Payroll is one of the most important processes for your business. It ensures your employees are paid on time and in full and your business complies with regulatory requirements.

 

However, payroll can also feel intimidating for small businesses. Outdated, manual processes can slow the process down and expose your organization to risk. But payroll software may also be overwhelming and, of course, expensive. 

 

There is no one-size-fits-all solution to payroll processing, but understanding the basics can help you find the best way to run payroll for your business.

 

Consider this your ultimate guide to payroll processing to help set your business up for success.

 

 

Payroll Processing FAQs

 

All the answers to common payroll processing questions are in one place.

 

How Do You Process Payroll?

You can find plenty of payroll processing checklists online. Some are more comprehensive than others. 

For small businesses, it all starts with understanding the basics of payroll processing. Here are the six simple steps every organization should follow:

1. Apply for an Employee Identification Number

According to the IRS, an Employer Identification Number (EIN) (of a Federal Tax Identification Number) is used to identify a business entity. Most businesses need an EIN to track payroll taxes and ensure compliance.

2. Collect Employee Information

Ensure you have the correct tax information for every employee, W4 for normal employees, and W9 for contractors. Taxes may differ for salaried employees compared to contractors, and some employees may have deductions while others don’t. Having this information ensures employee wages are accurate.

3. Choose a Payroll Schedule

Determine the best payroll schedule for your business. Business News Daily explains that there are four main schedules: monthly, semimonthly, biweekly, and weekly. This helps employees know when they will be paid. 

4. Calculate Gross Pay

Then, it’s time to crunch numbers. According to Indeed, gross pay is the total amount of money an employee earns for time worked. It also includes any overtime, bonuses, or reimbursements

5. Determine Employee Deductions

This is perhaps the most complicated step. You must keep your employees’ W-4s, federal and state requirements, insurance requirements, and benefits requirements in mind to accurately determine payroll deductions.

6. Compute Net Pay

Simply subtract each employee’s deductions from their gross pay. This is the amount you will pay your employees. That means it’s time to approach payroll and pay your employees through direct deposit, paper checks, cash, etc. 

 

Why is Payroll Processing Important?

Reliable, consistent payroll processing ensures your employees are paid fairly and you can file taxes correctly. It ensures compliance and creates a positive workplace environment where employees trust they will be paid on time and in full.

 

How Long Does Payroll Processing Take?

This ultimately depends on your payroll software and the number of employees. Manual calculations can take days, while a payroll service can help streamline the process. The best payroll processing systems only take a day or two to complete this process.

 

What Are Common Payroll Challenges?

There are many moving parts for payroll processing. Here are a handful of the most common payroll challenges for small businesses:

Compliance And Regulation Issues: Follow payroll compliance best practices to avoid penalties and damage to your reputation. 

Manual Processes: Manually processing payroll slows your business down and increases the risk of human error.

Record Keeping: Paper payroll records are easily lost, which can lead to miscalculations. 

Employee Misclassification: Ensure you properly distinguish between full-time employees and contractors. 

Technology Integration: Siloed payroll services can be doing more harm than good. Choose a fully-integrated solution that’s secure. 

 

In-House vs. Outsourcing Payroll Processing

 

When completing payroll, businesses have two options: doing things in-house or outsourcing to a payroll company. 

Can You Complete Payroll Processing In-House?

Yes! However, very few businesses find handling payroll in-house more cost-effective and efficient. Businesses must be careful about compliance with wage and hour laws and stay up-to-date on the latest changes. Payroll processing in-house can be time-consuming and prone to error.

 

What is Payroll Processing Outsourcing?

You can also outsource payroll to a professional or utilize an automated payroll solution. When done right, payroll outsourcing can help businesses save money and better control their cash flow.

These companies and solutions keep tabs on the evolving payroll processes and allow for seamless data flow to ensure payroll is completed efficiently and correctly. 

 

What Are Payroll Processing Fees?

These are the costs of payroll services. Some providers charge per month or per employee.

 

 

How FINSYNC Can Help

 

FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.

Payroll management is one of the most important processes a business consistently undertakes. From ensuring accurate and timely payments, complying with tax regulations, managing employee categories, and scaling for growth, payroll is more than simply cutting checks.

 

This being said it is clear why payroll is also one of the most challenging business processes. The intricate details of each paycheck can be daunting for businesses, especially those that rely on outdated systems and manual processes.

 

Read on to learn more about the challenges of payroll management and how the right payroll service solution can help.

 

Challenges of Payroll Management

 

Without the right processes, payroll administration is prone to error. Ernst & Young (EY) recently reported that the average company has an 80% payroll accuracy rate and makes 15 corrections per pay period. These corrections can be costly and time-consuming to resolve. The inaccuracies can also be frustrating for employees who often start looking for a new position after just one payroll mistake. 

 

Here are some of the common challenges payroll management businesses face:

Manual Errors and Inconsistencies 

There is a lot of information required to keep accurate payroll records. This includes everything from employee classifications and exemptions to tax rates and, of course, the hours worked by your employees.

When manually entering all this information, it’s easy to see how mistakes can occur. Even the smallest accounting error can drastically affect payroll data and lead to mistakes surrounding tax withholdings and gross pay that can cost your business money and time to fix.

Misplaced Documents

Many small businesses that rely on manual payroll management processes analyze pay stubs and keep paper records of payroll information. It’s easy for documents to become lost or misplaced, leading to miscalculations and errors. 

Handling Varied Employee Categories 

Understanding employee classifications is key to a seamless payroll process. Forbes explains that employees can often fit into two categories, contractors and full-time employees. If you misclassify employees, you could wind up with a lot of issues down the road, such as penalties for unpaid taxes. 

You also need to consider which of your employees are exempt or non-exempt. The former is not protected by The Fair Labor Standards Act (FLSA) and cannot receive overtime wages, while the latter can receive overtime pay.

Properly classifying employees ensures your payroll team can calculate taxes correctly, pay employees fairly and remain compliant overall. 

Compliance with Payroll Rules and Regulations

Speaking of compliance, it’s essential for businesses to remain compliant with both federal and state regulations. The Fair Labor Standards Act (FLSA) outlines minimum wage, overtime, recordkeeping, and more rules.

 

Benefits of Payroll Service Solutions

 

Even the best payroll department can be bogged down by these common challenges. And for many small businesses, HR is tasked with payroll on top of other responsibilities, which can add to the confusion.

 

One of the best ways to ensure an accurate and efficient payroll is with payroll manager software. Business.com emphasizes that an organized payroll management system can both streamline your finances and eliminate human error. It gives employees peace of mind they will be compensated on time and in full and also keep your business compliant with government regulations. 

 

Payroll-managed services put all your important payroll information in one place. The combination of time-tracking tools and customized permissions ensures employees are paid accurately. At the same time, payroll taxes are calculated and filed automatically, along with full payroll reporting.

 

In short, the right payroll management system streamlines payroll and gives your business a holistic view of its finances to help make accurate, strategic decisions for your future.

 

Choosing the Right Payroll Service Solution

 

Of course, not all managed payroll services are created equal. Modern businesses need a holistic, scalable solution to help simplify their finances and help them grow. Here are a few factors to keep in mind when choosing a payroll processing system:

 

• • Do you want an on-premise system or a cloud-based system? The latter is often more affordable and easier to set up but offers less control and flexibility.

• • What are your business’s specific needs? For some, direct deposit may be a priority, while time tracking is the main focus for other businesses.

• • What is your budget? Some payroll systems charge per employee monthly, so make sure you can afford this solution. 

 

Implementing a payroll management system comes with a learning curve, but the payoff is priceless. Accurate, efficient payroll is essential for business continuity and keeping employees engaged and productive throughout the years. 

 

 

How FINSYNC Can Help

FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.

Running a home services business is no small feat. In managing your team of workers, you also have to keep track of payroll, invoicing, and scheduling. Over time, it can be easy for things to start slipping through the cracks. That is why it is so important to have a sound payroll system in place. 

The right payroll software can make all the difference in keeping your business running smoothly. But with so many options on the market, how do you choose the right one for your needs? This article will break down everything you need to know about choosing payroll software for your home services business. Keep reading to learn more!

Ease of Use

When selecting payroll software, it is essential to keep the complexity of options manageable for your decision-making process. Keep in mind your ultimate goal – a simple and easy-to-use solution. Therefore, you should look for an intuitive system that allows you to get up and running quickly. 

Focus on finding a platform with a user-friendly interface and getting familiar with shortcuts or other tools designed to make navigating the software painless and straightforward. It is a bonus if this new software has troubleshooting videos and excellent customer service to help you get started. In the long run, avoiding excessively complex solutions will make managing your payroll much smoother.

Compatibility

Another important consideration is compatibility. If the new software doesn’t integrate with existing applications such as invoicing and payments, it could compromise a smooth workflow, resulting in lost time and money spent on fixing problems. 

Ensuring the software APIs are compatible can help streamline workflow processes, avoid incompatibility issues, and eliminate frustrations in the future. As such, make sure to assess compatibility before formalizing your decision.

Communication

Managing a home services company requires staying on top of countless details, one of the most important and challenging being communication. It is easy to take too much precious time figuring out hours worked, direct deposit information, and taxes that need to be withheld. To save valuable time with these tasks, consider a payroll processing system that can help streamline the process for you and your staff. Automatic tax deductions, cloud-based time tracking, and employees can input their direct deposit information.

Invest in technology that will help streamline communication between you, your clients, and your employees for worry-free time tracking and payroll processing. Don’t let miscommunication get in the way of a successful business.

Pricing

Pricing is a significant consideration when selecting payroll software for your home business. Fortunately, many software vendors provide packages well-tailored to a wide variety of budgets that offer valuable features. Be sure to collect a complete list of features from each provider to make an informed decision. 

You also need to be mindful and ask about any hidden costs that may not be immediately clear. These additional fees may be included for services such as direct deposit or customer support. You need to be aware of these expenses before finalizing your choice. Doing this due diligence now can save you a lot of hassle in the long run.

Advanced Features

Some accounting software may require you to pay more if you need more advanced features like time tracking or employee self-service portals. However, FINSYNC does not require an additional charge for advanced features. The payroll software is already equipped with time tracking, employee login, and cloud access from virtually anywhere. Payroll can be complex, but having the right knowledge base will ensure potential risks are accounted for before installation.

Additionally, fees like setup fees, subscription rates, tax forms, and aggregate records should be considered before investing in a certain platform. So when selecting your payroll solution, always check to see if the features you need are included in the package or available for an additional cost.

Taxes

It is a necessity for any new payroll software to come equipped with automatic tax filings and deductions. Automatic tax filing benefits businesses as it streamlines the entire process, allowing an organization to be more efficient in managing payroll-related taxes. Automatic deductions further benefit businesses as they capture accurate information needed for compliance with taxation laws. 

Not only will this make the company compliant, but it will save precious time and money that could be used to focus on other aspects of their business operations. When searching for the best payroll software solution, remember the importance of having automatic tax filings and deductions capabilities integrated into your system.

Additional Employees

Most software providers charge per-employee and/or per-pay run depending on how many people are being paid and whether they receive their weekly, biweekly, or monthly wages. It’s vital to scrutinize details and research thoroughly before paying any fees; in some cases, providing a report afterward of when these extra charges were triggered may help you better budget for them in the future. 

Choosing payroll software for your home services business can be manageable. All you need to do is look for a system that integrates with your accounting software, supports direct deposit capabilities, and provides robust reporting features. Once you’ve identified at least a few options that meet those key criteria, you can compare prices to find the one most likely to fit your budget. Doing so will save you time and money in the long run and eliminate the hassle of managing employee wages in different applications.

 

Interested in learning more about the FINSYNC payroll system, part of our all-in-one platform? Start a free trial today!

Whether your business is just starting up or you’ve been operating for years, streamlining your accounting process is a must. One way to do this is by using a payroll processing system. These apps can take the hassle out of tracking employee hours, paying wages, and making all the complex tax and benefit calculations. They often offer other features that can help keep your books in order as well. 

If you’re considering implementing a payroll processing system, here are some things to keep in mind. 

What Is a Payroll Processing System

A payroll system is a type of software that businesses use to automate the task of employee compensation. The application helps to streamline payroll by keeping track of employee time worked, PTO days, and other types of leave. It also calculates withholdings for taxes and deductions for benefits. In addition, the system can generate reports that help businesses to stay compliant with employment laws.

The system typically includes a software component that allows businesses to input employee data, calculate pay based on hours worked, and generate pay stubs or direct deposit payments. The system may also include hardware components, such as check printers or time clocks. 

In some cases, businesses use third-party providers to outsource the task of payroll processing. These providers can offer some similar features and services, however, it is easy to produce accurate paycheck and tax compliance reporting with the right accounting platform.  

Timekeeping App

Employee timekeeping applications allow workers to track their time for each job or project and authorize managers to view and approve employee time sheets. The app will improve the accuracy and efficiency of time tracking for employees and managers. 

There are many benefits to using a time-tracking app. This cloud-based feature will save time and can reduce payroll costs by ensuring that employees are only paid for the hours they worked. 

Additionally, some software can generate timekeeping reports and analytics, which can help businesses optimize their operations. Overall, the timekeeping app is a powerful tool that can help companies improve their performance.

Benefits of Using a Payroll System

Payroll processing systems offer a number of benefits for businesses. They can help to automate payroll, saving time and money. Manual processing is often error-prone and time-consuming, but a good application can automate many of the tasks involved, such as calculating tax withholdings and generating pay stubs.

In addition, these systems can provide accurate and up-to-date information about employee compensation. This information can be used to make informed decisions about how to allocate resources. Payroll systems can also help to improve compliance with government regulations. 

Another benefit some accounting platforms provide is a payroll portal or central hub that gives employees access to their payroll information 24/7 via the internet. The portal provides employees with secure login credentials, allowing them to view their pay stubs, W-2 forms, and other payroll documents. The portal also offers a self-service feature that will enable employees to update their personal information, such as their address or phone number. 

As a result, these payroll systems offer several benefits that businesses of all sizes can leverage.

Choosing the Right System

Payroll involves a lot of calculations and is crucial for businesses. It is essential to have an efficient process in place. There are a number of payroll apps available, but with so many options on the market, it can be difficult to know which system is right for your company. Here are a few key factors to consider when choosing a payroll processing system. 

• First, you need to decide whether you want an on-premise system or a cloud-based system. On-premise applications are typically more expensive and require more IT support, but they offer more control and flexibility. Cloud-based apps are more affordable and easier to set up, but they may not offer as much customization. 
• Second, you need to consider your company’s specific needs. Do you need a system that can handle direct deposits? Do you need features like time tracking or vacation accrual? Make sure to choose a platform that offers the features you need. 
• Finally, you need to compare pricing options. Payroll systems typically charge per employee per month, so be sure to calculate the cost for your specific business before making a decision. 

By keeping these factors in mind, you can feel confident in choosing the right payroll processing system for your company.

Challenges of Implementing Payroll Processing

Implementing a new payroll processing system can be a challenge for any business, large or small. There are a number of factors to consider. One common challenge is dealing with employee absences and using vacation or holiday time off. When an employee is out sick or on vacation, their hours still need to be tracked and accounted for. This can be a time-consuming manual process if not done properly.

Another challenge that businesses face is dealing with changes in tax laws or other regulations. Because payroll involves withholdings and deductions, any changes to the tax code can impact the way businesses process payroll. Businesses must stay up-to-date on the latest changes in order to ensure that they are withholding the correct amount of taxes and other deductions from employee paychecks. It is critical for businesses to have a solid understanding of these rules and regulations.

Businesses need to be careful about compliance with wage and hour laws. Employees must be paid for all the hours they work, including overtime if they work more than 40 hours in a week. Failure to properly pay employees can lead to hefty fines and penalties, including back pay, interest, and damages. The best way to avoid these penalties is to have a clear grasp of the wage and hour laws in your state and to make sure that all employees are properly paid. 

With these challenges, very few businesses find that handling payroll in-house is more cost-effective and efficient. When outsourced and done right, it can help businesses save money and better control their cash flow.

Conclusion

The implementation of a payroll processing system can be challenging. There are many steps involved in setting up the application and ensuring it is configured correctly. Good providers walk you through this process, however.

You will need to train employees on how to use the platform and ensure that it meets all government requirements. 

Despite the challenges, there are many benefits to using a payroll app. The process can save you time and money by automating many of the tasks associated with payroll. It can also help to improve accuracy and compliance with government regulations. 

Overall, a payroll processing system can help to streamline your accounting process and make your business run more smoothly.

 

Process payroll with confidence using FINSYNC’s online payroll and timecard for employees and contractors.

The prospect of adjusting to a four-day workweek has many businesses apprehensive. But what if the data does not result in productivity and revenue graphs plummeting? Perhaps there are unexpected business advantages when considering this radical new trend. 

Since we are well into Year Three of the pandemic, businesses are very much aware of the work-family dynamics that have challenged people and organizations everywhere. Parents have struggled to find child care, and conforming with the series of school-mandated COVID tests are just a couple of examples of employees needing a more flexible work schedule. 

Business pressure to find skilled workers is amplified due to the tight competition and high demand. Many companies are considering a four-day workweek to attract top talent and avoid The Great Resignation. 

This article will take you through the workweek history and intriguing facts that will explain why this new work craze is gaining traction worldwide. 

History of the 5-Day Workweek

“Eight hours labor, eight hours recreation, eight hours rest,” said labor activist Robert Owen in 1817. The Welsh textile mill owner and philanthropist did not know it would take over a hundred years before this eventually caught on. 

In 1926 Henry Ford developed a new working standard for his automobile factories. At this point, the US government began to acknowledge the 40-hour workweek formally. However, Ford didn’t do this for his employee’s well-being. He realized that if companies were to profit, customers needed to buy things, which meant workers needed time off to shop. 

The US has kept this standard ever since. Over 100 years later, this structure is still the norm for 8 hours a day, five days a week. Even with the tremendous technological advancements that have taken place over the past 30 years, workers still put in a 40-hour workweek. 

Until now.

Leading the Pack 

Iceland began several large-scale research trials between 2015-2019 to track and record data for workers only working four days a week. This research was the first large trial of a shortened workweek within the public sector. The result? By all measures, it was an “overwhelming success.” 

Employees’ well-being increased among a range of indicators such as stress, employee burnout, and work-life balance. This study was such an astonishing success that currently, 86% of workers in Iceland have the option of working just four days a week without a decline in their pay.

Other countries are quickly following suit. Spain started a larger project that will encompass 200 companies reducing their employees’ workweek to 32-hours without cutting pay. Scotland, Japan, Switzerland, New Zealand, the UK, Belgium, and many more have announced they would conduct similar trials without changing workers’ compensation. 

What began as a small trend is heating up fast and currently involves over 35 American companies (and growing) and over 20 countries worldwide that have started offering a reduced workweek. 

Increased Productivity

It is counterintuitive to think that working fewer hours would produce more worker output, but this is precisely what the data has revealed. Reducing the number of hours worked forces companies to prioritize their essential tasks, remove superfluous meetings and other distractions, and use technology to automate business processes. 

These changes make employees’ work more accessible. A 2016 study by Ginger Research in the UK showed that the average worker only accomplishes less than 3 hours of work each day, regardless of how many hours they physically spend at the office. 

The takeaway from this study and others is that overworked employees are less productive than those working fewer hours. A Stanford University study found that productivity during 60-hour weeks was less than two-thirds of when 40 hours were worked.

In addition to increased productivity, a four-day workweek has been shown to decrease worker sick days, increase sales, improve employee retention, increase company loyalty, and produce more job applicants. 

Drawbacks

Even though the data for a four-day workweek has been overwhelmingly positive, there are still challenges that companies have to overcome. For example, many employers insist on the same level of productivity, which means the same work gets squeezed into fewer hours. The result can be hectic days and exhausted evenings.

A condensed workweek allows less time for office socializing. Some respondents said this was a bonus, but many workers depended on the water cooler chats to help offset stress and anxiety. 

Sometimes four days doesn’t mean four. Trial participants said that a four-day workweek was four-standard, 8 hour days, and then a half-day to catch up. Some fear that it is only time before companies start paying less for the same output.

Regardless of the drawbacks, there are many happy tales from workers with newfound freedom in life. They have more time to incorporate exercise, quality time with their kids, or catch up on doctor appointments and errands.

Final Thoughts

Issues of work-life balance are very much on people’s minds when looking for a new job opportunity. But to make this trend more widespread, we need to have a significant shift in how we think about work and embrace the changes already in effect. 

Many business owners and employees agree that a two-day weekend isn’t enough time to recharge fully. The WHO recently announced that employee burnout is considered an occupational phenomenon, and this burnout is forcing business owners to prioritize their employees and their own mental well-being. 

Also, the growth in AI technology will significantly disrupt every aspect of every industry around the globe. How and when we work is about to change drastically, and some say this transformation will happen much sooner than we think. 

Finally, suppose workers can complete the same amount of work without diminishing the business’s bottom line, or actually improving it. In that case, it is hard to come up with why this policy shouldn’t be more widespread. At the very least, businesses should seriously rethink retention strategies such as a decreased workweek to avoid losing leading talent in an increasingly competitive labor market because the cost of replacing and training employees continues to reach new heights.

 

Try FINSYNC for free to see how the platform can help you easily improve your cash flow management and avoid those dreaded dips into the red.

 

There are several boxes to check after a business hires its first contracted employees or vendors. The W9 Form is one of the many tax documents required by the IRS to estimate the taxes owed by contract or freelance workers within a given year. 

 

It is easy to push all tax-related tasks off until tax season as a business owner. However, the W9 Form is critical when paying for non-employee services, and failing to provide the 1099 form to vendors by the January 31st deadline can create risks for your organization.  

 

This article will provide the purpose of a W9 form and how it differs from the 1099 tax form. We will also walk you through a checklist to ensure you have the information you need. Lastly, we will go over some items to keep an eye out for when collecting this information.

 

1099 Form

 

To understand the W9 Form, it is beneficial to have first-hand experience with 1099 forms. 

 

Businesses file 1099 forms when they have paid more than $600 to an independent contractor or non-employee during the year. You do not need to withhold any money when you provide payment; however, you must use the 1099 form to declare the exact dollar amount your company disbursed to the IRS. 

 

Therefore, the 1099 form serves as a record for the total amount of compensation a non-employee received. Before a contractor begins a work assignment, your business must deliver the W9 Form; then, the contractor must complete it before starting their project. This Form gives your business the necessary information to provide the 1099 form at the end of the tax period. 

 

Purpose of W9 Form

 

The W-9 Form, officially titled “Request for Taxpayer Identification Number and Certification,” is used to verify your independent contractor’s tax withholding status. They will supply you with their TIN or Tax Identification Number, which you use later in conjunction with the 1099 form. 

 

Besides non-employee compensation, here are a few other examples of W9 income.

 

◦ Cancelation of debt

◦ Acquisition or abandonment of secured property

◦ Dividends

◦ Real estate transactions

◦ Mortgage interest

◦ Miscellaneous income

 

Blank W9 forms are found on the IRS website and can be downloaded and given to new contractors as part of the hiring process.

 

Checklist for Completing

 

Form W9 is one of the most straightforward IRS forms to complete. 

 

 

Here are the required fields that all non-employed staff must complete.

Box 1: Contractor name goes here as it appears on their tax return.

Box 2 – Business name. Enter LLC, S-Corp, or sole proprietor name here.

Box 3: Box check required to distinguish between LLC, S-Corp, or sole proprietor.

Box 4 – Exemptions. Certain businesses are exempt from backup withholding, and this is when the employer is required to withhold a percentage of any future payments to ensure the IRS receives the tax due on this income. 

Most likely, backup withholding will not apply unless a vendor refuses to provide a Social Security number (SSN) or tax identification number (TIN)

Box 5 – Business street address, city, state, and zip code. 

Box 6 – Option box to include requestor’s name or payer’s name.

Box 7 – Social security number or tax identification number. If a business is a partnership, LLC, or corporation, there should already be a TIN, also referred to as an Employer Identification Number (EIN).

Box 8 – Signature required to attest to the truthfulness of all information.

 

Things to Look Out for

 

If you have a contractor who will not provide their completed W9 or TIN, the IRS requires your company to start withholding 24% of their compensation for tax money. There are penalties for failing to submit this backup withholding, and it is better to avoid this altogether and require W9 completion before work begins. 

 

Since the W9 Form contains sensitive information, always make sure to use secure channels to send it. If your organization uses email for the hiring process, ensure the contractor sends the form back encrypted. 

 

If a single person owns the LLC, list the name of the owner on the “name” line in box one and the name of the LLC on the “business name” line in box 2. If the business owner provides both SSN and TIN, the IRS would prefer the owner’s Social Security number.

 

At the end of the tax year, the information contained on the completed Form W9 gets used to prepare 1099 forms like 1099-NEC, 1099-MISC, 1099-INT, and 1099-DIV. Therefore, ensuring the W9 Form gets completed accurately will save you time during tax season.

 

How FINSYNC Can Help

 

FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.

 

It sounds like living the dream if you are permitted to take as much time off work as you wish. However, there are a few particulars to review before you begin offering unlimited PTO at your organization.

 

Unlimited PTO became a trend that started in the tech industry within the last decade. Currently, this trend has become more commonplace, with companies competing for top talent due to the “great resignation.” 

 

But what does it mean to have unlimited PTO? This article covers the pros and cons, and strategies to create the perfect paid time off policy for your business.

 

What Is Unlimited PTO?

 

Paid time off (PTO) is a benefit an employer provides their employees to receive payment when they take off work for vacation, personal days, holidays, and sick time. 

 

A company’s PTO policies establish the guidelines that determine when and how an employee can receive payment for time off work.

 

Unlimited PTO means that employees can take time off at their discretion and utilize it whenever needed. Manager approval is often required to ensure there aren’t too many employees requesting it at the same time during high workload demands. 

 

Pros of Unlimited PTO

 

• Great Recruitment Tool – Even though unlimited vacation is gaining popularity, many organizations still haven’t implemented it. Therefore, those with this competitive edge show they value and trust their employees.

• Saves the Company Money – Unlimited PTO began with Silicon Valley start-ups. Tech companies wanted to keep employees’ vacation rollover off the books while providing an extraordinary benefit. Now many organizations are taking advantage of not paying out unused vacation at the end of the year or when employment ends, simplifying cash flow management as fewer liabilities are accrued.

• Less Paperwork – Monitoring paid time off creates a lot of work in approving requests, tracking, and reporting. When a business incorporates unlimited PTO, all administrative burdens go away—removing the additional tasks and paperwork for managers and human resources. 

• Boosts Morale – Employees feel more satisfied when given the autonomy to take their leave as they wish. If your employees are engaged, you might see up to a 21 percent increase in profitability.

 

Cons of Unlimited PTO

 

• Employees May Abuse the Policy – When a business has established unlimited PTO, there is the risk of employees taking advantage of the policy. Some may use more time off than others without fear of their employment ending. Most studies suggest this is very uncommon; however, some individuals may exploit this policy.

• Not Truly Unlimited – Obviously, under this policy, workers cannot take off months at a time. If this consistently happened, unlimited PTO would become a costly failure. Because of this fear, many organizations have developed specific parameters around appropriate use. Requiring manager approval, 4-6 week limits, or making it performance-based are all stipulations you may want to convey in your policy.

• Might Lead to Burnout – By far, the most common problem associated with unlimited vacation is that employees end up limiting the amount of time they take off. Underuse can be a bigger problem than overuse. The worst-case scenario is that employees end up getting paid less with no value attributed to their PTO while companies gain more of their employees’ productivity. Overall, if employees do not take enough time to rest and recharge, there is the potential that they will suffer burnout at work.

 

Solutions

 

Businesses should be transparent about using unlimited PTO within their organization before hiring. At the same time, job seekers should try to get precise details about the company’s policy prior to starting their employment.

 

Many companies will encourage employees to take time off to prevent employee burnout. Some will even make it mandatory, such as two-week vacation minimums when working in this environment. 

 

Conclusion

 

A successful unlimited vacation policy can have a positive impact on your employees. You can build a culture of mutual trust which will boost both productivity and morale. A genuine interest in employee well-being and happiness motivates these employees to work harder.

 

An unsuccessful unlimited vacation policy lacks guidelines around how much time off to take. Employees who are unsure how many days are “too many” will likely default to less or follow the norms set by individual managers, who might not be taking enough time off themselves.

 

Finally, companies need to ask if they’re making these changes for employees or their bottom line. If employees use 100 percent of their PTO and the employer wants to reduce their small business expenses, then perhaps such a program makes sense. However, if the main reason to offer unlimited vacation is a marketing tool for recruitment but is severely underutilized, you might want to consider a different approach.

 

How FINSYNC Can Help

 

FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.

 

Do you have employees who will be working on a holiday? Who is eligible for this time off? How much extra do you pay for working on a holiday? 

 

This article answers these questions and more to assist you in determining the best holiday pay policy within your organization. 

 

Definition of Holiday Pay

 

Holiday pay, sometimes referred to as paid time off, is any alternative compensation an employer offers employees during holidays. This additional pay could be in the form of time-and-a-half when working on a holiday or being paid for the day when not working.

 

There are eleven federal holidays observed by the US government. While most government offices are closed these days, many small businesses choose to operate “business as usual.” 

 

The FLSA, or Fair Labor Standards Act does not require payment to employees who do not work during vacations or holidays. This type of paid time off is an agreement between an employer and an employee and is documented before that employee’s first day of work.

 

Likewise, companies are not required by law to pay extra for regular work hours. Holiday pay is considered a benefit to employees and is entirely voluntary. Sometimes, an employer will pay time and a half or double time for individuals who end up working on a holiday, but this is not required.  

 

That being said, restaurants’ and retailers’ demand for labor is at an all-time high. It is now highly encouraged to pay employees time-and-a-half or double time when working a holiday shift. 

 

2022 Holiday Schedule

 

Here are the dates for the 2022 national holidays.

When a holiday falls on a weekend, that holiday usually is observed on the following Monday or preceding Friday.

 

Eligibility

 

Anyone who works on a holiday is required to be paid their standard rate of pay. Most often, there is consistency in the paid time off system for all full-time employees. 

 

An employee should understand the paid holidays a company offers before accepting the position. You do not want to be surprised when a holiday rolls around and you are required to work or learn you are not paid for this time off. 

 

Contractors and consultants are not subject to holiday pay or any other type of paid time off given to regular employees. Exceptions may be made given in their contractual agreements. 

 

Part-Time or Seasonal Employees

 

Since companies are not legally required to provide paid time off for any full-time worker, part-time and seasonal employees are treated the same. Organizations are required to detail their holiday policy in their employee handbook. 

 

Most companies outline the pay structure for both seasonal and part-time employees. Paying more, even double or triple, during the holidays incentivizes employees to work during these busy periods.

 

Employers feel more compelled to provide better benefits to all employees in a competitive economy to prevent individuals from jumping ship for a better offer. 

 

Providing Benefits to a Small Business

 

A fundamental part of just about any compensation package in this very competitive environment is time-off benefits. Employers can provide vacation and holiday pay to their employees even though this isn’t a federal requirement for all businesses.

 

Currently, many organizations are struggling to fill career openings. These prevalent openings force companies to compete for local and international talent and make paid time off a standard and consistent practice. 

 

Even better, studies show that workers who are paid for holidays show increased productivity and morale and feel more valued at work. Paid holidays can be a major motivator to employees since they know that they will be given days to rest without losing out on wages.

 

For a majority of small businesses, customer needs take top priority. However, this doesn’t leave much time for self-care, which is why holiday pay is so important. It is a chance to relax and recharge while increasing output and overall job satisfaction. 

 

How FINSYNC Can Help

 

FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.