payroll
Taking the Headache Out Of a Corporate Tax Audit
Aug 16th
In November of 2009 the IRS announced the Employment Tax National Research Project (ET NRP), which is the first study of its kind in 25 years related to payroll and employment tax issues. The IRS plans to randomly audit up to 6,000 companies in the next three years, with a direct focus on employment tax, worker classification, officer compensation, benefits and expense reimbursement. The IRS has already sent out of first batch of alert letters, letting companies know that they have been selected for an audit. This short video from Pillsbury, a national full-service law firm, briefly outlines for its clients some of the major issues involved.
If your business has been audited by the IRS, you’re not alone. According to IRS statistics, anywhere from .38% to 14.55% of businesses are audited annually (see data grid below). The government’s exact method for choosing who is audited remains a well-kept secret. However, the IRS boldly warned in a 2007 report that some business types are more likely to be audited than others. The IRS report states that “While large corporate audits are down slightly, we have increased our focus on mid-market those with assets between $10 million and $50 million dollars.” See specific IRS service and enforcement tables here. Into what category does your business fall, and how likely are you to be audited? What’s your worst fear in an audit? Are you prepared for it?
The burden of proof during an audit lies with you, the business owner, and the depth of records required by the IRS can be time-consuming and onerous at best. AllBusiness.com posted an aptly titled article, “To Hell and Back: Different Types of Tax Audits”, which documents the extensive information that the IRS requires during a business audit. The IRS provides their auditors with specific guidelines to follow during a business audit that is industry specific. Do you know what your potential future auditor may ask of you? Become more prepared and look for your guide here.
Don’t be another IRS statistic
Audits are costly. The expense to your business will be massive, and the strain on your valuable employees even more so. Regardless of the kind of audit you may experience, it’s always helpful to have the information you need at your fingertips. Ascentis online payroll and HR software (HRIS) offers robust core functionality that supports the electronic documentation of most, if not all, employment and payroll related data you will need during an audit. Ascentis integrated systems include standard and customized reporting engines so HR and payroll teams can provide the specific and detailed data that audits often require.
Learn more
For more information, or to request a product demo, fill out this short form and let’s talk about how we can help your HR and payroll teams be more accelerated, efficient and compliant. Subscribe to our monthly newsletter, the Ascentis HR, Benefits and Payroll News, and stay on top of industry news, best practices and always-evolving legislation. Follow Ascentis on Twitter and “Like us” on Facebook to receive great HR, payroll and business tips.
Ascentis Announces a New Time and Attendance Solution
Jun 23rd
Ascentis is excited to announce the release of Ascentis Time, our new time and attendance solution. Many of our customers have requested a Web-based timekeeping solution, and we’re very excited to be able to offer this on-demand, easy-to-use tool. Ascentis Time will be officially launched to the marketplace at the 2010 SHRM Conference & Expo in San Diego, Calif., June 27-30.
Because Ascentis Time integrates with our existing HRIS and payroll solutions, it will save time and ensure data accuracy across functions. It supports up to 15 labor levels, the most in the industry, and Ascentis Time will help organizations eliminate unauthorized overtime and overpayment of benefits. In addition, Ascentis Time will provide the foundation to help organizations forecast labor utilization, easily perform job costing and stay in compliance with federal labor regulations. A variety of reporting options are available to assess job costing, control departmental costs, monitor staffing, and much more.
Ascentis Time can collect employee time and attendance data from multiple sources and devices, including Web-based entry, badge terminals, biometric hand punch machines, telephones and dedicated time clocks. In conjunction with Ascentis Self-Service, employees can request time off through an automated approval process system that requires authorization from multiple levels, where appropriate.
Click here for more information about Ascentis Time, or call Ascentis at 1.800.229.2713 about this or any of our other workforce management solutions.
Quarterlies and the New HIRE Act Credit
Jun 15th
Now that we’ve all heard about the HIRE Act and your company has decided whether to apply for the HIRE Act credit and you’ve collected the W-11 affidavit how do you go about getting the HIRE Act credit?
You may reduce your tax liability on a pay period basis by the credit, but in order to actually get the credit you need to make sure to complete the appropriate lines on your 941.
Make sure to prepare for the quarterly filing because unlike COBRA, where you could take the credit in the next quarter, the credit for the first quarter on the HIRE Act must be taken in the second quarter and the credit for the HIRE Act for each quarter after the first quarter must be taken in the quarter the wages are paid. This means if you aren’t prepared you may have to file amendments in order to receive the credit for the HIRE Act.
New Lines on the Form 941 –
Line 6a – Number of qualified employees first paid exempt wages/tips this quarter
This is simply a field which counts the number of employees that were hired and paid for the first time during the quarter you are reporting that are exempt from the employer portion of the social security tax under the HIRE Act. Basically this field lets the government know how many new employees were eligible for the HIRE Act during the quarter being field.
Line 6b – Number of qualified employees paid exempt wages/tips this quarter
This is simply a field which counts the number of employees that were paid during the quarter you are reporting that are exempt from the employer portion of the social security tax under the HIRE Act. This count would include the employees that are reported on line 6a. Basically this field lets the government know how many employees in total on the quarterly return were eligible for the HIRE Act during the quarter being field. Read the rest of this entry »
Going to the APA Congress? Visit the Ascentis booth and register to win an Apple iPad and other great prizes.
May 6th
Ascentis will be attending the APA Congress as an exhibitor in 2010. This will be our first year at the Congress, and we’re excited to be a part of a great organization that has been working with payroll professionals for more than 28 years.
To celebrate our first exhibition with the APA, Ascentis will be holding drawings for Apple iPads (two will be given away at the show), as well as Ghirardelli Chocolate, Bare Escentuals gift cards and some great wine selections (all these gifts are products made by some of our most prestigious customers).
Ascentis Payroll is the ideal payroll solution to save companies both time and money. You get the control of in-house payroll with all the benefits of a SaaS solution. Other great Ascentis Payroll benefits include:
- Ascentis Payroll processes in real-time, ensuring 100% accuracy and control.
- Pay periods can be scheduled in advance, and off-cycle payrolls can be run anytime.
- On-demand checks can be quickly created.
- With Ascentis Employee Self-Service, employees can access direct deposit information, tax withholdings and paycheck history.
- Used in conjunction with Ascentis HRIS, redundancy is eliminated and accuracy enhanced.
Watch an 8-minute tour of Ascentis Payroll.
So join us at booth #214, May 26-28, in Washington D.C. We look forward to making many new friends, showing product demos, giving away great prizes, and enjoying the networking opportunities with the APA.
HIRE Act materials starting to surface
Apr 9th
Remember the HIRE Act? Well, it looks like there’s some material slowly starting to trickle out of Washington.
The IRS has released a new form that will help employers claim the special payroll tax exemption that applies to qualified newly-hired workers during 2010.
New Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now posted on IRS.gov, along with answers to frequently-asked questionsabout the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.
For more information on the HIRE Act affidavit and exemption, including a Draft Form 941 revised for employers to use beginning with the second calendar quarter of 2010, please click here.
Why Automate Your HR Processes?
Mar 30th
Automating workforce management using integrated HR and payroll technology is imperative for companies that want to control costs by increasing efficiency, reducing the risk associated with errors, and securing their place in a competitive talent market.
Reducing paper-based processes is another factor that drives the need for automation. More companies are moving toward paperless workflow as a way to support “green” business practices. While helping the environment, these companies also help themselves: sharing information electronically saves time – and money.
According to a study conducted by Boston, MA-based Aberdeen Group, the top pressures that drive HR and payroll technology initiatives are the need to adapt to market changes, better management of complex employee relationships, rising costs associated with workforce management and employee retention amid a shrinking labor pool.
The study indicates that the actions required to meet these pressures include:
- Increasing the efficiency of HR and payroll management by adding strategic functionality to core processes
- Improving data accuracy and security
- Integrating business systems to consolidate functions
- Educating HR and payroll staff, and the end-users of self-service systems, on how to optimally utilize the programs that are put in place
Yet, while the need to automate workforce management isn’t argued, the challenges related to evaluating and selecting a solution often keep companies from breaking free of the burden created by their current processes and moving toward full automation utilizing an integrated system to manage HR and payroll.
With so many products on the market, and an HR and payroll team that is already over-loaded with work, who has time to sort through the myriad of choices and make an informed decision? For small to mid-sized businesses, Ascentis offers fully integrated, easy-to-use solutions that will get your HR and payroll process automation initiative up and running fast. To find out quickly how automation will make your team more efficient and accelerated, take a 6-minute tour of Ascentis HR or an 8-minute tour of Ascentis Payroll.
Is accounting a foreign language? A step by step approach to setting up a general ledger interface file
Mar 24th
Elissa Hinze, CPP Payroll Client Support Manager
Are you tired of accounting asking you to create the journal entry for payroll or to provide them with documents so they can create it each pay period or each month? There is a better way to get this information into the general ledger without having to do any manual work.
Step 1: Creating a List of Items to Map
You will first have to make a list of all of the earnings, deductions, employee taxes, employer taxes, and other codes that need to be mapped to general ledger account codes. First start out with the list of items that are paid to the employee or deducted from the employee’s check. The second list you will make is of all the items that are calculated in payroll but do not actually have an effect on the current check amount such as employer taxes, employer matches on retirement plans, and possibly time away accruals (put the accruals aside for now as we will cover that later on).
Step 2: Mapping
If you are currently creating the journal entry manually it is time to map each code to its appropriate general ledger account code. If you aren’t creating the journal entry but supplying accounting with reports instead it is time to sit down with accounting to map all of the codes. Don’t get discouraged by what may appear to be a foreign language with words such as debits, credits, assets, liabilities, and expenses. Here is a simple breakdown:
Earnings – these are usually expenses so they normally have a debit value and will have a general ledger account code that is an expense account. However, as in everything there are exceptions to the rules. If your company accrues for certain items such as bonuses, or time away such as PTO or vacations, then the debit will be going to a liability account.
Deductions and employee taxes – these are typically withheld from the pay check and are liabilities which normally have a credit value and will have a general ledger account code that is goes to a liability account. Yes, there are some exceptions to the rules. For instance, some companies take the benefit deductions which are credits to an expense account decreasing the expenses for the benefits.
Net pay and direct deposits – these typically reduce an asset account so they have a credit entry to a general ledger asset account. Yes, once again there are some exceptions to the rules – these entries may need to debit a liability account and credit an asset account.
Once you have finished mapping it on paper it is time to enter it into your payroll system.
Step 3: Journal Entry
If you haven’t gotten lost, it’s time to create a paper journal entry to determine if everything is mapping correctly, and of course, that you are In Balance. “In Balance” is another foreign accounting term that means the debits and the credits equal each other. If the report is not In Balance then you have missed an item and need to return to Step 1.
Once the journal entry balances, it’s time to have accounting confirm the entry is correct. If not, you will need to determine which codes need changing by going back to Step 2.
Step 4: Interface File
You need to get the file specifications for your general ledger system. What are file specifications, you may ask? Well, they are basically a map showing how the file must look in order for it to interface into the general ledger system.
Once you understand the file specifications it’s time to write or have a programmer write the file in the payroll system in order to create the export file.
Step 5: Test, retest….
If you have completed writing the interface file, it is now time to test the file. If there are errors on the file, you will have to go back to Steps 1, 2, 3, or 4, depending on what the error is and repeat the steps.
Step 6: Deploy!
You have successfully made it through all of the steps and have learned what you thought was a foreign language. You think it’s time for a rest and what do you hear? Accounting wants a monthly accrual file?!
Step 7: Accrual Files
Well, an accrual file is usually a file that estimates the payroll expenses that the company will incur for the remainder of the month. If you are really lucky, your payroll has a period end-date and pay date as of the last day of the month. Most of us aren’t that lucky.
You need to determine how to estimate the payroll expenses and once you have determined this go back to Step 1 for any mapping changes and proceed through Step 6. And another thing to keep in mind, this journal entry needs to have a reversing entry or automatically reverse itself in the next month since the actual entries will be entered.
Step 8: Everything is Deployed and Working
Now comes the fun part! Everything is up and running and you get the question from a manager or someone in accounting about an expense that looks really high (they usually don’t complain if the expense is low). Hopefully you have a report or easy way to determine the details for the account in question. If not you could spend a lot of time trying to determine the employees and items that make up the amount in question.
Step 9: There’s a Better Way!
Ascentis Payroll has the ability to interface with any general ledger system. Better yet, we usually work directly with the accounting department so if you don’t want to learn a foreign language you don’t have to. We also have detailed reports that may be run on demand which shows fully itemized entries that were passed to the general ledger.
If you would like more information about Ascentis Payroll, call 1-800-229-2713 or visit the Ascentis Web site.
The Long Road to Compliance
Mar 23rd
On March 18th, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. The act allows employers to hire qualified employees and not pay the employer part of the social security tax. As a payroll professional you may dread the new complications that will be inflicted on you but saving 6.2% may be worth the effort. So “Who qualifies?” you ask.
Qualified employees are those hired after February 3rd, previously unemployed for at least 60 days and of course not replacing existing employees. It sounds relatively simple, right? Just track these employees as they are hired and don’t pay the social security tax on their wages.
Not so fast. For starters, the bill is retroactive so unless you were politically prescient, you probably don’t have a list of qualified employees. Once you have assembled that list, you need to determine the portion of the wages that will be exempt from employer tax. To make things more complicated, only wages paid after March 19th are exempt and only up to the maximum $106,800. The 19th was a Friday, so with a little luck, if you have weekly or bi-weekly employees, this will match the end of a pay period and will make it easier to determine eligible wages. If not, tough luck! Be prepared to do some manual prorating or just forego a few days of tax exemption and start counting at the beginning of the next pay period. The latter is a good solution especially if you consider the time it will take for the seemingly small benefit you will get.
You now have a list of employees and you know the exempt amount of wages. So what’s next? Well at this point no one knows exactly: that is while the IRS works on the issue. It will probably come in the form of a change of the 941 to adjust what you’ve paid in excess in the second quarter. In all cases, don’t change anything for your first quarter payments!
Hey Ascentis said it would be easy, what’s in store for me?
We hear you. All this may sound complicated, but really at the moment your job comes down to determining who’s eligible* so that when the time comes adjustment will be a breeze. Ascentis Payroll will be updated soon to let you track qualified employees. We will then provide you with ways to compute eligible wages. As usual, your client support rep will be the most helpful contact if you have any questions.
The healthcare reform just signed into law will add many other challenges. We’re following that closely to be sure you always have tools to stay compliant. This will be the same process again:
- Read the law and prepare for change
- Wait for the IRS (in most cases)
- Implement changes in the system
- Explain changes to our clients and make sure everyone is happy.
Next time you hear that a law has 1,990 pages, keep us in your thoughts!
*Eligible employees will have to sign an affidavit stating that they haven’t worked more than 40 hours during the 60-day period preceding employment. IRS is working on a form just for that, stay tuned.
The year-end is nigh!
Dec 15th
Fear! Panic! Overwork!
Ok, maybe that was a little over the top. The end of the year is a generally busy time for payroll professionals. Year end payrolls, quarterlies, and benefits maintenance are just some of the things that have to be done before you can celebrate on New Year’s Eve. To help with year-end tasks, we’ve created a couple of wizards in Ascentis Payroll that guide you through a lot of the routine tasks. There are some tasks that need to be done outside of payroll, so we’ve created this handy list below to check before you run your last payroll of the year:
- Verify SSNs. There may be IRS penalties for mismatched names/SSNs so avoid the tax man by going through your employee SSNs.
- Got employees who recently changed their filing status? Make sure they’ve filled out a new W-4 (not necessary if you have Ascentis Self-Service!).
- Verify employee addresses so W-2s go where they are supposed to.
- Offering new benefits? Make sure deductions are setup for new offerings.
- Got tax exempt employees? Make sure to get their W-4s in by February 15th so they can continue their exempt status through 2010.
- Employees getting the Advanced Earned Income Credit (AEIC) for 2009 need to complete a new W-5 before the first payroll in 2010 in order to continue receiving AEIC.
There are other reconciliations (e.g. wage & tax, GL, Bank) that need to be performed as well. If you have any questions about year end with Ascentis Payroll, give your CSR a call today!
