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Are You in Compliance?


Payroll Compliance - What is it and why is it so critical?


By broad definition – Payroll compliance is the function that establishes procedures that ensure internal and external regulatory compliance.

It’s very tedious trying to keep up with the fast changes taking place with technology, employment labor laws, tax changes, garnishment regulations, changes in federal, state and local forms, as well as meeting all the different deadlines payroll practitioners must adhere to.  Understanding these types of rules and regulations is paramount to being compliant as it’s necessary to accurately report your company’s operations. Incorrect filings and/or employee misclassifications can lead to fines, penalties, or potential lawsuits. 

Payroll compliance is arguably the largest financial obligation a corporation has.  We know that the legislation surrounding payroll can be confusing, so it’s critical for payroll professionals to be aware of current and changing laws, rules and regulations. Below are some key issues that highlight the importance of payroll compliance.

 Meeting government organizational requirements:

  • Payroll tax withholding and reporting
    • Understanding local income taxation issues when paying employees in one or multiple states
    • Monitoring tax deposit calendars for accurate reporting of taxes
    • Understanding employer withholding obligations for FUTA and SUTA
  • FLSA (Fair Labor Standard Act) – paying employees in a timely manner, meeting the requirements of the wage and hour law
  • Maintaining withholding orders for garnishments and child support from wages
  • Ensuring new employees are eligible to work in the U.S.
    • I-9 verification
    • E-verify
  • Providing and maintaining federal, state and/or local withholding forms
    • Federal form W-4
    • State and local withholding forms
    • Federal form W-2 and W-2c
    • Form W-3
    • Form 940, 941. 941-X, 945 and 945-A
    • Substitute forms requirements
    • Electronic filings
  • Understanding the complex compliance issues such as
    • Mergers and acquisitions
    • Common paymaster
    • Nonqualified deferred compensation plans
    • Deferred compensation plans

Don’t put yourself or your company in jeopardy, stay compliant by publishing policies and procedures around these items, with roles and responsibilities to ensure that nothing gets missed.  These are living documents and should be reviewed and updated as necessary.

For your convenience, check out the glossary of payroll terms in payroll TAXES, in the payroll research section.

Written by: Judy Brooke-Gomez, Director of Tax Research and Support, Symmetry Software is a free online resource featuring a compilation of research, collaboration and web tools for use by payroll professionals and more including information about payroll tax articles, federal tax information and state tax information.

FYI...  All our calculators are able to address Supplemental withholding rates. Note that Supplemental is an option in the Federal Filing Status field.