Presented Tuesday, March 4, 2014 1 ©2014 The Payroll Advisor
Presented Tuesday, March 4, 2014 1©2014 The Payroll Advisor ©The Payroll Advisor, 2014 2 RCH Credit 3 Once approved, to earn RCH, you must Stay on the webinar for the full 60 minutes Be watching the webinar using your unique URL Certificates delivered electronically, to email address with which you registered Certificates delivered no later than April 21st. ©The Payroll Advisor, 2014 About the Speaker 4 Vicki M. Lambert, CPP, is President and Academic Director of Vicki M. Lambert, LLC, a firm specializing in payroll education and training. Known as “The Payroll Advisor,” Ms. Lambert is Founder and Director of www.thepayrolladvisor.com, a website that provides unique and expert services for anyone dealing with the complexities and technicalities of the payroll process. As an adjunct faculty member at Brandman University, Ms. Lambert is the creator and instructor for the Practical Payroll Online payroll training program, which is approved by the APA for recertification credits. What We Will Cover Today 5 1. 2. 3. 4. Reconciling Form 941 to Forms W-2 Conducting internal audits to find compliance issues for before an external one finds you Going paperless to decrease costs and increase efficiency Benchmarking your payroll to determine where you are and where you are going ©2014 The Payroll Advisor 6 Key Practice #1 Reconciling Forms 941 to Forms W-2 on a Quarterly Basis Key Area to help avoid audits by IRS and SSA ©2014 The Payroll Advisor Reconciling Form 941 7 Quarterly to the payroll records Quarterly to the Form W-2 files Annually to the payroll records Annually to the Form W-2 prior to filing with the SSA ©2014 The Payroll Advisor SSA Reconciliation Points 8 Compare the amounts to be reported to SSA on Form W-3 to the sum of the amounts you reported to IRS on Forms 941, 943, 944, or Schedule H for the tax year. The following amounts on the IRS and SSA report should match: Item W-2 Block 941 Line 944 Line Social Security Wages 3 5a 4a Social Security Tips 7 5b 4b Medicare Wages/Tips 5 5c 4c Additional Medicare Wages/Tips 5 5d 4d Federal Income Tax Withheld 2 3 2 ©2014 The Payroll Advisor Reconciliation of Form 941 to Form W-2 9 Lines on Form 941 2—Total Wages and tips and other compensation 3—Total income tax withheld from wages, tips and other compensation 5a – Taxable Social Security wages column 1 5a column 2 T o T o T o Boxes on Form W-2 1—Wages, tips other compensation 2–Federal income tax withheld T o 3—Social security wages T o 4 – Social security tax withheld T o 5 – Medicare wages and tips T o 6 – Medicare tax withheld 5c –Taxable Medicare wages and tips column 1 5d—Taxable wages & tips subject to Additional Medicare Tax withholding 5c & 5d column 2 combined ©2014 The Payroll Advisor 10 11 12 Key Practice #2 Conducting Internal Audits to Find Compliance Issues Before an External Audit Finds You Key Area because IRS and DOL Audits are increasing to find compliance issues especially in fringe benefits and calculating overtime ©2014 The Payroll Advisor Strategies to Conduct Internal Compliance Audits 13 Not a quick project but a department wide project Allow months to a year to conduct Any task payroll does is subject to audit Conduct the audit on an aspect by aspect basis to allow a starting and stopping point along the way ©2014 The Payroll Advisor Setting Up… 14 This makes it easier to complete each phase of the audit Can handle other projects, and then return to the next phase Speed is not the concern for this audit but accuracy Must conduct the same kind of thorough audit of all the payroll procedures as an external auditor would do—You are the IRS Agent! ©2014 The Payroll Advisor Setting Up… 15 When to start the audit is a tough call Best time is beginning of a new year—March is fine Employees are less likely to notice/question the changes that may occur Forms W-2 are easy to adjust Entire department can be verified in same calendar year ©2014 The Payroll Advisor Strategies… 16 The audit can be conducted with the full knowledge of the payroll staff Not a secret audit to find fraud or to “catch” someone doing something wrong Purpose is to find areas that are out of compliance and fix them before ever facing an external audit ©2014 The Payroll Advisor Strategies… 17 Payroll staff can be useful in this endeavor Staff can audit each other and manager No one working on the focus of audit does the audit for that task ©2014 The Payroll Advisor Strategies… 18 Don’t confuse this type of audit with accounting firm audits or other “internal audits”. Those are looking for compliance with general accounting practices or principles Audit both policy and practice. Your policy may be in compliance but your actual practice may not be. Never assume your company policy is in compliance ©2014 The Payroll Advisor Setting Up the Internal Audit 19 There are two points that are critical for the payroll manager to complete before beginning any internal audit ©2014 The Payroll Advisor First Point… 20 The person conducting the audit should know all the laws, rules and regulations concerning the topic being audited: These should be put in writing and include both federal and state regulations This should not be done from memory but from primary sources such as the DOL/IRS website or secondary sources such as manuals or webbased products ©2014 The Payroll Advisor Including… 21 The company policy for each topic should also be included Many times the federal or state requirements are exceeded by company policy Employees can sue if company policy is not followed even if the federal and state requirements are, so they should be included in the audit as well ©2014 The Payroll Advisor Second Point 22 A comprehensive list of all payroll tasks to be audited should be completed, in writing, either prior to beginning the audit or as you go along: This gives a “playlist” of the tasks to be accomplished and what lies ahead Helps with assembling the law book discussed in the previous bullet Also assists in compiling the time frame and work schedule for the audit ©2014 The Payroll Advisor What to Cover 23 Should include: All facets of paying employees that are covered by the Department of Labor All taxation and reporting facets Don’t forget the state equivalents ©2014 The Payroll Advisor Before Beginning… 24 Create template for conducting the audit for each task Create report template for audit findings for each task Create compliance problem template Create general template of final audit report for department ©2014 The Payroll Advisor How to Conduct It 25 Written, formal report for each procedures or policy reviewed This report the basis for new controls if needed Not a quick scan Set up spread sheets and review forms Compare the regulations to the actual practice and then to policy ©2014 The Payroll Advisor Areas of Concern for DOL 26 Regular rate of pay calculations Lunches docked but not taken Overtime for semi-monthly payroll periods Weighted averages used for overtime payment when employee works at more than one rate per week Off the clock work ©2014 The Payroll Advisor State Side… 27 Now look at the same areas for the states where employees are performing work Anything unique such as CA OT? Do they follow federal? Are meal and rest periods mandatory? Check for postings, paystubs, notices and other state related items ©2014 The Payroll Advisor Auditing for IRS Tax Compliance 28 All facets of taxation including all payments made through the payroll and through accounts payable and offered through human resources--Everything! Don’t forget the state and local taxes ©2014 The Payroll Advisor What to Do If Noncompliance Issue Is Found 29 Set up procedures in advance to report to management any noncompliance issues that are discovered. Deal with each one as they arise after the completion of the audit for that procedure Keep written records to show corrections to procedures or to show why they were not corrected ©2014 The Payroll Advisor 30 Key Practice #3 Going Paperless to Decrease Costs and Increase Efficiency Key area in today’s payroll world because we all must reduce our department’s cost and increase our efficiency to stay competitive ©2014 The Payroll Advisor Key Areas to Go Paperless 31 1. 2. 3. 4. 5. 6. 100% participation in direct deposit for all banked employees -- Paycards for those employees who are “unbanked” Get rid of paper time records—using an electronic timekeeping system Filing all quarterlies electronically/paying by EFT Use e-IWO for child support and pay by EFT Electronic Forms W-2 and W-4 Don’t forget the paystubs can be electronic ©2014 The Payroll Advisor 5 Steps to Improving Direct Deposit Participation 32 1. 2. 3. 4. 5. Get your house in order first Survey your employees Create the target marketing materials Conduct the campaign Remember new employees along the way ©2014 The Payroll Advisor Get Your House in Order First 33 Are your sign up forms complicated, out-ofdate, cumbersome or stale? Do you include directions and samples to assist employees in completing forms? Are the forms easy to access and submit but still secure—remember they are attaching a check of their own Do you acknowledge the receipt of the form to alleviate privacy worries Do you explain how long the process will take? ©2014 The Payroll Advisor Survey Your Employees 34 Target survey of only those who don’t use direct deposit Ask them upfront why they don’t use direct deposit Help narrow your marketing scope Can be quick e-mail or paper form Can be essay style or multiple choice check box style ©2014 The Payroll Advisor Create the Target Marketing Materials 35 Once survey is done create the marketing materials to target the reasons given in the survey Design the marketing to address the majority of needs or concerns Use materials that will reach them such as paycheck stuffers ©2014 The Payroll Advisor Conduct the Campaign 36 Conduct the campaign on many fronts First advertise the campaign outright to let the employees know what is going on—company newsletter, intranet sites whatever… Personalized letter: targeted campaign extolling the virtues of direct deposit Personalized e-mail: use after the paper letter to remind the employee about signing up…keep it going until they sign up ©2014 The Payroll Advisor Conduct the Campaign 37 On site live sign ups: some employees want help but don’t want to “ask” Make sure they are well publicized to your targeted audience High traffic area not in payroll office…you go to them Handle changes for current employees on direct deposit to show customer service Banners and signs: tacky but it works Create FAQs: post around the company including intranet and company newsletter ©2014 The Payroll Advisor Remember New Employees 38 Get them when they are hired How is a new hired informed about the direct deposit program? Form in new hire packet? Bad idea! Mentioned in passing after Form W-4 but before health insurance in new employee orientation? Bad Idea! Not even that much? REALLY BAD IDEA! No guarantee new employees will automatically sign up unless you can prove they do ©2014 The Payroll Advisor Rinse and Repeat… 39 This is an ongoing marketing campaign until there is 100% participation of all employees who are bankable No time limit May find trouble spots that you can adjust your marketing campaign as you go along ©2014 The Payroll Advisor Steps to Improving Pay Card Program 40 Going to use the same steps but look at it from a different perspective. We are going after the “unbanked” this time not the “undecided”. If we get crossovers then great but not the goal. 1. Get your house in order first 2. Survey your employees 3. Create the target marketing materials 4. Conduct the campaign 5. Remember new employees along the way ©2014 The Payroll Advisor Get Your House In Order First 41 1. 2. 3. Do you have a system in place to offer pay cards or are you thinking about it only? Do you have a system in place to sign up employees for your pay card program that is streamline and easy to use and understand? Get feedback if unsure from employees Do you have all the information about the system written up and ready to distribute including what is a pay card, how to use the card, replacing the card, the fees? ©2014 The Payroll Advisor Get Your House In Order First 42 1. 2. 3. You will need to address the issue of fees right up front if you want to improve your participation after latest news stories in New York Times and on the internet Maybe nobody is using because the fees are too high and too often and just too much. You will need to find that out during the survey portion. Get management to buy into a full scale marketing plan ©2014 The Payroll Advisor Get Your House In Order First 43 1. 2. 3. Get what you can from your vendor before you start the campaign so you know where you stand on their help You will be coordinating with the direct deposit campaign so make sure that is ready as well if doing and you should be doing Ensure that all payroll employees are thoroughly trained or retrained to answer questions about pay cards including legal ones ©2014 The Payroll Advisor Survey Your Employees 44 Target those employees only who indicated they are “unbanked” during your direct deposit survey Ask them how they feel about pay cards, do they know what they are, would they be willing to use one if they were available Give them facts on the survey such as “if you could save $10 over a check cashing service by using pay cards would you? Never mention “unbanked” at all! ©2014 The Payroll Advisor Create the Marketing Materials 45 Once the survey is done address the issued raised before going any further You may have to adjust current system for fees, usage etc. in response to survey Address the issues in the survey such as fees, ease of use, how the card words, privacy issues Address the benefits such as lower costs to employees, safety over carrying cash etc. ©2014 The Payroll Advisor Conduct the Campaign 46 Conduct the campaign on many fronts Going to do the same things we did for the direct deposit campaign except this time for pay cards Get supervisors and managers involved to push the program if you can. They might get questions as well. Get your vendor involved at the start with demos, live sign up days and trial runs ©2014 The Payroll Advisor Conduct the Campaign 47 Offer trial periods for the employee to “check it out” “kick the tires” “take it for a spin”—usually 90 days. If they don’t like then put them back on paper checks. Constant reminders for benefits to employees is crucial with posters, newsletters etc. Harp on the math of check cashing fees vs. your payroll card Take into consideration cultural requirements– non-English language sign up assistance ©2014 The Payroll Advisor Remember New Employees 48 Make enrollment part of the new hire process if they don’t sign up for direct deposit, they sign up for pay cards, where legal but push it where not Same as with direct deposit, send a reminder after the first paycheck and put them on the targeted list after the second paper check…don’t let them go by ©2014 The Payroll Advisor Benefits of an Electronic System 49 Less time spent processing Fewer errors introduced during processing Decreased costs Increased compliance with federal and state wage and hour regulations More efficient data for use by management to control labor costs ©2014 The Payroll Advisor Electronic Filing of Reports 50 There are states that require employers to file quarterly reports electronically but we are discussing when the state gives the option to efile or paper file California is a perfect example Employer may paper file the DE 9 and DE 9C But EDD offers the option of filing online using e-Services for Business To cut down on paper use always use the e-file option even if not mandatory ©2014 The Payroll Advisor EFT to Save Time and Paper 51 Many states have mandatory limits that require EFT payments—California for example If average deposit for SDI and PIT is $20,000 or more for the prior state fiscal year employer is required to pay all SDI and PIT deposits by EFT during the next calendar year regardless of dollar amount Go Green—do all deposits via EFT regardless if required by the state—just as done for federal taxes ©2014 The Payroll Advisor E-IWO for Child Support 52 Office of Child Support Enforcement working with employers and states to automate the income withholding process with electronic income withholding orders or e-IWO 2 types of implementation options ©2014 The Payroll Advisor E-IWO Options 53 Option 2—No Programing Option (NPO) Option 1—System to System Medium to large employer who has IT resources that can commit several months to programming IWOs sent in flat file format or .XML document You process and make appropriate updates to payroll system Get PDF of IWO You create acknowledgement record whether accepting or rejecting Takes 3-5 months to implement ©2014 The Payroll Advisor Receive small number of IWOs or have no IT resources Receive an image ready PDF copy of the IWO and a prefilled acknowledgment as an excel spreadsheet or PDF Takes 2-4 weeks to implement Need to configure server and directories so some IT support is still needed E-IWO for Child Support 54 States electronically send IWOs to employers Employers send acknowledgements to states A single interface for all exchange partners Federal Employer Identification Number (FEIN) is the key to passing data between the state and employer Notification of terminations and lump sums by employer can be handled through the e-IWO Portal ©2014 The Payroll Advisor E-IWO for Child Support 55 Secure File Transfer Program (SFTP) is used to send the eIWOs IWOs are not sent via e-mail Can receive all IWOs at one central location Can save money if currently processing many IWOs or if trying to cut down on paper ©2014 The Payroll Advisor PDF Acknowledgement Sample 56 ©2014 The Payroll Advisor Want a Single Acknowledgement Entry Form? 57 XLS is for you Receive a IWO PDF of each income withholding order sent to you by a state and a single spreadsheet for acknowledging Enter “accept” or “reject” for each row Supple a reason code if rejecting Save the file Move to outbound directory You are done ©2014 The Payroll Advisor XLS Acknowledgment Sample 58 ©2014 The Payroll Advisor The Employer Can Also 59 Notify a state when an employee is terminated Notify a state when an employee is going to receive a lump sum payment Employer controls when the notices are released ©2014 The Payroll Advisor Currently using e-IWO Currently developing e-IWO Not using e-IWO Map courtesy of the OCSE 60 ©2014 The Payroll Advisor Get Rid of the Crates! Contact Bill Stuart for more information: E-mail: [email protected] Phone: 518-399-9241 This payroll professional was the first tester of the system. She gets 30,000 IWOs a month—she loves the e-IWO! ©2014 The Payroll Advisor 61 Paying by EFT 62 Only 15 states require child support to be paid electronically. These include: CA, FL, IL, IN, IA, MA, NE, NV, ND, OH, OR, PA, TX, VA, and WV All state child support agencies except for South Carolina accept payments by EFT/EDI (electronic funds transfer/electronic data interchange) EDI includes the identifying information such as case number to properly apply the payment ©2014 The Payroll Advisor Benefits of Paying by EFT 63 Eliminates the cost of printing paper checks and supporting documents Eliminates the cost of postage and delays due to lost or misdirected mail—and the corresponding questions and research time Reduces check handling and processing costs Reduces data errors Results in faster payment processing http://www.acf.hhs.gov/programs/css ©2014 The Payroll Advisor Electronic Form W-4 64 May establish system that allows employees to submit their initial form or change existing form electronically Paper form must be available as well Paper form can be required for some employees if business reason justifies Must be able to provide questionable forms to IRS electronically ©2014 The Payroll Advisor Tech Specs for Electronic Forms 65 Electronic version must contain exact same info as the paper version-no exceptions Must be PIN or verified system Lock-in letter compliance must be available Perjury statement must be there Employees must understand that it is signed under penalty of perjury just like the paper form ©2014 The Payroll Advisor Tech Spec Continued 66 Electronic signature required Must be able to print hard copy All other regulations apply the same as paper form Practical Point: Good to have a system that requires employee to acknowledge perjury statement in order to submit as a separate step ©2014 The Payroll Advisor Electronic Forms W-2 to Employees 67 Software or website specs will vary Employee must consent—electronic consent even if consenting on paper Big stumbling block is disclosure requirements Statement can be furnished on the web if employee given access info ©2014 The Payroll Advisor Disclosure Requirements 68 May get paper if they want it How long will the consent last Procedure for paper copy after giving consent How to withdraw consent and how it is confirmed Conditions on when electronic Form W-2 is not available Procedures for updating contact info for employee Employer must notify if changes in contact info for employer ©2014 The Payroll Advisor Duplicate Form W-2 69 Nothing in the regulations require a duplicate form to be on paper No disclosure required for duplicate forms May require employee to download—should furnish printer and computer to use just in case Employers are not prohibited from charging a fee for the issuance of duplicate Form W-2 per IRS Code—charge for paper not for electronic? ©2014 The Payroll Advisor Going Paperless Internally 70 How do you handle vacation requests? Does the employee submit a paper form? Could it be done electronically via e-mail and PDFs? How are address changes handled? How is direct deposit set up—on paper? Could you set up employee self service portals to handle such items as address changes, voluntary deduction information, and direct deposit information ©2014 The Payroll Advisor What about Paystubs? 71 40 states have some type of requirement for paystubs or pay statements Paper or electronic-7 states have enacted legislation permitted electronic 1 has issued statement DE, HI, IA, ME, MN, NC, OK, and OR CA, NM, NY & VT employee must agree to it ©2014 The Payroll Advisor What about Paystubs? 72 No state specifically forbids electronic paystub or statement but may require employee agreement voluntarily Basically must have access to printer furnished by employer to print the statement out at no cost Must be accessible at all times ©2014 The Payroll Advisor 73 Key Practice #4 Benchmarking Your Payroll: Find Out Where You Are and Determine Where You Are Going Key area because you cannot move forward unless you know where you are now ©2014 The Payroll Advisor What is Benchmarking-Definitions 74 1. 2. 3. 4. The process of identifying, understanding, and adapting outstanding practices and processes from organizations anywhere in the world to help your organization improve its performance—American Productivity & Quality Center Seeking out superior performance through the systematic search for and use of best practices including innovative ideas, effective operating procedures, and successful strategies—Bogan and English Benchmarking for Best Practices A process for identifying and importing best practices to improve performance—A best practice is “anything better than your current practice” The American Heritage Dictionary of the English Language defines a benchmark as “a standard by which something can be measured or judged”. As a verb, to benchmark means “to measure (a rival’s product) according to specified standards in order to compare it with and improve one’s own product”. ©2014 The Payroll Advisor Benchmarking… 75 Actually term is borrowed from surveyors If a surveyor can mark a known position then that position serves as a reference point for other measurements and other points The goal of using a benchmark is to drive improvements by assessing performance against other who have similar products, traits, organizations etc. ©2014 The Payroll Advisor Powerful Tool 76 Powerful management tool because it overcomes what is known as paradigm blindness…in payroll this is the old axiom: “The way we do it is the best because that is the way be have always done it”. Any business process can be benchmarked “Alone, I am satisfied with myself. With others, I am beset by troubling comparisons—Mason Cooley ©2014 The Payroll Advisor What Benchmarking is Not 77 It is not a simple comparative study, copying practices from other organizations, performance assessment or a comparative analysis—it is not a college research paper or an article for a monthly newsletter You are not looking for the best performance but the best practice Best practices cut costs and maintain compliance ©2014 The Payroll Advisor Types of Benchmarking 78 Benchmarking types vary and have numerous names But the one that focuses on processes or procedures is designed for payroll departments Focuses on specific work processes Identifies the best operating practices Uncovers how well other companies perform in comparison to you and how they achieve that performance ©2014 The Payroll Advisor Example 79 How many employees do you have on direct deposit? How many do they have? What did they do, what method did they use or what procedure do they have in place that gets more employees to use direct deposit than you? How can we incorporate that procedures to improve our numbers? ©2014 The Payroll Advisor Before Establishing a Benchmark Program… 80 Before beginning a benchmark program you need to focus on 3 things: First you need to recognize that benchmarking takes a new mentality—I am probably not the best in everything and probably not perfect in everything I do--Somebody does it better Second you must be eager to learn from others Third you must remember that it is adapt rather than adopt—learn about it and adapt it to your payroll ©2014 The Payroll Advisor Are There Any Questions? 81 ©The Payroll Advisor, 2014 How Can Ascentis Help Me? 82 Ascentis Payroll Process payroll in real-time, ensuring 100% accuracy, flexibility and control Reduce payroll processing time by as much as 30% Information is electronically at your fingertips. By using Ascentis ESS payroll information can also be accessed by employees from anywhere and at anytime RCH Credit 83 Once approved, to earn RCH, you must Stay on the webinar for the full 60 minutes Be watching the webinar using your unique URL Certificates delivered electronically, to email address with which you registered Certificates delivered no later than April 21st. ©The Payroll Advisor, 2014 Download Slides? Watch again? 84 ©The Payroll Advisor, 2014 On-Demand Webinars? 85 The ABC’s of Payroll Frequencies Form 941: All You Need to Know Going Paperless in Payroll Handling Unclaimed Wages Travel Pay Fringe Benefits Third Party Sick Pay And many more Watch from anywhere, at anytime, at no cost to you! ©The Payroll Advisor, 2014 Contact Us 86 [email protected] www.ascentis.com 800.229.2713 ©The Payroll Advisor, 2014
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