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  • Running a small business is no small feat. Between managing daily operations and driving growth, it’s easy to overlook one of the most critical aspects of business success: regulatory compliance. But here’s the thing: ignoring compliance can lead to hefty fines, legal headaches, and even damage to your reputation. So, what exactly is regulatory compliance, and why should it be on your radar this April? In this blog, we’ll break down the essentials, highlight key April deadlines, and show how partnering with Group Management Services (GMS) can simplify the process while helping your business thrive. 

    What Is Regulatory Compliance, And Why Does It Matter? 

    Regulatory compliance refers to the process of adhering to laws, regulations, and standards relevant to your industry. Think of it as the rulebook your business must follow to stay on the right side of the law. For example, laws like the Sarbanes-Oxley Act (SOX) and the Federal Information Security Modernization Act (FISMA 2014) set strict guidelines for financial reporting and data security—rules that many businesses must comply with depending on their operations. 

    But compliance isn’t just about avoiding trouble; it’s a foundation for sustainable growth. Here’s why it matters: 

    • Avoid costly penalties: Non-compliance can lead to expensive fines, lawsuits, and even workers’ compensation claims. For example, failing to meet Occupational Safety and Health Administration (OSHA) standards could result in penalties that negatively impact your bottom line. 
    • Boost employee morale and retention: A compliant workplace shows employees you care about their safety and well-being. When employees feel valued, morale improves, productivity rises, and turnover drops. 
    • Enhance operational efficiency: Many compliance requirements push you to streamline processes, reduce inefficiencies, and improve the quality of your products or services. Over time, this can make your business more profitable and manageable. 

    Key Regulatory Compliance Deadlines In April 

    April is a busy month for compliance deadlines. Missing these dates can lead to penalties or missed opportunities, so mark your calendar! Here are some of the most important dates to know: 

    • April 15th: Tax Day—the deadline for filing individual and corporate tax returns. Don’t wait until the last minute to get your paperwork in order! 
    • April 30th: Employers must post OSHA Form 300A (summary of work-related injuries and illnesses) in a visible workplace location from February 1st through April 30th. This transparency informs employees and ensures compliance with OSHA regulations. 

    Pro Tip: These are just a few of the deadlines to watch. Depending on your industry, there may be additional state or federal requirements. Staying proactive can save you from last-minute stress. 

    The Risks of Non-Compliance—And How To Avoid Them 

    Ignoring regulatory compliance isn’t just risky—it’s expensive. Fines for non-compliance can range from hundreds to millions of dollars, depending on the violation. Beyond the financial hit, non-compliance can lead to legal battles, damaged reputations, and even business closures. For small businesses with limited resources, these setbacks can be devastating. 

    The good news? You don’t have to navigate this complex landscape alone. Partnering with a professional employer organization (PEO) like GMS) can take the burden off your shoulders. 

    How Group Management Services Simplifies Regulatory Compliance 

    At GMS, we understand that regulatory compliance can feel overwhelming, especially for business owners juggling multiple responsibilities. That’s why we’re here to help. When you partner with GMS, you gain access to a team of experts who can: 

    • Keep you updated: We monitor changes in state and federal laws, so you don’t have to. Whether it’s a new OSHA regulation or an update to tax codes, we’ve got you covered. 
    • Manage workers’ compensation: From claims to compliance, we streamline the process to minimize risks and costs. 
    • Provide legal guidance: Our experts offer advice to ensure your business stays compliant and avoids costly mistakes. 
    • Support your growth: Beyond compliance, GMS offers payroll assistance, recruitment support, and more, giving you the tools to scale with confidence. 

    With GMS as your trusted partner, you can focus on what you do best—running your business—while we handle the complexities of compliance. 

    Take Control of Compliance Today 

    Regulatory compliance doesn’t have to be a headache. By staying informed, meeting deadlines, and partnering with experts like GMS, you can protect your business, boost efficiency, and set the stage for long-term success. Ready to simplify compliance and take your business to the next level? Contact Group Management Services today for a free consultation and discover how we can help you navigate the regulatory landscape with ease. 

  • Tax season can be an overwhelming time for employers and employees. Between managing health care contribution amounts, ensuring timely and accurate filing, and financial planning, tax season can be challenging for business owners to navigate on their own. However, there are several strategies business owners can implement to save time, reduce their tax burden, and maximize savings. Continue reading to discover the different ways you and your employees can save this tax season.

    File on time

    • One of the easiest ways to save this tax season is by filing your taxes before the deadline. This year’s filing deadline is April 15, 2025. According to the Internal Revenue Service (IRS), for individuals and businesses that fail to file on time, the penalty is five percent of the tax due for each month the return is late. This can accrue up to 25%.

    Take advantage of available deductions and credits

    • There are several tax deductions and credits that individuals can take advantage of to achieve significant cost savings. A tax deduction allows a person to subtract a specific amount from their income when filing taxes, reducing the overall taxable income. This means that deductions can lower the amount of tax you owe. An example of a deductible expense is student loan interest.
    • On the other hand, a tax credit is an amount that you can subtract directly from the taxes you owe, reducing your tax liability and leading to substantial savings. For example, if your income falls under a certain threshold, you may qualify for the Earned Income Tax Credit. Other tax credits available are: 
      1. Work Opportunity Tax Credit (WOTC): This tax credit is available for businesses hiring individuals from targeted groups facing significant barriers to employment. These groups include, but are not limited to, veterans, ex-felons, and others.
      2. Child Tax Credit: This credit helps families with qualifying children to receive a tax break.
      3. Small Business Health Care Tax Credit: If you provide health insurance to your employees, you might be eligible for this credit.

    Invest in a retirement plan

    • Contributing to retirement plans such as 401(k)s, 403(b)s, or traditional IRAs can offer significant tax benefits. Employer contributions are tax-deductible and depending on the type of retirement plan you offer your employees; you may qualify for one or more tax credits for setting up and contributing to the plan.

    Invest and offer HSAs and FSAs

    • Using Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) is an effective way to reduce health care costs. HSAs allow contributions to grow tax-free, and withdrawals for qualified medical expenses are also tax-free. FSAs enable employees to save pre-tax funds for medical expenses, which helps lower their taxable income and Federal Insurance Contributions Act (FICA) Eligible medical expenses include copayments, deductibles, and certain over-the-counter medications. Additionally, offering HSAs and FSAs can serve as valuable tools for employee retention and recruitment, ultimately saving business owners money in the long run.

    Work with a professional employer organization

    • As tax forms, deductions, and laws evolve each year, it is becoming increasingly difficult to manage and file taxes as a business owner. Luckily, there are companies called professional employer organizations (PEOs) that can help. When using a PEO, you have access to tax professionals who can help with accurate contribution calculations and filing. PEOs can also help individuals manage their retirement plans and contributions, helping them find the best plan and contribution amount for their financial goals.

    How GMS Can Help You This Tax Season

    Focusing on tasks like cutting checks, filling out forms, keeping up with regulations, and managing tax deadlines can hinder your business growth. With Group Management Services (GMS), a certified professional  employer organization, you can transform how you navigate tax season.  By leveraging GMS’s advanced technology and the expertise of our seasoned tax professionals, you can save time, energy, and money.  Our team ensures precise tax filing and compliance with federal, state, and local tax laws, along with accurate contribution calculations. Avoid the confusion of tax season and potential financial penalties by partnering with GMS.

  • Each year, the Internal Revenue Service (IRS) releases revised forms to help individuals and businesses correctly handle federal income tax withholding. For 2025, the IRS has published updated versions of:

    • Form W-4: Employee’s withholding certificate
    • Form W-4P: Withholding certificate for periodic pension or annuity payments
    • Form W-4R: Withholding certificate for nonperiodic payments and eligible rollover distributions

    Below is an overview of each form, how they differ, and what employers should keep in mind.

    Form W-4: For Employees’ Wage Withholding

    Who uses it: Active employees earning wages or salaries.

    Purpose:

    • Informs an employer how much federal income tax to withhold from each paycheck.
    • Reflects an employee’s filing status, multiple jobs, dependents, and any additional withholding amount.

    2025 updates/reminders:

    • There is a minor tip reminding employees about the IRS tax withholding estimator.
    • The “Multiple Jobs Worksheet” (on page 3) includes updated wage thresholds for 2025.
    • Employees who haven’t adjusted their withholding since 2019 are encouraged to submit a fresh W-4 to help ensure accurate tax withholding.

    Employer tip:

    • Prompt employees to review their Form W-4 annually or whenever significant life changes occur (e.g., marriage, divorce, birth of a child).

    Form W-4P: For Periodic Pension Or Annuity Payments

    Who uses it: Individuals receiving periodic (regularly scheduled) pension or annuity distributions (e.g., monthly retirement benefits).

    Purpose

    • Tells the pension or annuity payer (often a plan administrator) how much federal income tax to withhold from each periodic payment.
    • Mirrors many of the W-4 adjustments but specifically pertains to retirement income streams rather than employee wages.

    2025 updates/reminders:

    • No major changes from the prior year, but the new form includes references to using the IRS’s tax withholding estimator (particularly beneficial for partial-year or more complex retirement scenarios).
    • Starting in 2023, payees had to switch to the “redesigned” W-4P or W-4R. This continues in 2025, so ensure retirees/pensioners are using the correct new version.

    Employer (or Plan Administrator) tip:

    • Clarify for retirees that Form W-4P only applies to periodic pension or annuity distributions. For one-time or lump-sum retirement distributions, see Form W-4R.

    Form W-4R: For Nonperiodic Payments And Rollovers

    Who uses it: Individuals receiving nonperiodic distributions or eligible rollover distributions from qualified retirement plans, IRAs, annuities, etc.

    Purpose:

    • Governs how much federal income tax is withheld from lump sums or other nonperiodic distributions, including rollover distributions (those not being paid out on a recurring schedule).
    • Often associated with a flat percentage approach.

    2025 updates/reminders:

    • Also lightly updated for 2025, with references to the IRS tax withholding estimator for more precise calculations.
    • For many nonperiodic payments, the withholding default rate may be 10% or 20% (depending on the distribution type), unless the payee specifies a different arrangement on Form W-4R.

    Employer (or Plan Administrator) tip:

    • If your business or plan pays out one-time distributions, ensure recipients understand that Form W-4R must be submitted if they wish to adjust from the default withholding percentages.

    Differences At A Glance

    Form

    Primary User

    Payment Type

    Key Notes

    W-4

    Employees with wages

    Regular wages/salaries

    Employees give this to their employers to set paycheck withholding

    W-4P

    Retirees receiving pensions

    Periodic annuity/pension

    Payees file with the plan administrator for ongoing retirement payments

    W-4R

    Recipients of nonperiodic/lump sums

    One-time distributions

    Covers distributions such as lump-sum or rollover from retirement plans

    Tips For Employers

    1. Educate your workforce
      • Provide guidance on which form is relevant. For instance, employees actively working for you submit W-4; retirees collecting monthly pension checks submit W-4P.
    1. Stay current on IRS changes
    1. Encourage updates after major life events
    • Marriage, divorce, or adopting a child may warrant a new Form W-4 or W-4P to ensure proper withholding.
    1. Distinguish between periodic and nonperiodic
    • Periodic = Repeated payments on a set schedule (W-4P).
    • Nonperiodic = One-time or lump-sum distribution (W-4R).
    1. Use reliable collection processes:
    • Keep digital or paper records consistent, and ensure new forms are collected whenever employees or payees want to change withholding amounts.

    Conclusion

    Navigating the IRS’s 2025 updates for Forms W-4, W-4P, and W-4R is crucial to maintaining accurate tax withholding for both wages and retirement distributions. Familiarize yourself with the specific scenarios each form addresses, encourage your employees and retirees to review their withholding decisions, and utilize the IRS’s online tools for best results.

    Even when you have a good understanding of each payroll form, the time and effort it takes to complete them and manage your payroll can put a serious dent in your schedule. That’s why many owners turn to Group Management Services (GMS) to handle payroll administration for their small business. Our experts take an active approach to managing your payroll so that you can spend your time growing your business instead of struggling with forms and tax calculations.

    Need assistance managing withholdings or other payroll processes? Get in touch with GMS today to see how we can support you with a streamlined, comprehensive payroll solution.

  • Setting up a 401(k) plan for your small business not only helps you stand out in the competitive job market but also offers tax credits, deductions, and retirement savings for business owners. With the passing of SECURE Act 2.0, small businesses can take advantage of even more tax incentives, making a 401(k) plan more lucrative.

    The following steps will help get you started on establishing a 401(k) for your employees.

    Why Offer A 401(k) Plan?

    Many business owners assume a 401(k) plan is too costly or complex, but the benefits can far outweigh the negatives. By offering a 401(k) plan you can:

    • Attract and retain top talent: A recent study found that after health insurance, retirement plans are tied with company leave as the second most sought-after benefit. This study also found that 401(k) plans can help reduce turnover rates and boost retention by 81%.
    • Access tax credits: Small businesses with 50 employees or less may qualify for up to $5,000 per year in startup tax credits for the first three years, and an additional $500 annually for automatic enrollment, adding up to a potential $16,500 in total savings.
    • Secure retirement savings: A 401(k) plan lets business owners contribute to their own retirement savings while offering tax-deductible contributions for their company.

    Step 1: Research Retirement Options

    If you don’t have a 401(k) set up for your business, begin by exploring providers. Look into reputable financial institutions that offer robust support, payroll integration, and easy administration. Seek feedback from other small business owners about their experiences and consider a provider that can serve you for the long term.

    Consider factors such as:

    • Cost: How much is the plan? Is there a monthly fee associated with managing the plan?
    • Investment options: What funds are available in the plan?
    • Advice and guidance: Is there advice or counsel offered for participants?
    • Customer support: Is there easy access to reliable support if technical questions arise?

    Step 2: Choose Your 401(k) Plan Type

    Once you have a provider, select one or more plan types that best fits your business and employees’ needs:

    A traditional 401(k) allows employees to make pre-tax contributions via payroll deductions. Employers can contribute on behalf of employees, offer matching contributions, or both, with these contributions potentially subject to a vesting schedule. This plan must meet nondiscrimination requirements through annual actual deferral percentage (ADP), actual contribution percentage (ACP), and top-heavy tests to ensure fairness to ensure fairness. to ensure fairness.

    A Roth 401(k) is similar to traditional plans but contributions are made with after-tax dollars. This means withdrawals from the account are tax free upon retirement.

    The safe harbor 401(k) also resembles traditional plans except this plan requires employers to make contributions that employees own right away. These contributions can either match what employees put in or be a set amount for everyone who qualifies. A safe harbor plan doesn’t have to pass the ADP or ACP tests if employers provide their employees with clear and timely information about how the plan works and what their rights are.

    Lastly, the SIMPLE 401(k) is designed for small businesses with 100 or fewer employees. It is not subject to annual nondiscrimination tests and requires fully vested employer contributions. However, employees cannot receive contributions under other plans of the employer. If an employer offers alternative retirement plans, an employee utilizing the SIMPLE 401(k) plan can’t maintain those options.

    Once you have your plan type(s) selected, you should then consider other factors such as automatic enrollment and matching contributions. Automatic enrollment self-enrolls employees in your company’s plan, increasing participation rates and potentially qualifying your business for extra tax credits. Matching contributions is when an employer matches an employee’s 401k contribution up to a certain percentage of the employee’s salary.

    Step 3: Create A 401(k) Plan Document

    Draft a plan document that meets IRS requirements and outlines the specifics of your retirement plan. This document will include the plan’s terms, contribution structure, and eligibility criteria. Work with your provider to ensure compliance with federal regulations.

    Step 4: Set Up A Trust To Hold Plan Assets

    All 401(k) plan assets must be held in a trust to protect participants’ interests. Appoint at least one trustee to manage contributions, investments, and distributions, ensuring the plan’s financial integrity.

    Step 5: Maintain Accurate Records

    Accurate record-keeping is essential for tracking contributions and plan values. Many small businesses work with a contract administrator or financial institution to simplify this process and ensure ongoing compliance.

    Step 6: Inform Your Employees

    Provide employees with a summary plan description (SPD) that explains the plan’s benefits, rights, and features. Keep employees updated on investments and any plan changes. Transparent communication helps employees make informed decisions about their retirement savings.

    Step 7: Monitor And Maintain The Plan

    Regularly review your 401(k) plan to ensure it continues to meet your business and employees’ needs. A reliable provider can assist with compliance checks, manage reporting requirements, and help maximize the plan’s value.

    Tax Benefits Of Setting Up A 401(k) Plan

    Establishing a 401(k) plan offers several tax advantages for your business including:

    • Startup tax credits: As mentioned above, small businesses with up to 50 employees may qualify for a tax credit covering 100% of startup costs, up to $5,000 per year for the first three years. Medium-sized businesses (51-100 employees) are eligible for a 50% credit on administrative costs, capped at $5,000 annually for three years.
    • Employer contribution credit: The SECURE Act 2.0 introduced a credit that allows small businesses to receive up to $1,000 per employee in employer contribution credits. This amount phases out gradually over five years, providing 100% credit in the first two years, 75% in the third year, 50% in the fourth year, and 25% in the fifth year.
    • Employer contribution deduction: Employers can deduct contributions up to 25% of eligible employees’ compensation, directly reducing federal tax liability.
    • Pre-tax deferrals for employees: Contributions reduce taxable income for the employer and employees, as pre-tax contributions defer taxes until funds are withdrawn, potentially lowering employees’ tax bills in retirement.

    Setting Up Your 401(k) With Ease

    Establishing a 401(k) plan may seem complex, but the right partner can make the process straightforward and manageable. A professional employer organization (PEO) like Group Management Services (GMS) simplifies 401(k) administration, offering expertise in plan selection, compliance, and ongoing management. Let GMS help you build a retirement plan that benefits your employees and strengthens your business.

    Ready to get started? Contact GMS today to explore how we can help you set up a 401(k) plan best suited for your business.

  • The Internal Revenue Service (IRS) has announced the annual adjustments to the standard deduction and tax brackets for tax year 2025, effective January 1, 2025. It’s important to note that these figures will be used to prepare your 2025 tax returns in 2026, not for your 2024 tax returns. Understanding these changes is vital for effective business planning and budgeting. 

    If you don’t anticipate significant changes in your financial situation for 2025, you can use these updated numbers to estimate your tax liability. However, if you expect changes such as increased income, getting married, starting a business, or having a baby, you should consider adjusting your withholding or estimated tax payments accordingly. Continue reading to understand how the adjustments impact you and your employees. 

    2025 Tax Bracket Overview 

    Each year, the IRS adjusts tax brackets to reflect changes in the cost of living, which helps maintain taxpayer purchasing power. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are: 

    • 35% for incomes over $250,525 ($501,050 for married couples filing jointly). 
    • 32% for incomes over $197,300 ($394,600 for married couples filing jointly). 
    • 24% for incomes over $103,350 ($206,700 for married couples filing jointly). 
    • 22% for incomes over $48,475 ($96,950 for married couples filing jointly). 
    • 12% for incomes over $11,925 ($23,850 for married couples filing jointly). 
    • 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly). 

    Standard Deduction And Personal Exemptions 

    The IRS defines the standard deduction as a precise dollar amount that reduces the amount of income on which you’re taxed. A standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and blindness. The standard deduction has also increased for 2025: 

    • For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. 
    • For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024.  
    • For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024. 
    • Personal exemptions for tax year 2025 remain at zero, as in tax year 2024. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017. 

    Additional IRS Adjustments 

    The IRS has updated a variety of other thresholds for 2025: 

    • Alternative minimum tax (AMT) exemption: $88,100 for single filers and $137,000 for married couples filing jointly. 
    • Earned income tax credit (EITC): Maximum EITC amount rises to $8,046 for qualifying taxpayers with three or more children. 
    • Flexible spending account (FSA): The contribution limit increases to $3,300. 

    For in-depth details regarding the 2025 adjustments, click here. 

    What Your Employees Should Know 

    The new tax brackets apply to all earnings starting January 1, 2025. Employees should be provided with the resources necessary to make informed decisions. The IRS offers a tax withholding estimator that helps individuals determine if they have too much federal income tax withheld, which could reduce their take-home pay. Alternatively, it can assist employees with additional income sources in deciding whether to withhold more or make an estimated tax payment to avoid a tax bill. Employees can also submit IRS Form W-4 to their HR or payroll department to ensure the correct federal income tax is being withheld. 

    What This Means For Business Owners 

    If you’re a business owner, it’s essential to understand the tax bracket adjustments and standard deductions. Paycheck withholding amounts and quarterly estimated tax payments can affect an employee’s income level subject to a higher tax bracket. Additionally, the following could impact your employees’ decisions: 

    Preparing For The Adjustments 

    Business owners should take proactive steps to prepare for these changes by: 

    • Reviewing payroll systems: Ensure your payroll systems are updated to reflect the 2025 tax brackets and standard deductions. This will help avoid discrepancies in employees’ paychecks. 
    • Communicating with employees: Inform your employees about the changes and how they might impact their take-home pay. Providing resources like the IRS tax withholding estimator can help them make informed decisions. 
    • Adjusting financial plans: Revisit your business’s financial plans and budgets to account for changes in tax liabilities. This includes reviewing estimated tax payments and potential impacts on cash flow. 
    • Consulting with tax professionals: Engage with tax advisors to understand the full implications of these changes on your business and to ensure compliance with IRS regulations. 

    How GMS Can Help With Tax Compliance 

    Navigating tax changes can be challenging, especially when it comes to payroll compliance. Failing to comply can result in hefty penalty fees. It is estimated that 40% of small businesses pay tax fines of more than $850 annually. GMS offers expert payroll tax management services, ensuring your business complies with the latest IRS updates. From handling payroll deductions to managing employee contributions, our services simplify your tax obligations, helping you focus on growth. Contact us today to learn how we can support your business.  

  • On July 17th, the Internal Revenue Service (IRS) announced that some amended employment tax returns can be electronically filed using the Modernized e-File program.  

    The Modernized E-File (MeF) Program 

    MeF is a web-based system that allows electronic filing of tax returns. E-filing saves time and money. When taxes are e-filed, whether it be for businesses, professionals, or individuals, the data is directly transmitted online from the e-filer’s servers to the tax agency’s servers.  

    The MeF program provides electronic filing and payment options for filers of corporation, employment tax, estates and trusts, excise tax, exempt organization, individual, partnership, and withholding tax returns. Learn more about these returns here. 

    Amended Returns That Can Now Be E-Filed 

    The following amended employment tax returns can now be e-filed: 

    • Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return 
    • Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund 
    • Form 943-X, Adjusted Employer’s Annual Federal Tax Return for Agricultural Employees or Claim for Refund 
    • Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund 

    Note: MeF cannot be used yet to e-file Form 944-X, Adjusted Employer’s Annual Federal Tax Return or Claim for Refund, or Form CT-1 X, Adjusted Employer’s Annual Railroad Retirement Tax Return or Claim for Refund. 

    About Form 940 

    Use Form 940 to report your annual Federal Unemployment Tax Act (FUTA) tax. Workers who have lost their jobs can receive unemployment compensation through the FUTA tax and state unemployment tax systems. Employers typically pay both federal and state unemployment taxes. Only employers pay the FUTA tax; your employee’s wages should not be subject to it. 

    About Form 941-X 

    Use Form 941-X to correct errors on a Form 941 that you previously filed. Form 941 is used to report both federal income taxes and Federal Insurance Contributions Act (FICA) taxes, the latter of which includes Medicare tax and Social Security tax. 

    About Form 943-X 

    Use Form 943-X to correct errors on a previously filed Form 943. Form 943 is a tax form used to report federal income tax, Social Security, and Medicare withholdings from agricultural employees. 

    About Form 945-X 

    Use this Form 945-X to correct administrative errors only on a previously filed Form 945. If the federal income tax you reported on Form 945 (including backup withholding) differs from the amount withheld from payees, you have committed an administrative error. 

    Use Form 945 to report withheld federal income tax from nonpayroll payments. Nonpayroll payments include: 

    • Pensions (including distributions from tax-favored retirement plans, for example, section 401(k), section 403(b), and governmental section 457(b) plans), and annuities 
    • Military retirement 
    • Gambling winnings 
    • Indian gaming profits 
    • Voluntary withholding on certain government payments 
    • Backup withholding 

    GMS Helps Keep Your Business Compliant 

    Staying compliant with the ever-changing landscape of tax and payroll regulations can be daunting for any business owner. With GMS, you can skip the manual work and focus on what truly matters—growing your business. Our expert team is dedicated to keeping you informed about new laws and regulations, ensuring your business remains compliant without the hassle. Let us handle the complexities of payroll and tax management. Contact us today to learn how GMS can support your business and simplify your operations! 

  • Onboarding new employees is an exciting time, but there are important compliance requirements to handle as well. The first order of business should be having your new hire complete a Form W-4. 

    What Is Form W-4 And Why Is It Important? 

    Form W-4 allows employees to determine how much federal income tax should be withheld from their paycheck each pay period. This ensures they don’t receive a huge tax bill when filing their annual return. The Internal Revenue Service (IRS) calculates how much tax to withhold based on the withholding information each employee indicates on their Form W-4. The IRS also considers whether employees are filing jointly or independently. 

    The amount of withholding depends on the following factors: 

    • Filing status (single, married, or head of household) 
    • Number of dependents 
    • Other jobs or income sources 
    • Anticipated deductions and credits 

    Employees have access to helpful tools, such as the IRS tax withholding estimator. This tool can assist them in determining the proper withholding allowances to claim on their Form W-4. 

    Employer Responsibilities 

    As the business owner, you cannot fill out Form W-4 for your employees or influence how they complete it. If an employee doesn’t submit this form, the IRS requires you to withhold taxes from them at the highest rate (which your employees won’t be happy about). However, you do need to do the following: 

    • Provide your business’s Employer Identification Number (EIN) 
    • Note the employee’s hire date 
    • Enter your company name and address 
    • Calculate the withholding amount based on the employee’s W-4 inputs 

    It’s a good practice to remind employees to update their Form W-4 anytime they have a major life change, such as getting married, having a child, or gaining another income source. This ensures proper withholding throughout the year. 

    If your employee didn’t claim all the allowances they were entitled to, their employer cannot repay the tax previously withheld, but the employer should ensure the employee fills out a revised Form W-4 to correct the amount moving forward.  

    Let GMS Handle Form W-4 Compliance 

    Keeping up with Form W-4 rules and properly withholding taxes for all employees can be an administrative burden. That’s where GMS comes in. As a professional employer organization (PEO), we take on full responsibility for payroll tax compliance, including: 

    • Collecting and processing Form W-4’s 
    • Calculating precise withholding amounts 
    • Filing quarterly and annual payroll tax returns 
    • Remaining up to date on changing regulations 

    This allows your team to focus on your core business operations while resting assured your payroll taxes are being managed accurately and on time. At GMS, we understand the challenges of remaining payroll tax compliant, especially when managing Form W-4s across a workforce. Our PEO services provide a comprehensive solution, ensuring proper withholdings and filings so you avoid penalties and audits. Contact us today to learn how our services can save you time and money while reducing risk! 

  • 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.

  • Taxes are a fundamental part of running a business, and understanding employer tax obligations is critical to remaining compliant with federal and state regulations. Two employment-related taxes that often cause confusion are FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) taxes. These taxes are essential for funding unemployment benefits for workers who lose their jobs through no fault of their own. 

    Although these taxes both fund unemployment compensation, they differ in their calculation methods, who is responsible for paying them, and their impact on businesses. Understanding these taxes can help employers avoid penalties, manage tax costs, and stay compliant with federal and state regulations. 

    What Is FUTA Tax? 

    The Federal Unemployment Tax Act (FUTA) is a federal payroll tax that employers pay to fund unemployment benefits at the national level. This tax helps support state unemployment programs and covers administrative costs for running unemployment systems nationwide. 

    FUTA ensures that state unemployment agencies have the resources to provide temporary financial assistance to unemployed workers. It also funds extended unemployment benefits during economic downturns when states may run out of money. 

    Key details of FUTA tax: 

    • Who pays it? Only employers pay FUTA tax. Employees are not responsible for contributing. 
    • 2025 FUTA tax rate: The standard rate remains 6.0% on the first $7,000 of each employee’s annual wages. 
    • Potential FUTA tax credit: Employers who fully pay their SUTA taxes on time can receive a tax credit of up to 5.4%, reducing their effective FUTA rate to 0.6%. 
    • Purpose of FUTA: These funds go toward unemployment insurance (UI) programs and help states during high unemployment periods when state funds are depleted. 

    What Is SUTA Tax? 

    The State Unemployment Tax Act (SUTA) is a state-mandated payroll tax that funds unemployment benefits for eligible workers within that specific state. Unlike FUTA, SUTA tax rates, rules, and wage bases vary by state. 

    SUTA taxes directly fund state unemployment benefits for workers who lose their jobs through no fault of their own. These programs ensure financial stability for workers while they search for new employment. 

    Key details of SUTA tax: 

    • Who pays it? Employers are responsible for SUTA taxes, though in some states (like Pennsylvania, New Jersey, and Alaska), employees also contribute. 
    • Tax rates vary by state: SUTA rates depend on state laws, employer industry, and individual employer experience ratings (how often they’ve had former employees claim unemployment). 
    • State-specific wage base limits: Unlike FUTA, which has a fixed wage base of $7,000, each state sets its own wage base for SUTA tax. In 2025, these limits range from $7,000 to over $50,000, depending on the state. 
    • Purpose of SUTA: These funds are used to provide unemployment benefits to workers in that specific state. 

    Key Differences Between FUTA And SUTA 

    Why Employers Must Stay Compliant 

    Employers must accurately calculate, report, and pay FUTA and SUTA taxes to avoid penalties, interest, and increased tax liabilities. FUTA credit reductions can occur if a state fails to repay federal loans for unemployment benefits, leading to higher FUTA tax liabilities for employers. Frequent layoffs can increase an employer’s SUTA tax rate due to a higher “experience rating,” resulting in higher state unemployment taxes. 

    Late payments, incorrect filings, or misclassifying employees can lead to severe penalties from the IRS and state agencies, including fines, interest, and even criminal charges. States with outstanding federal loans may face FUTA credit reductions, causing employers to owe more in FUTA taxes until the loan is repaid. Ensuring compliance with FUTA and SUTA tax requirements is essential to avoid these costly consequences. 

    How to Ensure Compliance 

    • Stay updated on state tax rates: Because SUTA rates and wage bases change annually, employers should monitor state updates. 
    • File reports on time: FUTA taxes are reported quarterly using IRS Form 940, while SUTA filings vary by state. 
    • Work with a payroll partner: Outsourcing payroll tax management to a professional employer organization (PEO) ensures compliance and reduces the risk of penalties. 

    How GMS Can Help 

    Managing unemployment taxes can be challenging, especially for multi-state employers navigating different SUTA rates and regulations. Group Management Services (GMS) helps businesses: 

    • Accurately calculate and file FUTA and SUTA taxes 
    • Stay compliant with state and federal tax laws 
    • Reduce their SUTA tax burden through proper claims management and best practices 

    GMS can provide expert guidance and comprehensive payroll services if you’re unsure about your company’s FUTA or SUTA tax obligations. Contact us today to learn how we can simplify payroll tax management for your business. 

  • The IRS recently released guidance for employers on the early termination of employee retention credit (ERC) if an employer received an advance payment or reduced deposits in anticipation of the credit. The Infrastructure Investment and Jobs Act, which was enacted on November 15th, 2021, amended the law so that the ERC applies only to wages paid before October 1st, 2021, unless the employer is a recovery startup business.  

    Notice 2021-65 applies to employers that paid wages after September 30th, 2021, and received an advance payment of the ERC for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of this year but are not ineligible for the credit due to this legislation change.  

    If an employer received advance payments for fourth-quarter wages, they will avoid failure to pay penalties so long as they repay those amounts by the due date of their applicable employment tax returns.   

    Employers that reduced deposits on or before December 20th, 2021, for wages paid during the fourth quarter 2021 in anticipation of the ERC, will not be subject to a failure to deposit penalty if: 

    1. The employer reduced deposed in anticipation of the ERC, consistent with the rules in Notice 2021-24 
    2. The employer deposits the amounts initially retained in anticipation of the ERC on or before the relevant due date for wages paid on December 31st, 2021 – regardless of whether the employer actually pays wages on said date. Deposit due dates will vary based on the deposit schedule or the employer.  
    3. The employer reports the tax liability resulting from the termination of the employer’s ERC on the applicable employment tax return or schedule that includes the period from October 1st, 2021, through December 31, 2021.  

    Penalties for failing to deposit will not be waived for employers if they reduce deposits after December 20th, 2021. If your business needs assistance on how to manage these new IRS guidelines, GMS can help you with a plan that fits your business model.