10 Most Common Payroll Pitfalls Tracie M. Sawade, CPP Technical Consultant Ultimate Software
Biography Certified Payroll Professional since 1996 Former Member of APA’s National Speakers Bureau and Current Member Hotline Referral Committee Former President of the Denver Chapter Payroll Association Presented at APA’s Congress and Chapter Leadership Seminars, Rocky Mountain Regional and Texas Payroll Conference, Indiana Statewide and Chicago, Denver and Minneapolis Chapters
Please Complete Your Evaluation at the End of the Workshop Agenda Mistakes Happen Common Blunders Minimizing Them Let’s get started…
Voids and Reversals Voids Impact Quarter/year end GL and bank accounts Reversals and adjustments
Voids/Reversals Recommendations Process voids promptly Track and compare Supplemental payrolls Posting transactions Validate NO NEGATIVE WAGES
Deductions and Earnings Incorrect taxation Impacts Employee/Organization Deductions Earnings Taxable Fringe Benefits
What is a taxable fringe benefit? Examples Imputed earnings Group Term Life Costs
Deductions and Earnings - The Fix Research proper taxation FIT/SIT/FUTA W-2 vs What box? o W-2 Instructions Publications 15 and 15-B
The Fix Continued Verify set up on system Test, test, test Process promptly Save Your Company Money by Doing it Right the First Time
State/Local Taxes Employees who move Did they forget to tell you? Reciprocal agreements Correct reporting Costs Audits and amendments
State Taxes – What to do Verify correct set up APA’s Guide to State Payrolls BNA, CCH, State sites Employees who move Timing/Checklist Quarterly reminders Validating with reports SUI
Blank slide for images and graphics
Wage and Tax Details
Year-end Preparation Waiting too long No checklist Compliance Lack of testing Not enough time for critical tasks
Year-end - The Master Plan Start early Have you started yet? Create a plan/checklist Create a team Where you can find help APA’s Year-end course Vendors/local chapters
Year-end Reconciliation Waiting compounds issues W-2 totals <> 941 totals Too much going on in Q4
Reconciliation – The Key Create spreadsheet Taxable wages Taxes that can be manually calculated Collect data each payroll/month Early detection Pay attention to warning signs
Compliance – It Matters! Challenges Healthcare Reform Hard to interpret Potential costs Audits Fines and penalties Recommendations
Intercompany Transfers Multiple companies Acquisitions/Successor When do taxes start over? Tracking/verifying YTD Costs W-2cs, amendments Audits, penalties
Things to Remember Understand wages and taxes SS/SUI/FUTA – start over Tax details Deductions - YTD
System Improvements ESS/MSS Workflow – what is it? Change management Dos and don’ts Potential savings
Steps to Take Recommendations What do you do today? Does it make sense? Process maps
Successful Implementation Key to Success Have a plan Communication Change management/training Manager/employee training Gaining user acceptance
GL Reporting Challenges New earnings, deductions and taxes Structural changes Acquisitions Costs Time, corrections, labor allocations Recommendations…
Regular Rate and Overtime Common misconceptions Does it really make a difference? Have to pay OT on extra earnings For some companies makes no difference But for others it does!
Regular Rate and FLSA OT Regular Rate of Pay Based on what? All earnings to be included Regular, regular overtime, commission, non-discretionary bonuses, premiums Add all earnings and divide by total hours
Overtime Example Reg. Rate = $10/hour/OT Rate = $15 Hours = 40 regular, 10 overtime Other earnings = $500 40 * 10 = $ * 15 = $150 + $500 = $1050 Right?
FLSA OT – The Right Way Rate = $10, 40 regular, 10 overtime, $500 other earnings 50 * 10 = $500 + $500 = $1000 $1000/50 hours = $20/hour (reg. rate) *.5 = $10/hour (OT rate); $10 * 10 = $100 $500 + $500 + $100 = $1100
Wrapping It Up Rolling the dice Pay Now or Pay Later Questions?
For More Information American Payroll Association (Links > State) US Department of Labor Internal Revenue Service Social Security Administration