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  • Under the Pennsylvania Minimum Wage Act (PMWA), the new state wage-and-hour regulations will take effect on August 5th for tipped and salaried nonexempt workers. The PNWA establishes a fixed minimum wage and overtime rate for employees in Pennsylvania. In addition, it sets forth compliance-related duties for the Department of Labor & Industry and employers. These changes align with additional federal regulations, including raising the tipped employees’ minimum wage to $7.25 an hour.

    New Regulation Requirements 

    Pennsylvania employers are now required to calculate the regular pay rate for salaried, nonexempt employees by adding all remuneration for the workweek and dividing this by 40 hours. In addition, to calculate the overtime pay due, the regular rate is:

    • Multiplied by 1.5
    • Then, multiplied by the number of hours worked more than 40 in that workweek

    The new formula for calculating overtime premiums for salaries of nonexempt employees is:

    • [(Weekly salary + any other remuneration not excluded under 34 Pa. Code § 231.43(a)) ÷ 40 hours] × 1.5 × OT hours = Total Overtime Owed

    This new formula for salaried nonexempt overtime workers is a departure from the Fair Labor Standards Act’s (FLSA) fluctuating workweek (FWW) method of calculating overtime premium pay for salaried nonexempt employees.

    What This Means

    Pennsylvania’s new formula for calculating overtime pay for salaried nonexempt employees was created to be more protective for workers. In addition, it will result in greater overtime pay for employees than before with the federal FWW formula. All employers in Pennsylvania should consider re-evaluating whether their practices comply with the new PNWA formula.

    Is It Time For Your Business To Invest In Payroll Outsourcing Services?

    It’s no secret that payroll management is a long and tiring process, not to mention keeping up with new regulations you must comply with. If you’re struggling, it’s time to consider outsourcing payroll administration to a professional employer organization (PEO) such as GMS. Contact us today.

  • As a business owner, you’re going to have to deal with a seemingly endless number of payroll obligations. Managing payroll for a small business isn’t easy, especially when it comes to dealing with payroll taxes.

    Between calculating payroll taxes and filling out numerous forms, approximately 40% of small businesses spend more than 80 hours per year managing the payroll tax process. That’s a lot of time, especially when it’s not always clear whether an employer should use Form 941 or 944 to report their payroll taxes. Keep reading to learn the difference between these forms and which is right for your business.

    What Is Form 944?

    Form 944 is the annual federal tax return that certain small businesses use to report employment taxes. Employers use Form 944 to report:

    • Wages you have paid
    • Tips your employees reported to you
    • Federal income tax withheld
    • Both the employer and the employee share of social security and Medicare taxes
    • Additional Medicare Tax withheld from employees
    • Current year’s adjustments to social security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance
    • Qualified small business payroll tax credit for increasing research activities

    Note: While the Federal Unemployment Tax Act (FUTA) is also considered a payroll tax, employers should use Form 940 to report their federal unemployment tax contributions.

    However, the following employers can’t file Form 944:

    • Household employers
    • Agricultural employers
    • Employers who are notified by the Internal Revenue Service (IRS) to file quarterly Forms 941
    • Employers who aren’t notified to File form 944

    This form is generally used by small business employers with an estimated annual payroll tax liability of $1,000 or less.

    New employers can request to file 944 tax forms when they apply for an employer identification number (EIN). If a business has previously filed 941 forms, they can submit a request to the IRS to file Form 944 instead. For more info, check out IRS.gov for instructions on how to request a 944 form.

    What Is Form 941?

    Form 941 is a quarterly federal tax return used by most employers to report the same employment taxes. Most businesses file Form 941 unless the IRS has notified them that they qualify for the annual filing option via Form 944.

    Key Differences Between Form 941 And Form 944

    Below is a summary table outlining the key distinctions:

    Who should file?

    • Form 941: Employers with an estimated annual tax liability of more than $1,000
    • Form 944: Small business employers with an annual tax liability of $1,000 or less

    When to file:

    Form 941: Due quarterly on:

    • April 30
    • July 31
    • October 31
    • January 31

    Form 944: Due annually by January 31.

    Tax Deposit Requirements:

    Form 941:

    • If total taxes are less than $2,500 per quarter, deposit taxes when you file the form
    • If the tax liability is $50,000 or less, deposits are made monthly (due by the 15th of the following month)
    • If more than $50,000, deposits are made semiweekly based on your payday schedule

    Form 944:

    • If annual tax liability is less than $2,500, payment is made filing Form 944.
    • If annual liability exceeds $2,500 but each quarter remains under that threshold, payment is due by the last day of the month following the end of the quarter
    • If a quarter’s liability is $2,500 or more, deposits follow the monthly or semiweekly guidelines

    Note: Regardless of the deposit schedule, the IRS recommends using the Electronic Federal Tax Payment System (EFTPS).

    Should You Switch Your Filing Requirement?

    New guidance from the IRS provides flexibility for businesses whose estimated tax liability does not match their current filing requirement. Consider the following:

    • If you currently file Form 944 but estimate your annual tax liability will be more than $1,000, you may be eligible to switch to filing Form 941
    • If you currently file Form 941 but expect your annual tax liability to be $1,000 or less, you may be eligible to switch to Form 944

    To request a change:

    • Send a written request postmarked by March 15
    • Call the IRS at 800-829-0115 by April 1

    For more detailed instructions or to initiate a change, visit IRS.gov.

    What Information Do You Need To File Forms 941 And 944?

    Although the total tax thresholds are different, both 944 and 941 tax forms require businesses to provide the same types of information. Any business filing these tax forms must report the following information to the IRS.

    • Employer information (e.g., EIN, name, and address)
    • Total number of employees that were paid
    • Employee compensation (wages, tips, and anything else paid to employees)
    • The amount of federal income tax, Social Security tax, and Medicare tax paid by the business and withheld from employees
    • Total amount of tax liability
    • Paid sick or family leave wages, if applicable
    • Consolidated Omnibus Budget Reconciliation Act (COBRA) information, if applicable
    • Any necessary adjustments

    How To File Forms 941 And 944

    The IRS gives businesses two ways to file Forms 941 and 944:

    • By mail
    • E-filing

    There are different mailing addresses for businesses depending on their location, special exemptions, and whether the business is deciding to file and pay their payroll taxes at the same time. Fortunately, the IRS lists out every possible scenario on their website:

    Businesses that want to e-file payroll tax forms can also choose to do so online. This process is not only quicker, but also more secure. Employers can choose to e-file Forms 941 or 944 on their own or have a tax professional submit these forms on their behalf. The IRS provides guidelines for how to e-file Forms 941 and 944 on their website.

    Forms 941 and 944 ready to be filled out.

    Correcting Mistakes On Your Payroll Tax Forms

    At some point, you might discover an error on a filed Form 941 or Form 944. The IRS allows you to correct errors by filing:

    • Form 941-X: To correct mistakes on a previously filed Form 941
    • Form 944-X: To correct mistakes on a previously filed Form 944

    The deadlines for corrections depend on whether you underreported or overreported your taxes. Consult the IRS guidelines for detailed deadlines and procedures.

    Streamline Your Payroll Process

    Managing payroll taxes, and choosing the right form, can be complex and time-consuming. At Group Management Services (GMS), we help you navigate these complexities by:

    • Ensuring you use the correct form based on your tax liability
    • Keeping you up-to-date on IRS deadlines and filing requirements
    • Assisting with electronic filing and tax deposit scheduling

    By streamlining your payroll processes, you can save valuable time and reduce the risk of IRS penalties, leaving you free to focus on growing your business.

    How GMS Can Help

    At GMS, we understand that payroll and tax compliance can be overwhelming. Our comprehensive solutions include:

    • Payroll & tax compliance: We handle all of your payroll processing and tax filing needs accurately and on time
    • Expert human resources (HR) support: Our team stays current on federal requirements so that your business is always compliant
    • Customized service: We work with businesses of all sizes nationwide, ensuring you have the support you need to simplify your operations

    Contact GMS here and let us help you take control of your payroll and focus on what really matters, growing your business.

  • A decision made by New York State explained that manual workers could sue their company over their wages being paid late. In New York, how frequently one is required to pay a worker depends on how that work is classified. It’s vital to understand who’s considered a manual worker as they must be paid on a weekly basis, not biweekly.

    Who Is Considered A Manual Worker

    In New York, a manual worker is considered a mechanic, workingman, or laborer who spends more than 25 percent of working time performing physical labor. If employees spend at least 25% of their working time engaged in “physical labor,” they will be considered a manual worker. The term “physical labor” isn’t just limited to lifting heavy objects or the back-breaking work many will consider it to reference. Instead, the term includes any worker who completes “countless physical tasks.”

    Frequency Of Paying Manual Workers

    Manual workers in New York must be paid weekly and no later than seven calendar days after the end of the week for which the wages were earned. Large employers can also pay their manual workers semi-monthly, but they must apply to the Commission of Labor.

    However, if you’re working in an executive, administrative, or professional capacity and earning more than $900 a week, the pay frequency doesn’t apply. In addition, there are some cases an employee may be considered exempt from overtime purposes as a manual laborer under the pay frequency law.

    Exemption Eligibility 

    There are large employers that could potentially apply to the New York State Department of Labor for an exemption. To qualify for the exemption, an employer must have an average of 1,000+ employees in New York during the last three years. In addition, if you’re an employer with an average of 1,000+ employees in New York within the last year and an average of 3,000+ employees outside of New York in the previous three years.

    Is It Time For Your Business To Outsource Payroll?

    If you’re a small business owner who finds it challenging to keep up with laws and regulations, consider outsourcing your payroll functions to GMS. At GMS, we provide our clients with GMS Connect, an online payroll software where your employees can keep track of their paychecks. We ensure that all employees are paid the right amount on time. Contact us today.

  • Beginning July 1, 2022, the business standard mileage rate for transportation expenses paid or incurred will be 62.5 cents per mile. The IRS recognizes the gasoline price increases which has caused this midyear change. A new rate for deductible medical or moving expenses will be in effect starting July 1, 2022. The price will be changed to 22 cents per mile as opposed to 18 cents in the first half of 2022.

    The business standard mileage rate is used to calculate the deductible costs of operating a vehicle for business purposes. In addition, the federal government and many businesses use this rate as a benchmark for reimbursing their employees’ mileage.

    IRS Commissioner Chuck Rettig stated, “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses, and others who use this rate.”

    Simplify Your Payroll Administration

    Business owners can utilize the IRS mileage rate through the support of GMS. Our team of payroll experts will be able to answer any questions you may have regarding the changing rates. Consider offering mileage reimbursement at the IRS rate so that your employees feel valued during these unprecedented times. Contact us today. 

  • The U.S. Equal Employment Opportunity Commission (EEOC) announced that the new deadline for employers to submit and certify their 2021 Employer Information (EEO-1) Component 1 has been extended. Employers who missed the original deadline of May 17th, 2022, now have until June 21st, 2022, to submit their 2021 EEO-1 reports.

    The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex, national origin, age, disability, or genetic information. Most types of work situations like firing, hiring, promoting, harassment, training, etc., are included under this law. The EEOC investigates any case related to discrimination against an employer who is covered under the law.

    EEO-1 Component 1 Data Collection

    The EEO-Component 1 report is a mandatory collection of data that all private sector companies with over 100 employees and federal contractors with over 50 employees are required to submit annually. These businesses must submit demographic workforce data such as race/ethnicity, sex, and job categories of each individual.

    Outsource Your Administration Function To GMS

    As a small business owner, it can be challenging to meet certain deadlines. Failure to comply can result in substantial penalty fees. At GMS, our experts keep you up to date on deadlines and ensure you are staying compliant with federal and state laws. Contact us today.

  • When considering partnering with a professional employer organization (PEO), many questions may cross your mind. If you’re just now learning about a PEO, you’ve taken the first step toward providing your company with more efficient and unique practices for handling your most precious assets: your employees. You may be asking, what exactly is a PEO? A PEO enables companies to cost-effectively outsource the management of human resources, employee benefits, payroll, and workers’ compensation. As a PEO, GMS leverages its collective buying power to act as one large company. A PEO works diligently with small business owners to provide them with the same buying power as a larger business through a co-employment relationship. By working with a PEO, you gain access to more cost-effective options regarding healthcare, dental, vision, and workers’ compensation.

    There are many reasons why employers use a PEO. As a business owner, you’re already aware of the amount of time and energy that goes into each aspect of managing your business. What can a PEO do for your business that will save you time and money? Continue reading to see how GMS can make your business simpler, safer, and stronger.

    Payroll

    Managing payroll and tax filings can be one of the most time-consuming and costly tasks there is within your business. Small and mid-sized companies spend an average of $2,000 per employee per year to handle payroll. When you outsource payroll with us, you gain access to:

    • Taxes & tax filing
    • Electronic onboarding
    • Pay card options
    • Garnishment administration 
    • Customized payroll reports
    • Employee documentation
    • Time clock integration
    • GMS Connect: advanced online payroll system
    • New hire reporting
    • Employee self-service portal and app
    • Compliance advice and assistance 

    Human Resources

    There are many functions when it comes to human resources management – from recruiting and retaining employees to payroll to tracking vacation time. Focusing on your company should be your number one concern. Your employees are the backbone of your business. HR management plays a role in instituting and suggesting strategies for individuals that impact the growth of your business. Creating an environment that encourages employees to do their best increases longevity in the workplace. Below are the advantages of outsourcing your human resource functions to a PEO:

    • HR audit
    • Human resources information system (HRIS)
    • Recruitment services 
    • Onboarding
    • Compliance assistance
    • Training & development programs 
    • Retention strategies
    • Recognition programs 
    • Employee relations guidance 

    Risk Management

    There are many risks associated with workers’ compensation and workplace hazards. The majority of work-related deaths, injuries, illnesses, and consequential workers’ compensation costs are preventable. With the right risk management solution, you’ll be able to create a safer work environment for your employees, which ultimately results in fewer claims and a lower workers’ compensation insurance rate. Below are benefits you gain when outsourcing risk management:

    • Claim(s) management
    • PEO discount programs
    • Drug testing
    • Workers’ compensation management 
    • Claim investigation
    • Hearing representation
    • OSHA walk-throughs
    • Safety programs & audits
    • Trainings, webinars, and more

    Benefits

    Attracting and keeping quality employees is the number one concern in today’s workplace. As many individuals are looking for new jobs, standing out from your competitors is key. One of the best ways to do this is by offering a benefits package. Offering a benefits package to your employees, show them you are invested in not only them but their future with your business. Below are examples of benefits you can offer your employees:

    • PEO benefit program
    • TPA services
    • Claims administration
    • Wellness programs 
    • Supplemental insurance programs
    • ACA compliance
    • ERISA compliance
    • RX specialist & assistance 
    • 401(k) 
    • Benefit plan offerings/administration
    • Benefit compliance reporting
    • Claim audits/case management 

    As the list of services that GMS can offer your business is extensive, our experts are here to help with any area of your business that is struggling. By choosing to partner with us, we can better understand what services will be of benefit to your business. We work with you to create a plan that’s designed specifically for the size and needs of your business. Contact us today to learn more!

  • Any employer who conducts business in Georgia has new compliance-related requirements to be considered in 2022. In order to determine the amount and type of tax credits that are available to employers, Georgia ranks all counties, census tracts, and special zones. Depending on what ranking your business falls in, it can significantly impact jobs and investment credits.

    A list of these rankings is published by Georgia’s Department of Community Affairs (DCA) at the beginning of each calendar year. The published list highlights any area that is changing and could lead to lost benefits that are available from the previous year. However, any business that is within an affected location can submit a Notice of Intent (NOI) with DCA no later than March 31st. For example, if a business filed an NOI by March 31st, 2022, that business would preserve the 2021 ranking/status for 2022, 2023, and 2024. If you do not submit an NOI in a timely manner, any business with a changing ranking or status will only be allowed to claim credits at the 2022 ranking level.

    If you plan to expand or invest in a business in the state of Georgia within the next three years, be sure to review the annual list and file an NOI if their location is within an area with benefits that are decreasing.

    Tax Credits Available To Offset State Payroll Withholding Taxes

    Depending on the location, Georgia continues to expand the availability of tax credits that can offset income tax liabilities and withholding taxes. Tier one counties, less developed census tracts, opportunity zones, and military zones are eligible for job credits. Tax years beginning January 1st, 2022, will also include investment credits for investments made in rural counties.

    The Department of Revenue established a new procedure that must be carried out through the Georgia Tax Center to claim any credits against withholding tax. This procedure was put in place to speed up the application and approvals processes. Follow these important steps that are required to use these credits to offset withholding:

    • Credit approval
    • Claiming of credit on income tax return
    • Notification of intent to utilize credit against withholding tax
    • Offsetting payments of withholding tax

    Outsource Your Payroll Administration To GMS

    Payroll tax filing requirements are complex and ever-changing. As a business owner, it can be challenging to meet payroll tax deadlines and file taxes correctly, and failure to comply can result in high penalty fees. In addition, staying on top of regulations, deadlines, and filling out forms takes time away from your busy schedule. Stop spending time worrying about these HR functions and start spending time growing your business. Contact us today!

  • Running a business is complicated enough. Having to deal with wage and hour violations only makes your ability to grow your business even more difficult.

    The majority of businesses in the U.S. are subject to the rules and regulations set by the Fair Labor Standards Act (FLSA). These rules establish standards for minimum wage, overtime pay, recordkeeping, and youth employment compliance.

    While these rules are designed to protect employees, it’s not always easy for employers to keep track of and apply these rules. It’s very easy for a simple, honest mistake to lead to an FLSA violation, which is why businesses should take the time and effort to conduct internal audits to identify any potential issues.

    Why Should Businesses Conduct Internal Wage And Hour Audits?

    The biggest reason to complete internal wage and hour reviews is quite simple – FLSA noncompliance is expensive. Violations can range from $1,000 to $10,000 each. In addition, FLSA violations could end up costing businesses in a couple of other ways. 

    According to the U.S. Department of Labor (DOL), the Wage and Hour Division took more than 24,700 compliance actions against businesses in 2021. Those actions led to more than 190,000 workers earning more than $230 million in back wages. This results in non-compliant companies owing an average of $1,211.70 in back wages for affected employees.

    In addition to back wages, financial penalties make FLSA violations even more costly for a business. The DOL will fine any company that willfully or repeatedly violates minimum wage or overtime pay requirements. These penalties include civil fines up to $1,000 for each violation.

    Repeated violations can also make a business a common target for future audits. The DOL chooses targets for wage and hour audits as part of an overall initiative or because individuals have filed complaints against a specific business. By failing an audit, the DOL has reason to check in on your business in the future for additional violations.

    An FLSA Audit Checklist

    A thorough FLSA audit includes multiple steps. Each of these steps is designed to provide a comprehensive overview of who is covered by the FLSA as well as, the different factors that can lead to violations.

    1. Review employee classifications
    2. Review regular and overtime pay calculations
    3. Review records and policies

    Employee classifications

    The first step of auditing your wage and hour practices is to examine the exemption status for all your employees. It’s essential to properly classify each employee to determine their exact employment status and whether or not they’re eligible for overtime.

    Employers conducting an audit should create a list that includes every employee. The safest way to start is to assume that every employee is eligible for overtime until proven otherwise. This employee list should include the following information to help employers determine overtime exemption status:

    • Job titles
    • Job descriptions
    • Salary information

    Once armed with this information, employers can perform a trio of tests to determine whether employees qualify as exempt or not. If an employee passes all three tests, employers can assume that they are exempt from overtime pay.

    • The salary basis test – Exempt employees must be paid a predetermined, fixed salary that cannot be reduced.
    • The salary level test – Exempt employees must meet the minimum salary threshold of $35,568, which equates to $684 per week.
    • The duties test – Employees must primarily perform a list of set duties established by the DOL.

    The easiest way to determine exemption status is whether an employee is a blue-collar worker or not. Blue collar workers are eligible for overtime, regardless of their salary. Non-salary employees are also eligible for overtime.

    When it comes to “white-collar exemptions,” employers will need to review each employee’s title, job description, and current duties. The DOL lists five separate groups as exempt from overtime pay, which are explained in-depth in our post on navigating white-collar exemptions. If a white collar employee’s duties align with any of the following groups and pass the salary tests, they are exempt.

    • Executive
    • Administrative
    • Professional
    • Computer
    • Outside sales

    Pay calculations

    Once you’ve successfully separated exempt and non-exempt employees, it’s time to review your pay practices to ensure that everyone is being compensated properly. This phase involves confirming the use of proper pay practices and calculations.

    • Ensure all hourly workers are being paid at least $7.25 per hour (or more, depending on your city/state).
    • Confirm that all employees who earned overtime were paid at least one and one-half times their regular pay rate after 40 hours of work in a workweek.
    • Double check to see if there are any employees who work in two different positions at differing rates that require special pay calculations and timekeeping practices.

    Records and policies

    An internal audit is a good time to review your company’s timekeeping policies. The FLSA requires employers to maintain a variety of records pertaining to their employees’ wages and hours. As such, your audit should confirm that your business records the following information and that all recorded information is accurate:

    • Employees’ personal information which includes, name, home address, occupation, sex, and birth date if under 19 years of age.
    • Hour and day when workweek begins.
    • Total hours worked each workday and each workweek.
    • Total daily or weekly straight-time earnings.
    • Regular hourly pay rate for any week when overtime is worked.
    • Total overtime pay for the workweek.
    • Deductions from or additions to wages.
    • Total wages paid each pay period.
    • Date of payment and pay period covered.

    How Often Should I Conduct FLSA Audits?

    In general, it’s best to perform wage and hour audits at least once a year. For example, some organizations plan a regular internal audit timed with either the beginning or end of their fiscal or calendar year.

    Another option is to conduct ongoing reviews throughout the year. This process involves more regular check-ins for compliance concerns, such as employee classifications or overtime calculations for new employees. Employers can also combine a comprehensive yearly audit with quarterly inspections to be as proactive as possible about FLSA violations.

    Stacey Larotonda, Vice President of Client Services at GMS, emphasizes, “FLSA self-audits should be done by every business on a consistent basis. It’s an easy way to make sure you aren’t hit with a significant fine should the Department of Labor want to audit you. Spending a little time on the front end can save you lots of money in the long run.”

    Protect Your Business From FLSA Violations

    A simple timekeeping mistake is all it takes to land your company in trouble with the DOL. Internal FLSA audits are one tool that employers can use to protect their business from misclassification, timekeeping errors, and other challenges. However, sometimes business owners can use some additional support.

    Simply put, most business owners don’t have the time to handle every tedious administrative task. GMS partners with businesses to help them simplify their core business functions. GMS provides your business with experts and a comprehensive web-based payroll solution to help you save time and protect your business against FLSA violations, wage and hour laws, and other costly issues. Our experts help business owners with:

    • Contractor vs. employee status
    • Recordkeeping
    • Overtime exemptions
    • Child labor

    Ready to streamline your payroll process and other HR tasks? Contact us now about how GMS can make your business a safer place.

  • As the saying goes, “To make money, you have to spend money.” While spending money is an inevitable part of running a successful business, keeping track of all your expenses without a proper process can be difficult.  

    While some companies choose to track their expenses manually, there is a quicker and safer approach: using an expense report tracking system. 

    What Are Expense Reports and What Do They Do? 

    Expense reports are special forms that outline and track business-related purchases and are submitted by employees for tracking and reimbursement purposes.  While they may be tedious to complete, these reports help streamline budgets, confirm purchases, ensure compliance through documentation, and track tax deductions.  

    Common expense report categories include the following: 

    • Travel 
    • Parking 
    • Hotels and other lodgings 
    • Gas 
    • Office expenses such as rent, utilities, office supplies, etc.  
    • Repairs and maintenance 

    The most common expense on a report is when an employee uses their own money to buy something on behalf of the business. The employee provides details on the purchase, attaches proof of payment such as an invoice or a receipt, and submits it to their employer, who then decides whether to approve or deny reimbursement. 

    What’s Included in an Expense Report? 

    While there isn’t one expense report format, there are common fields and information needed to submit a report. These fields include: 

    • Name of the employee who made the purchase 
    • The date of the purchase 
    • How the purchase was paid for (i.e., credit card, cash, etc.) 
    • Type of expense (Travel, parking, etc.) 
    • Description of the purchase 
    • Proof of payment 
    • Reimbursement total 
    • Any additional notes or information regarding the purchase 
    • Signature or approval from a supervisor 

    Top Benefits of an Expense Report Tracking System 

    Manually reviewing a long list of business expenses can be daunting, but an expense tracking system can simplify the entire process and offer several other benefits. 

    Enhanced compliance 

    An expense reporting system enables businesses to categorize expenses and produce documentation for tax returns, ensuring compliance with federal, state, and local tax laws. In the event that there is miscommunication among a team or a miscalculation, having an expense reporting system allows you to quickly review the expense in question and go over any details, making it easier to correct any mistakes made during the reimbursement process. Fixing potential expense mistakes before it’s too late can help reduce the potential for a non-compliance fine or monetary penalty.  

    Budget management 

    Expense reporting software plays a crucial role in effective budget management. It allows businesses to track and categorize expenses accurately, ensuring that cost amounts are correct and accounted for. By automating the expense reporting process, the software reduces the risk of errors and fraud while streamlining expense approval and reimbursement. This software enables businesses to make informed financial decisions and identify areas to improve and maintain compliance.  

    Saves time 

    As a business owner, your time is valuable. By automating expense reporting, you remove the need for manual processing. This not only increases efficiency but also saves you time, allowing you to concentrate on higher-value tasks, such as strategic planning and business development. Reporting software can also flag various issues and fix them in real time, reducing potential delays with reimbursement.  

    Simplify Administrative Tasks with GMS 

    Managing expense reporting alongside other responsibilities can make it challenging for business owners to concentrate on growth. That’s where a professional employer organization (PEO) like Group Management Services (GMS) can be a beneficial ally.  

    GMS’ knowledgeable experts can assist business owners with administrative functions like human resources, benefits administration, payroll, and more. GMS provides insight, assistance, and resources to help business owners effectively manage their business and employees. Our human resources information system (HRIS) allows business owners to easily manage everything from payroll to paid time off (PTO) requests to expense reporting.   

    Contact GMS to learn how we can help save you time and money with our services. 

  • The Employee Retention Tax Credit (ERTC) is set to expire at the end of 2021, but that doesn’t mean that businesses are out of time to take advantage of the credit. The exact details of the ERTC have changed since it was created by the Coronavirus Aid, Relief and Economic Security (CARES) Act in March of 2020. After multiple extensions, it’s likely that the ERTC won’t be around after Dec. 31, 2021.

    Fortunately for businesses, the most recent updates have made it easier to benefit from the ERTC. Between the Consolidated Appropriations Act and American Rescue Plan, the IRS has loosened its criteria for which businesses qualify and increased how much businesses affected by COVID-19 can claim. Here’s a breakdown of what has changed for the ERTC and how businesses can claim tax credit before it’s too late.

    Key Updates To The ERTC

    Relaxed standards for eligible businesses

    Businesses of all sizes can qualify for the ERTC. There are a variety of factors that the IRS uses to determine if a private-sector business or tax-exempt organization is eligible for the tax credit. These factors have changed over time since the ERTC was introduced in 2020. As of now, the following criteria are used for eligibility:

    • A full or partial suspension of trade or business operations during 2020 or 2021 due to governmental orders stemming from COVID-19.
    • A decline in gross receipts of more than 20% (previously 50%) during a calendar quarter in 2020 or 2021 when compared to the same quarter from the 2019 year.
    • New businesses – called “recovery startup” businesses – created after Feb. 15, 2020, and have average annual gross receipts that are $1 million or less.

    Originally, the CARES act excluded Paycheck Protection Program (PPP) loan recipients from qualifying for the ERTC. That exclusion has changed and businesses that received PPP loans can also qualify for the ERTC retroactive to March 12, 2020.

    Changes to how much businesses can claim

    The credit is based on an eligible business’ “qualified wages.” In the past, businesses with 100 or more employees would only count wages paid while the employer could not provide services due to COVID-19. The CAA changed it so that any eligible business with fewer than 500 employees can consider all employee wages as qualified for the credit whether they are subject to a shutdown order or open for business. In addition, businesses can consider any employer-paid health benefits as part of employees’ qualified wages.

    The exact amount of the credit has also changed since the ERTC was first introduced. The credit was increased from 50% of qualified wages paid during the calendar quarter to 70% thanks to the Taxpayer Certainty and Disaster Tax Relief Act of 2020. That rate was kept when the ERTC was extended through Dec. 31, 2021.

    Eligible employers can apply that 70% to their qualified wages up to a limit of $10,000 per quarter. As a result, employers can receive a maximum quarterly credit of up to $7,000 per employee, or $28,000 combined for all four quarters. However, businesses that received PPP loans will still receive a maximum credit of only $5,000 per employee.

    New exceptions for “severely distressed” employers

    Another change that the American Rescue Plan Act made to the ERTC involved loosening up some of the restrictions placed on what the IRS considered “severely financially distressed employers.” The Act allows employers to claim tax credit for all employee wages up to the limit as long as they can demonstrate reductions in gross receipts of at least 90% compared to the same calendar quarter in 2019.

    How To Claim The ERTC For Your Business

    Any eligible employers must report their total qualified wages and the related health insurance costs on their quarterly employment tax returns to claim credit. For most employers, this will require filling out Form 941 and including relevant information for each quarter. The final date to claim the ERTC is now Dec. 31, 2021.

    Businesses that may have previously missed opportunities to claim the ERTC are also in luck. Eligible businesses can retroactively claim an ERTC refund on qualified wages paid for past quarters within the ERTC timeline. Employers would need to file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, in order to make up for that lost opportunity.

    While the deadline is Dec. 31, 2021, it’s best to collect all the required documentation and submit it to the IRS earlier than that date. The quicker a business files this information, the sooner it will receive ERTC funds, as turnaround times are roughly 30 to 60 days. This need for prompt filing is especially true for Form 941-X. The estimated turnaround time for retroactive claims is roughly 90 to 120 days, and there could be significant delays as the IRS addresses its current backlog of 941-X returns.

    Prepare Your Business For The ERTC And More

    While it’s easier to qualify for the ERTC in 2021 than in the past, it’s still not a simple process. Employers still need to parse through a lot of payroll data to even determine if they’re eligible – and then they’ll have to collect and complete even more documentation to claim those important funds.

    If that sounds like a lot of complicated, tedious work, it is. That’s why so many businesses partner with GMS to manage their payroll administration and stay on top of ongoing legislative changes. While our experts take on time-consuming tasks in payroll processing and tax management, you can focus on your own business and make the most out of opportunities like the ERTC.

    Ready to simplify your business? Contact GMS now about how we can help you stay on top of tax credits and more.