who also use a payroll service provider are also not affected.

Other states that have passed legislation requiring EFT for child support payroll deductions are California, Florida, Illinois, Indiana, Massachusetts, Nebraska, Nevada, Ohio, Oregon, Pennsylvania, Texas, and Virginia.

Rules vary widely for each state, so it’s important to make sure you’re in compliance. Noncompliance or late payments may mean penalties in some instances. Indiana, for example, fines employers $25 for non-compliance per payroll period. To look up your state’s requirements, visit the Office of Child Support Enforcement website.

Texas Employers Add Big to Their Payroll

Texas payrollTexas is big in plenty of ways, especially in terms of job creation.

While much of the country has been struggling to shake off the recession, Texas has been busy, adding 37% of the new jobs to America’s payroll, according to the Wall Street Journal.

Economists with the Federal Reserve Bank of Dallas studied payroll data from the Bureau of Labor Statistics. Texas added 265,300 of the 722,200 net jobs created in the U.S. since the recession officially ended in June 2009. New York was a distant second with 98,200 jobs and Pennsylvania with 93,000. Nine states created fewer than 10,000 jobs, and Maine, Hawaii, Delaware, and Wyoming created less than 1,000. Eighteen states lost jobs during that period.

While construction, manufacturing, and information jobs declined in the Lone Star state, Texans added to their payroll in several business sectors, including professional and business services, health care, and trade and energy. The Texas economy has grown by an average 3.3% annually over the last two decades, compared to 2.6% for the nation (currently a lackadaisical 1.8% growth.)

So what’s Texas have that other states don’t? According to the article, Texas offers ample opportunities for business growth and an especially friendly business climate, plus a free market, no state income tax, and a small, responsible state government.

Payroll: The Dept. of Labor Has an App for That!

iphone app for payrollThe Dept. of Labor has developed a timesheet app for smart phones!

With the free app, currently compatible with the iPhone and iPod Touch, employees can record their time worked, determine their payroll wages owed, and access materials about wage laws.

Users can add comments, view a summary of their work hours, and email the summary of work hours as an attachment. The app is especially useful for workers who perform their job off site or who work for more than one employer.

Available in English and Spanish, the app provides an easy way for employees to keep a separate record of their hours worked, as well as breaks and overtime.

Get a free download of the app at the Wage and Hour Division home page.

Payroll News: Employers Call for More Competitive Workforce

manufacturing payrollU.S. employers worried about unprepared younger workers are putting pressure on schools to improve math and science scores, the Wall Street Journal reported.

The United States trails behind China, Singapore, Japan, Korea, Australia, Germany, and the U.K. when comparing average math and science scores for 15-year-olds in 2009.

Employers are also concerned about the number of experienced employees who are poised to retire from company payrolls. Approximately a quarter of U.S. manufacturing employees are 55 and older.
Some businesses and organizations hope to turn the tide. Here’s a look:

  • The National Association of Manufacturers seeks to standardize curricula at community colleges, certifying students in industrial skills and moving toward competency-based education.
  • More companies, such as BMW AG in South Carolina, are requesting customized training at technical colleges to train qualified workers for their payroll. In Ohio, the Lorain County Community College’s Nord Advanced Technology Center offered 41 tailored courses for individual employers this year.
  • The Math and Science Initiative, funded by companies such as Exxon Mobil, foundations, and the federal government, seeks to train teachers in science and math and extend college-level coursework to high school students.
  • The Dyson vacuum cleaner company is sponsoring after-school engineering clubs at 20 Chicago public middle schools.

Jack Jennings, chief executive officer of the Center on Education Policy, said in the article that employers are right to worry that the U.S. is falling behind. However, employers should be patient with the political process, as U.S. education policy is mostly decided at the local level, compared to countries that can make quick nationwide changes. The problem doesn’t lie entirely with educators either; students and parents should take school more seriously, he said.

Florida Employers: A New Minimum Wage for Payroll

New Minimum Wage FloridaEffective June 1, 2011, the new minimum wage in Florida is $7.31 per hour. The previous minimum wage was $7.25 per hour, which is the current federal minimum wage.

Florida employers must now also pay tipped employees a direct wage of $4.29 (calculated as the minimum wage minus a tip credit of $3.02.) The state’s law requires the minimum wage for payroll to be calculated annually, based on the percentage change in the national Consumer Price Index for urban wage earners and clerical workers in the southern region.

For more information on the minimum wage change for employees on your payroll, read the notice from the State of Florida Agency for Workforce Innovation, which includes state and federal posting requirements.