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    Payroll Blog

January 9, 2018

3 Ways to Save $1,000’s on Employee Labor

HOW MANY MINUTES PER DAY ARE YOU OVERPAYING EMPLOYEES?

Employee wages and benefit expense is the highest cost for most businesses. This cost continues to rise as new laws create increased mandatory time offpaid family leave, and higher minimum wage.

Now more than ever, employers seek for a balance between remaining profitable, and in business, and providing the best benefits and wages to valuable employees.

One of the best ways to do this is to eliminate wages for unworked labor.

When employees estimate punch times, they usually estimate wrong. Employees often don’t remember or don’t account for arriving late or leaving early. They often don’t realize how the extra few minutes at lunch turned into an extra 10. All of this costs you money in labor that was never realized.

If you’re not using a time clock, you are paying too much for employee labor!

THE COST OF MANUAL TIMEKEEPING

Payroll Errors Cost Employers Money

The American Payroll Association estimates that the rate of human error in time card preparation is between 1% and 8%.

These errors can happen with typos, innocent slips or memory lapses regarding the exact times employees started and ended work.

In addition to the type of errors that cost employers additional money in wages, there is an administrative cost to errors.

These costs are shown in the time and money it costs to re-issue paychecks, re-processing fees, administrative time and more.

The Cost:  A conservative 2% human error rate on a $12,000 payroll would equal $240 in erroneous wages paid per pay period.

Moreover, the cost to re-issue correct payroll amounts (if the error is detected and reported) further increases your cost of human error.

Employee Punch Cards Cost in Administrative Wages

The average payroll clerk spends 7 minutes per time card each pay period:

  • Preparing and handling time cards
  • Verifying time card totals
  • Computing time card totals
  • Computing shift and dept. totals
  • Reconstructing lost/damaged cards

The Cost: Preparing 100 time cards takes an estimated 11.67 hours to complete.  At an average clerical wage of $15.00 per hour, time card preparation would cost $175.05 per pay period.

This time could be eliminated and could free up your Human Resources and Payroll staff for other more effective processes.

Accidental Employee Time Theft

Employees knowingly and unknowingly often steal time from employers.

This can come in the form of untracked breaks, extended lunches and over-approximated punch times.

Did you know that just 15 employees receiving pay for merely 4 minutes of “wasted” time per day will total 1380 minutes of additional pay per month? That’s an additional 23 hours!

The American Payroll Association estimates that employees steal an average of 4.5 hours each week. That’s according to surveys of employees.

The actual time could be much more than employees will even admit on a survey.

4.5 hours per week for 15 employees equal 72 hours in a 4 week period.

The Cost:  If your average pay rate is $10.00 per hour, then you pay an extra $230.00 each month for labor worked. That’s only for 12 minutes of wasted time per week per employee.

That cost multiplies if you account for an average wage loss of 4 and a half hours a week per employee!

Buddy Punching is Expensive

When late or absent employees try to escape notice by employers, they turn to buddy punching. Buddy punching is when a coworker punches in for an employee who is not present. It is illegal and unethical, but it costs employers millions of dollars in unworked wages.

It also affects 75% of all employers.

Buddy punching decreases return on investment, productivity, and decreases the profits of businesses.

It also reduces the employer’s ability to add more benefits for their employees.

Buddy punching costs employers approximately 7% of their total payroll costs.

SAVE ON EMPLOYEE LABOR WITH AUTOMATED TIMEKEEPING

Recover Overpaid wages

Even through employee labor is among an employer’s greatest expenses, there are ways to reduce expenses. Automated timekeeping helps to reduce costs many ways.

Automated timekeeping can help to reduce overtime costs. Alerts go out to managers when overtime thresholds are encroaching.

Managers can see current times and manage employees who are clocked in on overtime hours. They can also manage those who consistently clock overtime hours.

End Buddy Punching and Time Theft

Through biometric time clocks, employers can end buddy punching. Biometric clocks ensure that employees are physically present when they clock in.

Employers in some states should take extra steps to stay compliant. New York employers can use hand geometry time clocks, but cannot force employees to use biometric clocks that scan fingerprints.

Illinois employers must notify employees and disclose the use of biometric information before implementing clocks. These employers are still allowed by law to use biometric time clocks after following state guidelines.

SwipeClock biometric time clocks do one of two things to identify the individual.

Fingerprint: The employee places their fingerprint on the clock. It scans the finger and uses a hash to identify specific points on the finger.

The fingerprint is not stored in the clock or software. The clock matches the hash to the employee’s finger to identify them. Fingerprints cannot be recreated from the hash. All biometric information is automatically deleted when the employee is terminated in the timekeeping system.

Hand Geometry: The hand geometry time clocks measure the employee’s fingers length and width. It does not scan the surface area of the hand. As a result hand geometry time clocks are legal for employers to require employees to use in New York.

Eliminate Overhead & Administrative Time

Small business owners often have smaller margins than larger companies. As a result, reducing overhead costs can be vital to growth.

Large employers can save thousands each month by reducing payroll overhead and administration time.

Automation is more effective than outsourcing.

Take the pain out of collecting time and preparing payroll! Turn tasks that take days days into only hours and minutes.

Automated timekeeping allows managers to track hours, manage overtime, track holidays & time off requests. Employees can view accruals balances, employer  notifications, and manage personal information through an employee self service portal.

People make mistakes, so tracking this stuff usually results in costly errors and time. Automated timekeeping will simplify the process and change how you do business.

Preparing time card data for payroll takes a few clicks when time keeping is automated.

Whether it’s the convenience of gathering punch data in a fraction of the time or simply minimizing the cost of human error, with automated timekeeping submitting payroll doesn’t get much easier!

Compliance Fines Kill

Employers in New York City who failed to properly comply with the new sick leave law were fined over $800,000 in only 4 months of 2016.

An Oregon restaurant failed to pay $30 for a working interview and ended up paying $30,000 in fines for non-compliance.

Mandatory sick leave laws, local minimum wage ordinances, and secure scheduling laws are only a few of the employee-wage related laws that employers must be aware of and track.

These laws require tracking of employee hours for accrual purposes. They require employee location tracking for minimum wage compliance. They also require planned schedules to be posted and employee input and requests for specific schedules.

Employers who do not automate timekeeping and payroll often find themselves hiring additional positions to manage the overhead and documentation these laws require. Plus, they are more likely to be found non-compliant.

Unfortunately, many employer laws require proof of compliance from the employer or the law assumes employer guilt. SwipeClock’s software tracks, retains, and helps employers to stay compliant.

 

December 11, 2017

Payroll Year-End Prep Checklist

If you’re not already preparing for year-end, it’s time to start looking at some items that need to be considered for payroll purposes. Before we know it, the new year will be here! So as you finish up payroll this year, keep in mind the following items:

  1. Employee Data – Confirm identifying employee (both inactive and active) information, such as address, ssn, name, etc for W-2 purposes.
  2. Year-end Bonuses – If you offer bonuses in December, note whether you’d like the amounts to be considered gross or “grossed up” for the required FICA/Medicare taxes. For example, a gross $1,000 bonus (paid at an employee’s current withholding) will handle taxes differently from a net $1,000 ($1,082.84 gross) bonus. Please let us know these amounts before your last payroll of the year or before December 29th.
  3. Year-end Adjustments – These year-end adjustments include, but are not limited to, S-Corp Shareholders Health Premiums, personal use of company automobile, 3rd party sick Pay. Anything you need to include outside of your normal payroll, let us know for your last payroll of the year or before December 29th to make the adjustments.
  4. Tax Rates – Provide us with your SUTA Tax Rate Notice (State Unemployment Rate) for 2018.
  5. Deposit Requirements – In October of every year, the IRS determines if a change for the next calendar needs to be changed, depending on the total tax liability in the company. The company either pays these taxes monthly or semi-weekly, depending on what the IRS has determined. If you have received a notice that indicates your “deposit requirements for Form 941” have changed for 2018, please forward the notice to us.
  6. Time Off Accrual/Balances – Confirm employee PTO/vacation/sick balances. Take note of sick days, vacation time, and other allowed time off, carry over rules, depending on your company’s policies.
  7. Employee updates – Have employees review their withholding allowances before the new year. Please let us know of any new pay-rates or deductions that are effective for the new year.

As you are making plans, prepping for the holidays and other year-end items, we hope this payroll year-end checklist will alleviate some of the stress during this already busy time of the year. In fact, we wish for you, that this is truly the most wonderful time of year!

November 22, 2017

Top Ten Reasons to Outsource Payroll

To outsource, means “to contract out certain business task, previously performed internally, to an independent outside professional organization.” Below are some of the top ten reasons to outsource your payroll with Paragon Payroll & HR!

  1. Save Time and Money – Payroll is an essential part of business, and outsourcing your payroll will save you time and money as it cuts cost to train employees and develop a payroll department within your company.
  2. Improved Company Focus – As a business owner or manager with more time and money at your fingertips, your focus can be on what really matters – the success of your business!
  3. More Internal Resources – With a outsourced payroll company in place, you can free up your employees in-house to do more important tasks directly related to your business.
  4. Access to Professional Payroll Expertise – Paragon Payroll & HR is local and we are here for you to assist with payroll matters as quickly and easily as possible.
  5. Increase Accuracy – Our payroll specialists are trained to make sure your information is done and processed accurately and timely for you.
  6. Access to Several Payroll-related Functions – The right choice in a payroll partner also gives employers access to other payroll-related functions, such as  timekeeping solutions, human resources support, mobile pay stub delivery, etc.
  7. Peace of Mind –  Outsourcing can mean less headache and less worry for you. Leave it to your payroll company to deal with any payroll-related issues. You have better things to do!
  8. Less Liability –  The last thing you want to deal with is a penalty from the IRS or state. Partnering with a payroll company means you have less risk of your taxes being paid late, and thus avoiding penalties. If you receive a notice, forward to it us, and we will take care of it.
  9. Compliance – With the constant changes in governmental rules and regulations, outsourcing your payroll will give you that advantage of staying ahead and keeping your company compliant.
  10. A Partner – By choosing to outsource your payroll with Paragon Payroll & HR, you’re also getting a partner. We hope you consider choosing us today. Call us today for a quote! We are excited to get started!
November 15, 2017

Bi-Weekly vs. Semi-Monthly Basics 201

Bi-weekly and semi-monthly payrolls are the most common pay frequency among employers. The terms “bi-weekly” and “semi-monthly” can be a little confusing when it comes to payroll. Both prefixes, “bi” and “semi” mean “two or twice” but have different meanings, especially when it comes to scheduled payroll dates. Bi- means “every other” or “every two” while semi- means “half” or “twice” in the sense that it happens two times.

In payroll, bi-weekly means employees are paid every other week, while semi-monthly means employees are paid twice a month. Typically, each month for bi-weekly payrolls, employees also paid twice a month, but two months out of the year, employees are paid three times, instead of two. Confused yet? If you are, hopefully we can clarify a thing or two about the difference of bi-weekly and semi-monthly pay frequencies. Even though they tend to stay together throughout the year, there are several differences and implications in payroll.

Bi-weekly

  • Every other week or every 2 weeks
  • 26 payrolls in a year (52 weeks in a year / 2 weeks)
  • Salaried employees typically work 80 hours each pay period (2,080 hours / 26 payrolls)
  • Hourly employees’ overtime is easily calculated
  • Employees will know it will be (every other) weekday;
  • More consistent and preferred for employees. They know when the payday is coming – (i.e. every other Friday)
  • The number of days in the pay period is consistently 10 workdays or 14 total days (two 7-day workweeks)
  • Less consistent for budgeting for employers and employees, as some months have 3 payrolls in a month & are different dates in the month

Semi-Monthly

  • Twice a month or every half month
  • 24 payrolls in a year (12 months  x 2 times)
  • Salaried employees typically work 86.67 hours each pay period (2,080 hours / 24 payrolls)
  • Hourly employees’ overtime often crosses over pay periods. Sometime that means extra work for those calculating payroll hours (contact us to learn more about how our timekeeping solutions can solve this issue for your company)
  • Employees are typically paid on the 15th/End , 10th/25th of the month, etc and they fall on different days of the month (depending on month, weekends, holiday, etc)
  • The number of days in the pay period changes depending on day of month; it might be 16 days or 15 days, depending on how many days are in the month (31 days, 30 days or 28/29 days in February)
  • More consistent for budgeting for employers and employees; it works great for paying bills (as paydates are always on the 15th for instance)

Just remember, a bicycle is a cycle with 2 wheels, and in payroll, biweekly means you’re paid every 2 weeks. And while we’re on the topic of transportation in Portland, how about those semi-trucks we love driving next to on the freeway? I bet you didn’t know that a semi-truck is a trailer without the front wheels, so about half of it is missing. In payroll, that means you’re paid halfway through the month as well as the final half, depending on your payroll schedule.

Of course, we must not forget about monthly and weekly payrolls. Monthly is once a month, paid 12 times a year, and weekly is once a week, paid 52 times a year. Weekly is the most preferred by employees, but payroll processing cost is the highest, as this requires more times in a year to process payroll, therefore is not very common.

 

November 8, 2017

Tips for First-Time Business Owners

“What do you wish you knew before you started your business?”

Successful, Portland small business owner, Sam Thannickal, shares his insight on what he wishes he knew before he first started his small businesses years ago. Sam has over 30 years of experience in payroll, tax, and consulting.

Find a Structure that Fits. Partners, S-Corps, & LLCs…oh my! How do you know what’s the best fit for your business? Once you choose a businesss structure, it’s relatively difficult to shift to another type of structure. Do the research to find the best form of ownership & organization that will benefit your situation for liability protection and tax savings. Contact your accountant or attorney for professional advice.

– Sole Proprietorship
– Limited & limited liability partnerships (LLP)
– C-Corporation
– S-Corporation
– Limited liability companies (LLC)

Monitor, Modify, Repeat. Your business plan is all about effective strategy and communication. It is an important document presenting the company’s strategy and expected financial performance for the future years. It’s what you do in your business and how you plan to carry it out. As you move along in your business, it is important to monitor its progress, making sure company goals and benchmarks are being met. Update it regularly, as needed.

Think Proactive. Set your business up for success! At the initial stages of your business, plan and implement forward-thinking. Instead of reactive measures after issues arise, it’s a good idea to account for potential issues, as much as you possibly can. Remember, it’s okay to fail and make mistakes. That’s how we learn. But do it with a proactive approach, and think ahead. Creating documentation for business practices by safeguarding your business value is vital to the success of a small business is an example of how you can succeed at business proactively.

Outsource as an Option. To outsource or to keep it in-house? Before you dive deep into your business, it is important to know your options to outsource certain business functions. When making your decision, be sure to weigh in the cost, resources, control and location. Outsourcing makes sense when it increases efficiency and effectiveness in your business. We know outsourcing your payroll functions to us will save you time and money! Call us today to find out more about our services.

Learn to Love Networking. Don’t worry, you don’t have to be an extrovert to be good at networking! Introvert or extrovert, it is vital to your business to build a support network of like-minded business peers in your local area. Share what you do best in your industry, creating conversations and thus, opportunities to build up your business. Remember it’s not about who’s the best at small talk; it’s about building strong, beneficial relationships and connections within your business network.

 

If you are a new business owner, we would love to come alongside with you. Contact us today!