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  • Compensation is a hot topic for both employers and employees, encompassing everything from minimum wage debates to comprehensive benefits packages. As an employer, meeting your staff’s needs and expectations can be challenging, especially when balancing your payroll budget. However, by implementing certain strategies, you can effectively manage your total payroll cost while still maintaining a competitive edge.

    The job market is constantly changing, and with that, employees’ expectations have also shifted. They now demand not just competitive pay but also respect, recognition, and a higher quality of life outside the office. As an employer, you have the power to positively influence their overall well-being and job satisfaction by addressing these broader concerns. This makes their positions more appealing in the long term and shows your commitment to their welfare.

    Compensation can be stressful to navigate; with limited budgets, it might be difficult to offer competitive salaries to your team. However, because today’s employees are looking for more than fair wages, we’ve gathered a variety of non-monetary ways you can boost your retention and recruitment efforts. When implemented effectively, these strategies can lead to a more engaged and satisfied workforce.

    Do Non-Monetary Benefits Matter?

    Happy employees are 20% more productive than unhappy employees. Non-monetary benefits are one way you can help boost employee morale, engagement, and overall satisfaction. Though it can take a bit of effort upfront to get these programs up and running, they can save you time and money once integrated into your work operations. The impact on employee productivity and satisfaction is well worth the investment.

    Employee turnover can significantly undermine team morale, productivity, and the quality of work. Moreover, the time and financial costs involved in hiring a replacement are substantial—often exceeding 24 days to fill a position and costing up to 33% of an employee’s annual salary. Implementing non-monetary benefits alongside a livable wage can effectively reduce turnover, fostering a more stable and engaged workforce.

    In addition, non-monetary benefits are of little to no cost to you as an employer. Once up and running, these benefits often maintain themselves with minimal ongoing expenses. Offering such benefits can create a more fulfilling work environment, encouraging employees to stay longer with your company. This approach not only reduces the frequency and costs associated with turnover but also builds a reputation for your company as a caring and desirable place to work.

    Non-Monetary Benefit Examples

    Ensuring employees are content and motivated extends beyond providing a living wage. Younger generations (Millennials and Gen Z) specifically prioritize meaningful work, positive culture, and work-life balance over traditional incentives. As an employer, it’s crucial to understand these changing needs and expectations. While it’s still necessary to consider monetary compensation, there are several options that can help boost employee engagement, productivity, recruitment, and retention:

    • Flexible work arrangements: Options such as remote work, flexible schedules, and compressed workweeks allow employees to effectively balance their personal lives with professional responsibilities. Generate a policy that works for your team, with set expectations around project completion and core operating hours. Include potential repercussions if the policy is abused, work goes unfinished, or remote employees are unreachable during core hours.
    • Health and wellness programs: These can include gym memberships, mental health days off, and recreational activities. Even if some team members don’t utilize these benefits, offering and encouraging them can help boost employee engagement and satisfaction.
    • Professional development: Offering tuition reimbursement, access to courses, workshops, and seminars, and opportunities for upward mobility within your company can motivate employees to stay long-term. Not only does this show investment in your team’s professional growth, but often, what they learn can be brought back and help your business grow.
    • Recognition and reward systems: Implementing peer recognition programs or performance-based awards can boost morale and encourage a productive workplace culture. Fostering a culture of appreciation gives employees a sense of belonging, which helps increase overall job satisfaction.
    • Financial well-being programs: These programs could include financial planning services, retirement planning sessions, and workshops on budgeting and economic health, helping employees feel more secure about their financial future.
    • Student loan repayment assistance: Given the rising concern over student debt, offering help with student loan repayments can be a significant relief for younger employees, making your business much more attractive to this demographic.
    • Time for volunteering or passion projects: Offering your team time off, specifically for volunteer work or to spend on a project they’re passionate about, is a simple but effective benefit. As younger generations are more motivated by meaningful work, giving them a few days a year or hours per month to dedicate to projects can lead to a more engaged and content team.
      While some of these tools, such as a gym membership or student loan assistance, will require a small budget, they can often be cheaper than offering your whole team higher salaries than other companies.

    While some of these tools, such as a gym membership or student loan assistance, will require a small budget, they can often be cheaper than offering your whole team higher salaries than other companies.

    Implementing Non-Monetary Benefits

    When rolling out new company-wide initiatives, anticipate some initial challenges, such as general confusion or underutilization of the new benefits. To mitigate these challenges, it’s important to develop comprehensive policies and communicate them effectively and regularly to your team. These policies should outline who qualifies for these benefits and how to use them. Make your benefits accessible and appealing to encourage your staff to utilize them.

    Moreover, actively seek feedback and involve your team in refining and improving these benefits and policies. It’s crucial that the benefits you offer align with your team’s needs and interests. Offering benefits that no one uses is not only a waste of resources but also a missed opportunity to enhance employee satisfaction and engagement.

    How GMS Can Help With Your Employee Benefits

    As a business owner, retaining and attracting quality employees is vital for business growth. Offering a competitive benefits package is critical to securing top talent. However, this can be costly and time-consuming. As a professional employer organization (PEO), GMS will work with you to find the benefits package that makes the most sense for your business operations, employees, and bottom line.
    In addition, once we’ve helped you find a benefits package, we’ll help you manage it. Our outsourcing small business benefits services include:

    Let us help you provide competitive and cost-effective benefits while you focus on running your business effectively. Contact us today!

  • As a small business owner, it’s crucial to understand the distinction between Forms 1099 and W-2, as they have significant implications for tax and compliance purposes. Misclassifying employees can lead to costly penalties and legal issues, making it essential to navigate these forms correctly.

    Let’s Start With The Basics: Understanding Form 1099

    A Form 1099 is a crucial tool for reporting income paid to independent contractors, freelancers, or self-employed individuals for tax and compliance purposes. Tax payments should not be reported on the 1099 Form. The most common type is the 1099-MISC, which reports miscellaneous income such as fees, commissions, rent, prizes, and awards. The second type of 1099 is Form 1099-NEC (Non-Employee Compensation), which is specifically used to report non-employee compensation paid to independent contractors and other self-employed individuals.

    Who qualifies as a 1099 worker?

    A 1099 worker is often referred to as an independent contractor. Some types of workers who would receive a Form 1099 may include:

    • A consultant who is hired for a set amount of time to complete a project
    • A freelancer who works on a per-assignment basis and uses their own computer
    • An electrician contracted a few times a year to repair power outages in an office building.

    These workers have more control and flexibility over when, where, and how they perform their work. They are responsible for paying their own self-employment taxes.

    When to use a Form 1099

    You would issue a Form 1099 to individuals or other businesses that provided a service but are not employees of your business. Companies must issue a 1099-MISC to any individual or unincorporated business that is paid $600 or more during the tax year for services rendered.

    Understanding the Form W-2

    Form W-2, on the other hand, reports wages, salaries, and tips paid to employees. It shows the total income earned by an employee and the amount of taxes withheld from their paychecks throughout the year, including federal income tax, Social Security tax, and Medicare tax.

    How does someone qualify as a W-2 employee?

    A W-2 employee is an individual who is paid through their employer’s payroll and has their payroll taxes withheld throughout the year. Every year, by January 31st, they will receive their Form W-2 detailing their taxable compensation, tax withholding, and deductions for employer-sponsored benefits like health insurance or 401(k). They use this information to file their annual taxes.

    These employees typically have scheduled hours, ongoing work, and company-provided equipment and may receive employer benefits. Being a W-2 employee establishes an official working relationship with an employer who has the right to control when, where, and how the employee performs their job duties. Examples include office workers, warehouse supervisors, and administrative assistants with set responsibilities and hours.

    When to use a Form W-2

    Employers must provide Form W-2 to all employees who receive wages, salaries, or tips during the tax year, regardless of the amount earned. Generally, having W-2 employees means that individuals have been given ongoing work, use company equipment, have set hours, and have a direct manager.

    Now that we understand Forms 1099 and W-2, let’s discuss their differences and reporting requirements.

    • Purpose: Form W-2 reports an employee’s taxable compensation and tax withholding. A Form 1099 lists the gross payments made to independent contractors.
    • Employer status: Form 1099 is for independent contractors, while Form W-2 is for employees. The distinction lies in the employer’s level of control over the worker and the worker’s ability to control their own work.
    • Tax withholding: Employers are required to withhold income taxes, Social Security, and Medicare taxes from the wages of W-2 employees. Independent contractors receiving 1099 income are responsible for paying their own taxes, including self-employment tax.
    • Benefits eligibility: W-2 employees are typically eligible for employer-sponsored benefits such as health insurance, retirement plans, and paid time off. Independent contractors receiving 1099 income do not qualify for these benefits.
    • Reporting requirements: Employers must report the income paid to 1099 workers on Form 1099-MISC if the amount exceeds $600 in one year. W-2 wages must be reported regardless of the amount.
    • Deadlines: Form 1099 must be provided to recipients and filed with the IRS by January 31st of the following year. Form W-2 must be provided to employees by January 31st and filed with the Social Security Administration by January 31st (if filing electronically) or February 28th (if filing by paper).

    Misclassification Risks And Penalties

    Having different types of employees within your business can be challenging. Should you accidentally misclassify an employee as an independent contractor (a 1099 employee), your business could experience hefty penalties. The Internal Revenue Service (IRS) and state agencies closely monitor worker classification and penalties for misclassification, including back taxes, interest, and fines. Additionally, misclassified workers may be entitled to retroactive benefits, such as unemployment insurance, workers’ compensation, and overtime pay, which can result in significant financial liabilities for the employer.

    How GMS Can Help With Tax And Compliance

    GMS has a comprehensive payroll tax management solution that can assist businesses in ensuring compliance with tax regulations and the proper classification of employees and independent contractors. The following is how GMS can help:

    • Payroll integration: GMS integrates with our payroll systems (GMS Connect), ensuring accurate tax withholding and reporting for W-2 employees.
    • Contractor management: GMS can help track and manage independent contractors, ensuring proper 1099 reporting and compliance with relevant laws and regulations.
    • Compliance monitoring: GMS can provide alerts and reminders for tax filing deadlines, helping businesses meet reporting requirements for 1099 and W-2 forms.
    • Audit support: In the event of an audit, GMS can provide comprehensive records and documentation to support worker classification and the accuracy of tax reporting.
    • Worker classification guidance: GMS can offer guidance and best practices for properly classifying workers as employees or independent contractors, minimizing the risk of misclassification.
    • Centralized record keeping: GMS provides a centralized platform for storing and managing all worker-related records, including contracts, timesheets, and payment records, ensuring easy access and organization during audits or legal proceedings.

    By leveraging the expertise GMS provides to small businesses, business owners can streamline their workforce management processes, maintain compliance with tax regulations, and ensure proper classification of employees and independent contractors, minimizing the risk of penalties and fines. Ready to streamline your payroll processes? Contact us today to talk to one of our experts about how we can help your business.

  • The Internal Revenue Service (IRS) has recently released the 2024 Form 941, Employer’s Quarterly Federal Tax Return, along with Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors, and Schedule R, Allocation Schedule for Aggregate Form 941 Filers. These updated forms, along with instructions, are now available here.

    As a business owner, learn how these changes will affect your tax reporting by reading on.

    What Employers Should Know

    Employers are advised to start using the March 2024 revision of Form 941 beginning with the first quarter of 2024. The IRS expects this revision to be utilized for all four quarters of the year. In addition, a notable change is the removal of COVID-19-related lines from the Form 941. This means the lines previously used to report COVID-19-related credits have been eliminated from the form. Employers will need to be mindful of this adjustment when completing their tax returns for 2024.

    Form instructions update

    The Form 941 instructions have been updated to align with the changes to the form. In addition, the updated instructions no longer include any worksheets. Employers should familiarize themselves with the revised instructions to ensure accurate completion of the form.

    Implications

    Employers are encouraged to familiarize themselves with the updated Form 941 and related schedules to ensure compliance with the latest reporting requirements. They may also need to review and adjust their internal processes and systems to accommodate the changes introduced in the updated forms. This could involve updating payroll and tax reporting software and training staff on the revised requirements to facilitate smooth and accurate reporting.

    Where GMS Steps In

    Given the dynamic nature of tax regulations, employers should stay informed about further updates or clarifications related to the revised forms. Regularly monitoring official IRS communications and updates can help employers stay ahead of any additional changes that may impact their tax reporting obligations.

    However, partnering with a professional employer organization (PEO) like GMS is here to take on this administrative task that, let’s face it, you don’t want to worry about. Our HR experts offer comprehensive HR, payroll, and compliance solutions that provide small business owners with expertise in managing tax-related matters. Small business owners can leverage the resources of a PEO to ensure seamless adaptation to the revised forms and instructions. This allows business owners to focus on their core business operations, knowing their tax reporting requirements are being effectively managed. Stay on top of regulatory changes and partner with GMS – contact us today.

  • Tax season can be a stressful time for many employees. In fact, a survey showed that 64% of individuals who were surveyed admitted that tax season introduced a level of stress to their lives. As a small business owner, you can support your employees during this period in several ways, helping them navigate the complexities of tax filing and ultimately boosting their morale and productivity. The following are five effective ways to assist your employees during tax season.

    1. Provide clear guidance and resources

    • Educate your employees: Offer informational sessions or workshops to educate your employees about tax-related matters such as deductions, credits, and filing procedures. Providing access to reliable online resources or inviting tax professionals to address common concerns can be immensely beneficial.
    • Clarify tax forms: Ensure your employees receive their W-2 form promptly and offer assistance in understanding the information provided. In addition, provide clear instructions for any other tax-related documents they may need to submit.

    2. Offer flexible work arrangements

    • Flexible schedules: Allow employees flexibility in their work schedules to accommodate tax-related appointments or personal time needed to organize their finances. This can alleviate the pressure of balancing work responsibilities with tax obligations.

    3. Support financial wellness

    • Financial counseling: Consider providing access to financial counseling services or workshops to help employees better understand their financial situation, including tax planning and budgeting.
    • Tax preparation assistance: Offer to cover the cost of professional tax preparation services for employees or negotiate group discounts with local tax preparers. This can alleviate the burden of navigating complex tax laws and regulations.

    4. Recognize and reward dedication

    • Acknowledge hard work: Recognize your employees’ efforts during tax season and express appreciation for their dedication and hard work, whether through verbal recognition, small tokens of appreciation, or additional time off once the tax season has concluded.
    • Incentive programs: Consider implementing incentive programs tied to tax season productivity or accuracy, such as bonuses or extra paid time off for exemplary performance during this challenging period.

    5. Foster open communication

    • Encourage dialogue: Create an open and supportive environment where employees feel comfortable discussing their concerns about tax-related stress. Encourage managers to check in with their team members regularly to offer guidance and support.
    • Seek feedback: Request feedback from employees about their experiences during tax season and use their input to continually improve the support you provide in future tax seasons.

    By implementing these strategies, small business owners can demonstrate their commitment to the well-being of their employees and help alleviate the stress associated with tax season. Supporting employees through this challenging time not only fosters a positive work environment but also contributes to enhanced employee satisfaction and loyalty.

    As a small business owner, prioritizing your employees’ well-being during tax season can yield long-term benefits, including improved morale, increased productivity, and a stronger sense of loyalty and dedication among your team. Remember, by investing in your employees’ well-being, you’re investing in the success and sustainability of your business.

    One Final Consideration

    While the five items listed above are great options to help support your employees during tax season, consider partnering with a professional employer organization (PEO) instead. A PEO like GMS is your one-stop shop for a smoother and more efficient tax season for you and your employees. PEOs provide their expertise in payroll management, tax compliance, and employee benefits administration, ultimately lifting the administrative burden off the business owner’s shoulders and ensuring all tax-related processes are handled accurately and efficiently. Through partnerships with PEOs, business owners can streamline their tax-related responsibilities, allowing their employees to focus on their work with peace of mind and contributing to a more efficient work environment. Contact our experts today!

  • The Internal Revenue Service (IRS) has recently unveiled a voluntary disclosure program for employers who mistakenly claimed the Employee Retention Credit (ERC). The ERC, a refundable tax credit, was designed to aid businesses that faced hardships due to closures and event cancellations mandated by state and local governments during the pandemic.

    Understanding The Issue

    Despite the noble intent behind the ERC, numerous employers who were ineligible for the credit applied for and received funds. This was partly due to misinformation provided by scammers. As a result, the IRS initiated a disclosure program to rectify these erroneous claims, which is open for participation until March 22nd, 2024.

    Consequences Of Erroneous Claims

    Employers who erroneously claimed the ERC face multiple repercussions, ranging from financial penalties to potential criminal investigations. If the funds have not been received, employers can withdraw their ERC claim, essentially nullifying the claim. Completing the voluntary disclosure paperwork and returning 80% of the total credit is necessary for those who have already received the funds.

    However, failure to rectify these claims may lead to audits by the IRS and subsequent demands for the full refund of the credit, along with interest and potential penalties. In cases of fraud, employers could even face criminal investigations and prosecution for submitting false tax claims to the IRS.

    Eligibility Criteria For The ERC

    To qualify for the ERC, a business must meet one of the following criteria:

    • Sustained a full or partial suspension of operations due to a government order limiting commerce, travel, or group meetings because of COVID-19 during 2020 or the first three quarters of 2021
    • Experienced a significant decline in gross revenue during 2020 or a decrease in gross revenue during the first three quarters of 2021
    • Qualified as a recovery startup business for the third or fourth quarters of 2021

    In addition, certain agencies, such as government agencies and employers that faced supply chain disruptions but did not experience a government-ordered suspension of operations, are not eligible for the credit.

    Challenges And Confusion

    Determining eligibility for the ERC can be challenging for employers, particularly in assessing the significance of revenue downturns or operational slowdowns. The complexity of this criteria has led to confusion among employers, with many unsure if they were rightfully entitled to the credit.

    The situation has been worsened by aggressive marketing tactics employed by some firms, which encouraged businesses to apply for credit even if they were not eligible. Employers were enticed with promises of substantial funds, often at the request of marketers who stood to gain a percentage of the claimed tax credit.

    Recommendations And Guidance

    Given the complexities and potential pitfalls associated with the ERC, it’s crucial for employers to seek guidance from trusted tax advisors. Advisors who do not stand to benefit from the credit can offer unbiased counsel, helping employers navigate eligibility requirements and make informed decisions.

    In light of the IRS’ voluntary disclosure program, employers are urged to take a close look at their ERC submissions and reassess their eligibility with the assistance of legal, accounting, and HR professionals. This presents a limited window of opportunity for employers to rectify any erroneous claims and avoid potential repercussions.

    In addition, it’s essential for employers to be aware that wages reported as payroll costs for the Paycheck Protection Program (PPP) loan forgiveness cannot be used to claim the ERC. The PPP, established by the CARES Act, provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.

    Looking For Assistance?

    The IRS’ new voluntary disclosure program offers employers an opportunity to rectify erroneous ERC claims and avoid potential legal and financial consequences. By seeking expert guidance and carefully reassessing their eligibility, employers can navigate this complex landscape with confidence and integrity. Not sure where to start? GMS, a certified professional employer organization (CPEO), provides business owners with valuable assistance and guidance. The following are several ways GMS can support businesses through this process:

    • Expert guidance on eligibility: GMS can provide expert advice on the eligibility criteria for the ERC, helping businesses assess their qualifications for the credit based on the specific requirements outlined by the IRS.
    • Compliance support: GMS is equipped to ensure that businesses comply with the ERC’s stringent guidelines. They can help employers navigate the complex compliance landscape, minimizing the risk of errors and ensuring adherence to the program’s terms.
    • Strategic advisory services: GMS can offer strategic advisory services, guiding employers on the best course of action regarding their ERC claims and voluntary disclosure.

    Contact our HR experts today to learn more.

  • Small business owners have the opportunity to evaluate their processes and find ways to enhance efficiency and productivity. While reflecting on your operations, you may realize that payroll management demands more attention than you initially thought. Let’s face it: you didn’t start your business to become an expert in payroll and spend countless hours on processing. Whether in construction, manufacturing, health care, plumbing, or any other industry, payroll is likely the last task you want to spend your precious time on. You started your business for a reason, driven by passion or a need you identified, and running payroll probably wasn’t part of that vision.

    Fortunately, outsourcing your payroll processes can be the solution you’ve been looking for. You might be unfamiliar with what outsourcing entails, or perhaps you’ve been bombarded by outsourcing companies claiming to be your payroll saviors. It may seem too good to be true, but we’re here to share the truth! Continue reading to explore the benefits of outsourcing your payroll and how it can save you countless hours.

    What Is Payroll Outsourcing?

    Let’s start with the basics: what is payroll outsourcing? Payroll outsourcing is the practice of delegating payroll-related tasks to a third-party service provider such as a professional employer organization (PEO). Instead of handling payroll in-house, businesses can entrust this crucial responsibility to experts specializing in payroll management. These outsourcing companies have the knowledge, resources, and technology to efficiently handle payroll processes such as:

    • Wage calculation
    • Tax deductions
    • Issuing payment to employees
    • And more!

    Outsourcing your payroll processes allows business owners to free up valuable time, enabling them to focus on their core operations and strategic goals. In addition, payroll outsourcing ensures compliance with ever-changing tax regulations and reduces the risk of errors or discrepancies. It offers a seamless and streamlined solution that eliminates the hassle and complexity associated with managing payroll internally.

    Now, let’s explore the five signs your business needs to outsource payroll.

    1. You Don’t Have Enough Time

    Handling payroll in-house can be a time-consuming and complex task. Small business owners often find themselves dedicating countless hours to managing payroll, which takes away valuable time from other critical business functions. According to The Business Journals, a survey found small business owners spend 5 hours or more each pay period or 21 days each year managing payroll. When you outsource your payroll, business owners can free up this time and allocate it towards activities that directly contribute to their business growth.

    In addition, outsourcing payroll eliminates the need to hire and train specialized staff, invest in payroll software, and constantly update systems to comply with changing regulations. These costs can quickly add up for small businesses. Instead, by opting for payroll outsourcing, business owners can redirect these resources towards areas that help their business thrive, such as product development, customer service, or marketing efforts.

    2. You Struggle Keeping Up With Regulatory Demands

    Payroll management requires a deep understanding of complex tax laws and regulations. Mistakes in payroll calculations or non-compliance with legal requirements can lead to severe consequences, including penalties, fines, and damage to the business’s reputation. By outsourcing payroll to experts who specialize in this field, small business owners can ensure accurate and timely payment of wages, taxes, and benefits. 40% of small businesses pay an average of $845 annually in IRS penalties because of mismanaged payroll processes.

    On the bright side, payroll outsourcing providers stay up-to-date with the latest regulatory changes, ensuring that businesses remain compliant at all times. They have the knowledge and expertise to handle tax filings, deductions, and reporting requirements, minimizing the risk of errors or oversights. This accuracy saves businesses from potential financial losses and provides peace of mind.

    3. You Need Security And Confidentiality

    Data security is a critical concern for businesses, regardless of their size. Payroll outsourcing providers invest heavily in robust data security measures to protect sensitive employee information. To safeguard data from unauthorized access, breaches, and identity theft, they utilize the following:

    • State-of-the-art technology
    • Secure servers
    • Encryption protocols

    By outsourcing payroll, small business owners can benefit from the expertise and resources of these providers, ensuring their payroll data is handled with confidentiality. This allows business owners to focus on their core activities, knowing that their employees’ personal and financial information is secure.

    4. Your Business Is Growing

    As businesses grow and evolve, the complexity of payroll management increases. Outsourcing payroll offers scalability and flexibility, allowing small business owners to adapt to changing needs without disruptions. Whether adding new employees, accommodating seasonal variations, or expanding into new markets, outsourcing providers can quickly scale their services to meet the requirements.

    Outsourcing providers have the infrastructure and resources to handle payroll for businesses of all sizes. They’re equipped to manage payroll across multiple locations, handle different pay structures, and integrate with various HR systems. This flexibility ensures that payroll processes remain seamless and efficient, regardless of fluctuations in the business landscape.

    5. You Need Access To Expert Support

    Payroll outsourcing providers not only handle routine payroll tasks but also provide expert support and advice. Their team of professionals specializes in payroll management and stays updated with industry trends, regulations, and best practices. This expertise is invaluable for small business owners who may not have dedicated payroll staff or the time to stay informed about the ever-changing payroll landscape.

    When business owners outsource their payroll, they gain access to a team of experts who can address any payroll-related queries, provide guidance on compliance, and assist with complex issues such as tax filings, benefits administration, and regulatory requirements. This support ensures that small business owners can make informed decisions, minimize potential risks, and maximize efficiency in their payroll processes.

    Meet Group Management Services (GMS)

    Long story short, if you’re a small business owner, consider partnering with a PEO. If you want to free up your time for the first time in who knows how long, you’ve come to the right place. I get it; it seems too good to be true, but it is the truth. Say goodbye to restless nights wondering about the what-ifs and what could’ve been. We’re here to bring your dreams to life.

    By entrusting payroll-related tasks to experienced professionals like GMS, businesses can save time, resources, and energy that can be redirected toward their core operations and strategic goals. Not to mention, we ensure compliance with complex tax regulations, minimize the risk of errors or discrepancies, and provide a seamless and streamlined payroll management solution. Stop thinking about it and get a quote from us today. You’re one click away from a brighter future!

  • Effective payroll management is one of the most essential parts of operating a successful business. It’s a complex process that, if mishandled, can result in serious legal repercussions, fines, and reputational harm. Payroll responsibilities go beyond the distribution of paychecks; they encompass a range of regulatory compliance and detailed record-keeping that can be confusing.

    As you prepare for the year ahead, it’s the perfect time to review your payroll processes and ensure your business has an efficient payroll system in place. This will help ensure compliance, foster employee trust, and ultimately contribute to the overall health of your business.

    To navigate the complexities of payroll, many small business owners turn to partnerships with professional employer organizations (PEOs). These organizations have expertise and specialized tools designed to streamline the payroll process and maintain compliance and efficiency. However, if you’re determined to tackle payroll alone, there are a few common errors you should be aware of.

    Common Payroll Mistakes To Avoid

    Employee misclassification is one of the most frequent pitfalls employers make. Employee classification is a framework used to categorize workers, which in turn dictates their pay structure and tax obligations. This classification also plays a role in determining eligibility for company benefits and differentiates between U.S. citizens and non-citizens.

    Under the Fair Labor Standards Act (FLSA), employers must categorize their employees as either exempt or non-exempt. Exempt employees typically receive a salary and are not subject to overtime and minimum wage laws. In contrast, non-exempt employees are paid hourly and are entitled to overtime pay and minimum wage protections. Misclassifying employees can result in over or underpaying your staff. Additionally, it can cause issues when determining if an employee receives benefits and overtime.

    In addition to exempt vs. non-exempt classification, another error is classifying an individual as an independent contractor rather than an employee. This misclassification can be costly as you will have to make back payments or other adjustments to rectify that employee’s pay. This not only affects the financial aspect of a business but can also have legal and reputational consequences.

    Hourly tracking and overtime

    Overtime compensation (1.5 times the regular pay) is mandatory for the following: 

    • Employees clocking in more than 40 hours per week
    • Work performed during designated breaks 
    • Travel time spent moving between job sites
    • Participation in activities beyond usual work hours, such as team-building events, training sessions, or other company-sponsored activities. 

    For non-exempt employees, meticulous tracking of work hours and any overtime is a legal obligation. Without close monitoring, you risk over or underpaying your staff, leading to a lengthy and complex correction process. It can also be uncomfortable for employees who might have to repay the company.

    Poor record keeping

    Keeping accurate records is a must for any business, especially regarding payroll. Under the FLSA, employers must keep accurate pay records for at least three years. These records should include specifics such as the number of hours worked, pay rates, and the dates of each payroll period. It’s a critical step to maintain compliance with labor laws and ensure everything’s squared away if any questions or issues arise down the line.

    Miscalculations

    It’s critical to double-check your team’s pay. Ensure you have the right tax rates, calculate overtime correctly, and understand how deductions should be applied. Payroll errors can be a hassle, but by taking the time to ensure everyone is paid correctly, you can save yourself a lot of headaches later on.

    Inaccurate paperwork

    Employees must complete W-2 forms to ensure accurate documentation of benefit withholdings, 401(k) plans, and health spending accounts (HSAs). Employees rely on their W-2s to file their annual tax returns; even a single mistake can lead to considerable complications and annoyance for you and your employees. Ensuring the accuracy of these forms is crucial for a smooth tax filing process.

    Missing deadlines

    According to Form 941, employers must make payroll tax payments periodically throughout the year. The frequency of these payments, whether monthly, semiweekly, or on the next day, depends on your total payroll amount and how long your business has been operating. Make sure you understand which depositor category applies to your business and adhere strictly to the corresponding deadlines. Neglecting to meet these payment obligations can result in substantial fines and legal consequences, which could be detrimental to your business.

    Garnished wages

    It’s important to understand that not all wage garnishments are handled in the same way. Obligations such as fines, taxes, and child support each have their own set of rules that can vary by state. You must adhere strictly to the instructions given by the issuing authority, such as the Internal Revenue Service (IRS), a state tax agency, or the U.S. Department of Education.

    Incorrectly handling your employees’ wage garnishments, such as neglecting to file or filing improperly, can have serious consequences. You could face legal judgment against your business that requires you to pay the total amount of the employee’s debt, meaning this isn’t something you can afford to mismanage.

    In addition to the common mistakes mentioned here, there are many less common mistakes we haven’t covered. So, it’s essential to keep a watchful eye over your payroll practices. Ensure you have robust systems in place and stay up-to-date on new laws and regulations in your area to remain compliant. Set yourself up for success next year by conducting a detailed review and audit of your payroll operations.

    How GMS Can Help 

    For small business owners, managing payroll and tax filings can be one of the most time-consuming and challenging tasks. Through expert payroll management services, GMS can save time and give you peace of mind. 

    We seamlessly blend proprietary technology with dedicated HR services and support from our expert employees. We offer: 

    • Payroll processing
    • Payroll software
    • Payroll tax management
    • Employee self-service

    Stop spending time worrying about payroll and start spending time growing your business. GMS is more than just another payroll management company – we’re a PEO that provides comprehensive HR solutions to solve your payroll and other administrative issues. Contact us today!

  • The Internal Revenue Service (IRS) unveiled its annual adjustments for the upcoming year, and among the updates include the changes in transportation fringes and flexible spending arrangements (FSAs). These changes outlined in Rev. Proc. 2023-34, released on November 9th, 2023, shed light on the cost-of-living adjustments (COLAs) for 2024, signaling notable shifts in various financial parameters. A COLA is an increase made to Social Security and Supplemental Security Income (SSI) to counteract the effects of inflation.

    Enhancements In Transportation Fringes And Qualified Parking

    In 2024, employers can exclude from gross income amounts related to qualified transportation fringe benefits and parking. The new threshold for exclusion has risen to $315 per month, a substantial jump from the previous year’s $300. This upward adjustment reflects the evolving landscape of transportation costs and seeks to provide individuals with additional financial flexibility.

    Flexibility And Expansion In Flexible Spending Arrangements (FSAs)

    The changes don’t stop there. The dollar limitation for voluntary employee salary reductions saved for contributions to health FSAs has been raised to $3,200 for plan years starting in 2024, up from $3,050 in 2023. This upward revision allows individuals to allocate more pre-tax income toward their health care expenses, potentially alleviating the financial burden of medical costs.

    In addition, for those utilizing cafeteria plans allowing the carryover of unused amounts in FSAs, the maximum carryover amount has been adjusted to $640, up from $610 in the previous year. This enhancement in the maximum carryover amount allows individuals to retain a more significant portion of their unspent funds, providing a safety net for unforeseen medical expenditures.

    Additional information about the complete coverage will be in Payroll Currently.

    Implications For Employers And Individuals

    Employers will need to reassess their benefit offerings and adjust them in accordance with the updated limits. This entails revisiting policies related to transportation benefits, FSAs, and cafeteria plans to ensure compliance with the new thresholds. In addition, individuals should leverage these revised limits to optimize their tax savings and health care budgeting for the upcoming year.

    The Assistance Of A PEO

    The 2024 IRS cost-of-living adjustments bring pivotal changes in transportation fringes and FSAs, offering avenues for optimized tax planning and health care budgeting. However, for businesses navigating these updates, the complexities might be challenging. Fortunately, a professional employer organization (PEO) like GMS is here to help. A PEO assists with ensuring compliance with these revisions and provides expertise in managing benefits, payroll, HR, and the intricacies of changing regulations. Collaborating with a PEO can empower businesses to seamlessly adapt, leveraging these updates to enhance employee benefits and streamline operations with evolving IRS standards. Embracing these changes with the support of a PEO could be the catalyst for businesses to thrive in the dynamic financial landscape of 2024 and beyond. Contact our HR experts today to learn more.

  • The Alabama Department of Revenue’s Income Tax Administration has recently announced three rules set to reshape the landscape of overtime wages and withholding taxes. With an effective date of December 3rd, 2023, these changes usher in a new era for employers and employees, significantly altering how overtime wages are handled for tax purposes.

    Diving Deeper Into The Law

    One of the most notable changes comes in the form of Ala. Admin. Code r. 810-3-72-.01, where the Department of Revenue has amended existing rules to exclude the entirety of overtime wages paid to full-time hourly employees from Alabama withholding tax. This shift marks a departure from the previous requirement that employees engaged in exempt and nonexempt work have either all or none of their earnings taxed. The amended rule, effective from January 1st, 2024, through June 30th, 2025, does not apply to salaried or alternative payment methods.

    Qualifications And Definitions

    To provide additional clarity for employers, Ala. Admin. Code r. 810-3-72-.02 introduces new definitions and qualifying information. The rule defines an hourly wage-paid employee and clarifies that gross income will not include amounts received for hours worked over 40 per week, even if paid at the regular rate. In addition, the exclusion of paid time off (PTO) and holiday pay from determining hours worked over 40 per week adds an extra layer of nuance to the exemption calculation.

    The rule also has exceptions for salaried employees, those compensated through alternative methods, and those receiving commissions and bonuses in addition to an hourly wage. These distinctions aim to provide a comprehensive framework for employers navigating the complexities of overtime wage calculations.

    Reporting Requirements

    Alabama employers now face enhanced reporting requirements, as outlined in the Department of Revenue’s third rule, amending Ala. Admin. Code r. 810-3-74-.01. Beginning January 1st, 2024, employers must report the total amount of exempt overtime wages for the filing period and the total number of employees who received such wages. These requirements apply to monthly and quarterly filings (via Form A-6 or Form A-1, respectively), placing an increased burden on employers to ensure accurate and timely reporting.

    Embracing Technological Advances

    Acknowledging the need for efficient reporting, the Department of Revenue’s third rule allows employers to comply with the new reporting requirements electronically. Encouraging the use of electronic filing for Form A-6 and Form A-1, employers can now seamlessly report total exempt overtime wages and the number of employees receiving such payments through the Department of Revenue’s website.

    Closing The Compliance Gap

    Alabama’s recent change to overtime wage regulations introduces a paradigm shift for employers, requiring meticulous attention to compliance and reporting. The amendments to withholding tax rules underscore the need for businesses to stay on top of evolving legislation. As these changes take effect, small business owners face the challenge of navigating intricate reporting requirements, which is where a professional employer organization (PEO) comes in. PEOs like GMS specialize in managing HR-related tasks, ensuring compliance with ever-changing laws, and providing valuable support in navigating complex regulations. By partnering with GMS, small business owners in Alabama can streamline their operations, reduce administrative burdens, and focus on what matters most – growing their business in a dynamic and competitive landscape. Contact GMS’ compliance experts today.

  • As of January 1st, 2024, California will be ushering in a new era of employee rights and benefits. Thanks to Senate Bill 616, a groundbreaking piece of legislation passed in 2023, significant changes are coming to the state’s paid sick leave (PSL) policies. These changes represent a huge win for employees across California, as they mark a significant increase in PSL entitlements, accrual caps, and front-loading options. Continue reading to learn more about this law and what it means for California business owners and employees.

    Increased PSL Entitlement

    The most notable change that employees will enjoy under the revised law is an increase in PSL entitlement. Previously, employees were entitled to 24 hours or three days of paid sick leave per year. With the new law taking effect, this entitlement will jump to a more substantial 40 hours or five days of paid sick leave per year. This adjustment ensures that employees have more time to take care of their health and well-being without worrying about lost income.

    Accrual Cap And Front Loading

    In addition, the new law introduces changes to the accrual cap and front-loading options. In the past, employees could accrue up to 48 hours or six days of PSL per year. This cap will now be raised to 80 hours or 10 days per year. This means that employees will be more flexible in managing their paid sick leave and can accumulate more time for unforeseen health issues.

    Front-loading is another exciting aspect of this law. Front-loading means employers give employees their paid sick leave hours in one lump sum at the beginning of the year. If employers choose to front-load PSL for their employees, the law mandates specific timelines for doing so. By the 120th calendar day of employment, employees must receive no less than 24 hours of PSL. By the 200th calendar day, they should have a total of 40 hours of PSL. This feature ensures that employees can access their PSL benefits early in their employment, offering peace of mind from the very beginning.

    Rate Of Accrual

    The rate of PSL accrual remains unchanged, with employees earning one hour of PSL for every 30 hours worked. This fair system ensures that employees accrue their benefits gradually over time, aligning with their actual working hours.

    Local PSL Laws Preemption

    Another significant aspect of the new law is the prohibition of local PSL laws from regulating certain issues related to PSL. This means that state law will take precedence over any local regulations, creating a more uniform system across the entire state. While local laws were once a patchwork of rules and regulations, this new provision will streamline PSL policies and make it easier for employees and employers to understand their rights and obligations.

    Navigating The Changing Landscape

    With these significant changes in California’s paid sick leave laws, business owners might wonder how they can best navigate the evolving landscape while ensuring compliance and providing the best benefits to their employees. If you’re a business owner in California wondering this, we’re here to share the benefits of partnering with a professional employer organization (PEO) like GMS. GMS’ HR experts assist with HR management, employee benefits, and navigating the intricate maze of labor law compliance. We guide business owners to streamline their operations, stay ahead of evolving regulations, and foster an empowering work environment.

    Partnering with GMS amidst this complex landscape of California equips business owners to seamlessly transition into the new PSL era. This ensures not only compliance with laws and regulations but also the ability to allure and retain top-tier talent in the competitive job market. Interested in learning more? Contact our HR experts today.