Payroll management has never been a static profession, but is dynamic and evolving. Changes in technology, in available tools and services, and regulation requires payroll professionals to be constantly "up to speed." The approach of each new year, of course, brings this need to the forefront as January 1st looms ahead.
The year 2015 is no different. A number of significant changes are on the calendar and new trends becoming more of the rule rather than the exception.
Changes for Payroll Management Professionals in 2015
Federal Unemployment Insurance Tax increase
The federal unemployment insurance tax, also known as FUTA, will be one of the biggest changes for 2015. According to the 2015 federal budget, if this provision is passed, the government will reinstate the pre-2011 FUTA surtax, which was .2%. If this is approved, it would take effect January 1, 2015 and would raise the FUTA rate from the current .6% to .8%.
This will impact at least 13 states and the Virgin Islands, according the U.S. Department of Labor (DOL).
Based on federal budget estimates this means that businesses with employees earning over $7000 per year will see an increase of $14 per employee. For small businesses, typically defined as those having up to 50 full-time employees, this increase in taxes could amount to as much as $700 per year.
Affordable Care Act requirements
Another change that will impact payroll management practices will be new compliance requirements with the ACA, or Affordable Care Act. Beginning January 31, 2015, all employers will be required to have the ability to accurately document all hours worked by full-time employees in order to ensure compliance with the ACA. On top of this, businesses will be required to file annual health insurance coverage reports along with their end-of-year payroll reports so that they can prove they are in compliance with the new federal rules and regulations.
The ongoing changes with the requirements of Obamacare make it vital to properly document and verify employee W-2 information since, in many instances, there are costly consequences otherwise.
Social Security Payroll taxes
According to an announcement from the Social Security Administration (SSA) in October, higher earning employees will be paying out more of their salary for Social Security payroll taxes beginning on January1, 2015. Because of the projected increase in average wages, the amount of earnings that will be subject to the taxable maximum for Social Security tax will increase 2015 from $17,000 up to $118,500.
It is estimated that around 168 million workers will pay Social Security taxes in 2015. Of these, about 10 million will pay higher taxes because of the increase in the taxable maximum, according to the SSA.
What does this mean for payroll management professionals and employers? Essentially, by January 1st, you do the following:
- Update your payroll systems - It is required that you account for the higher taxable maximum under the Social Security portion of FICA.
- Notify any affected employees - As employer, you are also require to make sure your employees are aware that a larger portion of their pay will be subject to FICA.
Getting Professional Payroll Management Help
One of the foremost trends in payroll management in businesses is the move to outsource these functions to a Payroll Management Services provider, such as Accuchex. This is a major trend among businesses both large and small as many discover that their cost savings far outweigh the investment.
According to a study released earlier this year by staffing services firm Robert Half and Financial Executives Research Foundation, the research affiliate of Financial Executives International, forty-seven percent of U.S. companies reported outsourcing payroll.
Larger companies tend to be more likely to outsource payroll, with the survey showing that 73% of companies with revenues of $5 billion or more outsourced this function. And outsourcing of tax filing rose in 2014 to 42%, up from 30% in 2013.
Let Accuchex help you in managing your 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.