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Many employers rightly proclaim that their employees are their most valuable assets. If this holds true for your organization, it stands to reason that paying those employees consistently and accurately is among the most important things you must do.

Unfortunately, payroll errors plague many employers. Among the biggest dangers of inaccurate payroll administration is that your organization may fall out of compliance with its payroll tax obligations.

Failure to properly withhold or deposit

As you’re no doubt aware, employers are obligated to properly withhold income tax, Social Security and Medicare contributions from employees’ pay, as well as match the Social Security and Medicare contributions.

Setup errors involving Form W-4, “Employee’s Withholding Certificate,” may occur that compromise this process. Residential address change mistakes and visa status changes can adversely affect withholding as well.

Perhaps the most dangerous mistake is failing to timely deposit withheld income taxes, Social Security and Medicare contributions, and employer matching amounts. IRS penalties accrue quickly because they increase as time goes by. That is:

• If a deposit is one to five calendar days late, the penalty is 2% of the unpaid deposit,
• If a deposit is six to 15 calendar days late, the penalty is 5% of the unpaid deposit, and
• If a deposit is more than 15 calendar days late, the penalty is 10% of the unpaid deposit.

The penalty amount may be 15% if more than 10 calendar days elapse after the date of the first notice or letter from the IRS. Alternatively, a 15% penalty may apply on the day a notice or letter for immediate payment is received.

If the IRS can make the case that a failure to deposit payroll taxes was willful, a 100% penalty may apply. And such penalties can be levied personally against all responsible individuals in an organization.

Failure to include items in taxable income

Remember, salaries or wages aren’t always the only includable items in employees’ taxable incomes. Employers must also include the value of awards, bonuses and, as required in certain cases, fringe benefits.

Failing to withhold sufficient amounts from employees’ total reportable income can also result in noncompliance with IRS rules. In turn, this could lead to penalties for failing to properly withhold or deposit payroll taxes. What’s more, the employer could be subject to information return penalties for incorrect Forms W-2, “Wage and Tax Statement.”

A multifaceted threat

Make no mistake, payroll errors are expensive — not only because of IRS penalties but also because of the resources you must expend to correct them.

Perhaps worst of all, they hurt your employer brand. Many employees will put up with only a few mistakes, if any, before they jump ship to another job. Contact us for help identifying all your payroll costs and assistance catching costly errors.

© 2024
TopLine Content Marketing Team

You’ve probably heard that an employer will likely spend less money trying to improve an employee’s performance than it would firing the worker and hiring someone new. Indeed, this generally does hold true, unless the staff member in question could put your organization at legal risk or single-handedly undermine its financial stability.

So, how can you pull struggling employees back from the brink of potential departure and place them back in the fold of productive workers? Upskill your supervisors to use constructive feedback in a timely and appropriate manner.

Assess the situation

Employers often get into trouble when supervisors “fly off the handle” and lay into struggling employees before knowing all the details involved. Train supervisors to take a step back when a situation involving substandard performance arises and assess the matter at hand — assuming there’s not an immediate safety risk, of course. Ideally, they should have a set of preestablished performance metrics for each employee to use as a guide. Metrics can show, definitively, whether and how the subject is falling short of expectations.

From there, supervisors should set up one-on-one discussions with struggling employees to discuss the issues. It’s often a good idea to start out with some positivity. The supervisor might point out that the organization values the person as a team member and remains confident in the skills and, in some cases, experience that the individual brings to the table. This will typically make troubled employees more receptive to constructive criticism.

One word of warning: Beware of the “compliment sandwich.” This occurs when supervisors try to slip a critique between two positives. Compliment sandwiches can send a mixed, confusing message and undermine the affirmative effect of the compliments. After prefacing the discussion with positivity, supervisors should clarify that the topic of conversation is indeed performance improvement.

Lay out clear objectives

As it’s usually counterproductive to let issues fester, supervisors need to address demonstrable weaknesses in performance at the earliest appropriate opportunity. But employees are more likely to improve if supervisors don’t broach the topic without concrete performance improvement steps in hand. Train supervisors to create clear, actionable items before reaching out to employees.

As mentioned, supervisors should ideally provide constructive criticism in face-to-face meetings, whether in-person or virtual, or at the very least on a phone call. In today’s text-happy world, some may be inclined to transmit feedback via text, instant messaging or email. For relatively minor matters or a “heads-up,” doing so is sometimes acceptable.

However, it’s generally best to address serious issues in the context of an actual conversation, where tone of voice plays a role and struggling employees can tell their sides of the story. By now, most of us have been involved in a “back-and-forth” via text, instant messaging or email that goes nowhere fast and leaves both parties feeling misunderstood and resentful.

Invest wisely

In the most serious cases, your organization may need to develop written performance improvement plans — commonly known as a “PIPs” — to get troubled employees back on track. But that’s a subject for another article. By and large, if you invest a reasonable amount of money and time into honing your supervisors’ skills, you’ll likely be able to resolve most problems and retain a substantial percentage of your employees.

© 2024
TopLine Content Marketing Team