Payroll compliance best practices are an essential part of payroll management. And sometimes the most difficult.

Every year seems to bring with it more legislation, regulations and Federal and State requirements. The pressure to be both up-to-date and proficient with these laws can be immense. Especially since failing to be in compliance can result in costly errors.

The costs of non-compliance involve much more than fines, fees, and other penalties. The time and work required to go back and re-do paperwork, correct payroll errors, and fill out numerous forms can cost even more.

The bottom line is that payroll compliance best practices are critical.

Payroll Compliance Best Practices: Tips and Recommendations

Best practices can be unique for and specific to every individual business. However, there are some basic and essential tips and recommendations that can help to ensure that your company's payroll processes are consistently in compliance.

Here's an overview of these:

Prioritize Documentation

This is an area where too much will never really be too much. This means ensuring that all forms needed for every employee, including independent contractors, is both complete and accessible. The best strategy is have a central location for all your hard-copy documents and a virtual equivalent for your digital forms.

In every instance that is practical – and legal – you can eliminate the paper copies, which will both streamline your processes and reduce required storage.

Secure Documentation 

While comprehensive payroll documentation is critical, it also provides a source for data breaches. Whether they sit in a filing cabinet or in the cloud, most of your payroll-related documentation contains sensitive personal identification data.

This can be everything from birth dates, Social Security numbers, phone numbers and addresses, to personnel records and work eligibility information. And this information can be vulnerable not only to outside hackers, but to co-workers.

Ideally, payroll data should be on a secure cloud-based product with encryption. All documentation should only be accessible by employees who need to interact with the payroll department directly. An online payroll solution also protects your data from fire or floods.

Keep Up to Date

Keep on top of all labor laws regarding income, overtime, and compliance. Contracting with a payroll management company like Accuchex can help you in this regard. Every business should know and understand labor laws that impact their payroll processes including:

• Fair Labor and Standards Act (FLSA)
• Federal Taxes including Income and Unemployment (FUTA)
• State and Local Taxes

Create Compliance Checklists

A very organized approach to payroll compliance is to develop several payroll checklists specific to your payroll process. These could include the following:

• New employee or independent contractor hiring
• Steps for each payroll run
• Monthly, quarterly and annual tasks
• etc.

Each checklist should document the steps to be taken, forms to complete, and anything that needs to be reported or documented. The objective for the checklists is similar to that for doctors and pilots: they serve as guidelines and reminders to prevent anything from being overlooked and help you to stay in compliance.

In addition to having a solid set of references to assist with all your payroll processes, you can use them for training resources with your team and for new hires. The process of creating these checklists will also allow you to assess your overall payroll process with an eye towards streamlining and improving it.

Automate Your Payroll with Payroll Software

The more functions and processes you can automate rather than doing them manually, the less hours that will be required and the fewer errors that will be made. In addition, reliable and robust software like Time2Pay from Accuchex will dramatically improve payroll compliance.

Automated, cloud-based software solutions are one of the best ways to simplify your payroll procedures and maintain compliance.

Information to Help You Stay Compliant

Payroll compliance can be a labor-intensive requirement for employers, but there are scores of resources available for employers who choose to manage their own payroll processes.

Here are a few to get you started:

• http://www.dol.gov/compliance/#.UKNG_-Oe-_A
• http://www.irs.gov/uac/Publication-15-(Circular-E),-Employer's-Tax-Guide
• http://www.sba.gov/content/learn-about-your-state-and-local-tax-obligations

Another option to consider is to use an online payroll solution. By automating payroll functions you can also streamline all the requirements that are currently dependent on your HR staff to do in order to maintain compliance. 

Choosing an Online Payroll Solution

• Don't settle for bundles only:  Don’t choose a payroll solution that only provides bundled services. Make sure that they also provide “a la carte” services so that you are not forced to pay for services you don’t need.
• Consolidate services:  If you do need a variety of services, it’s much easier to choose one vendor or provider than dealing with a different one for each service needed.  In addition, having one vendor means one call can provide answers to all your payroll and benefits questions.
• Look for dedicated customer service:  Having a dedicated person for your account will give you a reliable resource for answers and problems and someone who will know the nuances of your business.

Using an online payroll system, such as Time2Pay by Accuchex, can provide an easy-to-use and integrated solution that is delivered directly from the cloud. In addition to reducing the processing time typically required by a paper-based payroll process, managers can provide employees with direct access to their own pay information anytime.

Save Time, Save Money, and Stay in Compliance

In addition to payroll compliance best practices, opting for online payroll software for your payroll processes is a viable option for many businesses. However, keep in mind that another "best practice" you can consider is outsourcing.

This can be done by simply outsourcing one process such as payroll. However, with a full-service provider such as Accuchex, you also have additional options for outsourcing as well.

Let Accuchex help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.