This post is by Bruce Senti of Aatrix State and Fed Payroll Reports

State and Federal eFiling requirements are mandating more businesses to eFile payroll reports and payments every year.

More than a dozen states either lowered the threshold for employee count requirements or outright mandated that businesses eFile wage withholding, unemployment, and new hire reports.

The federal government requires virtually all employers to make withholding payments electronically.

The efficiencies provided government agencies by requiring eFiling will continue the trend towards requiring business to file reports and payments electronically.

Electronic tax administration is the foundation for a modernized IRS that provides secure, convenient, timely and accurate services to taxpayers, and to the tax professionals and IRS employees who serve them. (IRSOB-E report 2010 page 9)

The full vision for a modern ETA environment goes beyond just e-filing and seeks to make electronic interactions among taxpayers, tax practitioners, and the IRS the norm. These electronic interactions include the entire range of pre-filing, filing, and post-filing tax activities which taxpayers and their representatives may engage in with the IRS, including the ability to resolve taxpayer account issues over the Internet. (IRSOB-E report 2010 page 9)

The Board emphasizes the need to substantially increase the e-file rate, particularly among businesses filing employment tax returns, because it is crucial to the IRS to achieve the strategic 80 percent electronic filing goal. ( IRSOB-E report 2010 page 39)

“It’s good news for taxpayers as well, whether they be commercial or private filers, most experts agree, businesses that utilize e-filing have a 99 percent accuracy rate,” said David Deeter of Frazier & Deeter LLC.
Source: E-filing Hits Record High | Atlanta Business Chronicle

It is clear that the movement towards electronic filing is more than a trend. It is inevitable that virtually all reporting to taxing authorities will be electronic.

What to look for when choosing an eFiling solution.

With more and more agencies providing an eFile portal online which allows businesses to file reports electronically for free, you may wonder why would an efiling solution have any appeal.

You should look for a solution that has dramatic advantages over the use of the agency sites.

Simplicity

• The interface is very simple. Choose any form from one screen, review/edit onscreen, and simple steps to eFile
• One administrative account to track all confirmations, filings, and payments

Efficient

• eFiling is completed within the payroll solution without additional exports, typing, and logging into multiple sites
• Reports are filled in automatically with no need for manually transcribing
• Reports are time-stamped and saved on your machine and accessible anytime for review or audit

Accurate

• Reports are completed using the data within the payroll solution you use
• The solution must guarantee compliance with all legislation, eFile requirements, and form changes.

Affordable

• The solution should be offered as a subscription service which covers all your filing requirements for a single price. It should include all state and federal agencies you file with.
• It should offer a W-2 eFiling service which allows you to complete all filings as well as employee distribution for less than $4 per employee (the average in-house cost).

eFiling More Than a Trend...

Electronic filing is not going away. In fact, it is the future for virtually all business activity. State and federal agencies are being legislatively and budgetary driven to take advantage of the efficiencies and cost savings eFiling affords them. Take great care in choosing a solution that meets all your needs and has the ability to grow and meet your future needs.

Are you currently using payroll software to process your payroll? Although there are various ways of paying employees such as direct deposit and debit cards, many businesses still use checks to pay some or all of their employees. There are two ways you can print your payroll checks: with blank check stock or on preprinted forms.

If you choose to print on blank check stock, you must use MICR or "Magnetic Ink Character Recognition" ink, a magnetic ink that can be detected by check processing machines. On the other hand, using preprinted forms does not require you to have any special ink for your printer, since the forms are already printed appropriately and shipped to you that way.

Flexibility

The biggest benefit to printing on blank check stock is the flexibility you gain. If you need to make changes to the way your checks look, you can do so at any time and not worry about having to throw out the preprinted checks that are sitting there in boxes. Another advantage is the ability to print checks from multiple bank accounts, as all the bank information is printed on the blank stock by the software. This is particularly handy if you are printing checks for several companies since you won't need to order checks for each company. Printing on blank check stock also allows you to print signatures on your checks, helpful in the case that the check signing party is away or simply unable to sign checks.

Convenience

Using preprinted checks may be more convenient for some companies, since it is fairly simple to order the correct checks for your software, and then keep ordering the same product from your vendor. This option is best for companies who are fairly certain they will not require any changes to the look of their checks. Using blank check stock is also easy once you get it set up, but keep in mind you will still need to keep enough of the special MICR ink in stock.

Green Factor

Obviously, printing checks takes paper, no matter which method you choose to use. You can save paper and money by planning in advance for changes that might require you to purchase new checks and toss out the outdated preprinted ones. If you know about such changes in advance, a good idea is to begin using blank check stock, so that when the change is made, only your check design will need t be changed.

Choosing the right method of check printing for your business can save you valuable time and money!

Processing payroll on time is crucial to the management of your business. As your company grows, you may find that payroll processing becomes more complex with tax requirements, multiple employee types, increasing deduction types, and much more. To efficiently manage your payroll, you will need to choose the best options for your business to process payroll allowing you to continue to pay your employees on time, ensure taxes are filed promptly by due dates and still have access to the information you need.

1. Cost

   As your number of employees grows, so do your labor expenses. Many people start their business using a payroll service, yet as business increases, they realize the expense grows out of hand. Once the cost of using a payroll service starts to outweigh the convenience, you may be ready to bring your payroll processing in-house and use payroll software.

2. Staffing

   Whether you use a payroll service or payroll software, you will need somebody to manage the process. Functions such as collecting employee pay data and editing employee information will need to be manually entered into a payroll software system or delivered to a payroll service.

3. Tax Filing

   Probably the biggest benefit to processing payroll with a service is their guarantee that they will file your taxes in a timely manner. However, payroll software providers currently offer online tax filing or complete tax filing fulfillment options. These options make the Federal and State tax filing processes much easier.

4. Control

   Some companies need or desire tight control over their payroll. Some reasons for this include having a large number of employees or the need to track data by different departments. Companies needing control of their payroll are better suited, in most cases, to processing payroll in-house using payroll software because often times a payroll service cannot provide the flexibility they need. With in-house payroll software, changes can be made instantly and there is no need to wait for somebody else to make them.

5. Security

   Obviously pay data is sensitive, and should be protected. With in-house payroll software, be sure the system offers security tools so that only authorized employees can see certain screens or data. A system with menu level security is helpful so that certain users can only see the screens you give them access to within the system. With a payroll service, if you are entering data online, be sure your service offers security measures so your data cannot be captured by somebody else.

6. Reporting

   Every business has a different set of payroll reporting needs. Perhaps you want to know labor expenses by department or expenses for just one or a combination of your locations. Typically, there is more flexibility in reporting when you are using an in-house program with report editing capabilities. If you are using a service, be certain your service provider can give you the data you need, when you need it.

There are variations of product offerings among payroll software providers as well as payroll service providers. No matter which method you choose, be sure to consider all of the above so that your payroll runs smoothly.

When researching accounting and payroll software for your company, be sure to get these commonly forgotten questions answered, or you may have unwanted surprises down the line.

What are my ongoing yearly costs, and what does that include?

People often remember to ask the upfront costs for a software package but place less importance on the ongoing costs, which can be substantial. Even if your upfront costs are minimal, you may be shocked when you find out as the years go by that there are additional costs for functionality your company requires. For example, you decide you want to start processing payroll via direct deposit, only to find out there is an expensive per-check fee for that service. Another example is support, which can be handled in various ways depending on the software company. Be sure to ask what support is included in the price, what that support includes, and what the ongoing costs for it are.

Can I talk to somebody in my own industry for a reference?

If you own a retail store, then talking to a manufacturer for a reference probably won't help you much because your company processes accounting and payroll in a completely different way. Be sure to talk to a reference that is in a business similar to yours, so you get a true feel of how it could work for your own business.

Will it work with other software products I use?

Most businesses now use software for many different purposes whether it's for word processing or spreadsheet management to time clock entry and electronic data interchange ("EDI"). Be sure to find out whether your accounting and payroll software can fit together with your other software. Having your programs work together saves you significant reentry of data, which saves you time and cuts out a margin for error.

What are the product limitations?

A salesperson by nature does not want to tell you all the details of what a product cannot do; however be sure you understand what its limitations are. For example, you might find out that a software package has the capability for unlimited concurrent users. This may be true in theory, but in reality there is a limitation of how many the system can handle while still running efficiently. This number likely depends on many things like the number of items, customers, transactions, and history saved in the system, not to mention the database technology used. Gain a good understanding of these limitations before purchasing your new software.

How experienced is their technical support staff, and where are they?

Technical support experience varies greatly by company. Be sure to ask about the experience level of the staff that provides support. If you don't get a better answer than, "I'm not sure," you have reason to be skeptical. At times when you need help, you will definitely appreciate having an expert available instead of somebody who knows nothing about accounting or payroll. Do they outsource support services to another company?

Will this work for everybody at my company?

Don't forget that many people in a company are affected by the accounting and payroll software choice. Shipping may need to print special packing lists; accounts payable may need to print 1099 forms, and the warehouse may need a better way to perform a physical inventory count. These are just a few examples of problems that can easily be solved with your accounting software. Include input from people in all departments, so your new system will work well for the entire company.

According to Wikipedia, “A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party (the garnishee) to pay the money, otherwise owed to the defendant, directly to the plaintiff. Wage garnishment, the most common type of garnishment, is the process of deducting money from an employee’s monetary compensation (including salary), sometimes as a result of a court order.”

Calculating wage garnishment withholdings and making payments can be complex, and processing them incorrectly can result in legal repercussions. Here are some ways your business can use payroll software to help ensure deductions are made accurately and on time.

• Set up and track garnishment calculations. Set up garnishment calculations to compute automatically when payroll is processed, and you are assured a consistently accurate dollar amount is being withheld, keeping both employee and creditor happy.
• Specify a minimum net pay. Many garnishment court orders require that an amount be deducted from the pay, yet the employee pay should not go below a specified amount. Set this up in your payroll software, and you can be confident the proper garnishment is taken out, and that the employee gets their minimum amount.
• Set up a garnishment priority. When an employee has more than one garnishment, you need to know which garnishment takes priority. Setting up a priority system within your software allows you to automatically deduct the garnishment in the correct order, so that the proper amount is deducted for each creditor.
• Specify the priority of other deductions. A garnishment may be set up to allow the employee to contribute money to other areas before the garnishment is taken, such as a 401(k) contribution. In this case, setting up a rule within your system to handle this will make certain that the garnishment is taken only after the other deductions are taken.

Using these methods of tracking wage garnishment keeps your information accurate, and also makes it much easier to calculate payments. Keeping track of employee payroll wage garnishments can be overwhelming. Use your payroll software to make the job of tracking and paying wage garnishments much easier, and also to stay in compliance.