Following the latest payroll compliance updates 2023 should allow your business to adhere to any of the new federal, state, or local regulations for how you pay employees. The IRS might issue penalties or substantial fines on any employer who violates these laws. Ignoring any of these regulations might also result in lasting negative consequences on the business’s bottom line or your ability to keep the doors open. Avoid tax trouble and reduce employee turnover by using comprehensive and trustworthy payroll software to maintain your business’s compliance.
Advanced Micro Solutions Payroll Software helps improve employer and employee morale with an easy-to-use, menu-driven format designed with small businesses in mind. Small businesses need to guarantee that they do not put their employees’ livelihoods or their business’s financial health at risk. Download our free 1099-etc Demo software today to see which tools support the latest payroll compliance updates.
What Does Payroll Tax Compliance Mean?
Numerous laws govern payroll and range from local to state regulations. Businesses of any size must also pay attention to specific federal legislation throughout the year.
Federal Insurance Contributions Act (FICA) – The general FICA tax rate stayed 7.65% for 2023 the tax year. Pay attention each year to the Social Security wage base. The wage base leapt from $147,000 in 2022 to a gross limit of $160,200 in 2023.
Fair Labor Standards Act (FLSA) – Familiarize yourself with the national minimum wage and overtime rates for your employees. The FLSA determines payroll recordkeeping requirements and mandatory child labor laws.
Davis-Bacon Act – Keep an eye on payroll compliance updates for prevailing wage rates in your state. Businesses that hire workers for public works projects must compensate laborers and mechanics with the appropriate prevailing wages.
Federal Unemployment Tax Act (FUTA) – The COVID-19 pandemic and mass unemployment disrupted how much money certain states needed to borrow from the federal government. Many employers paid higher FUTA taxes in 2023 to offset these outstanding government loans. Focus each year on how the FUTA rate may affect your business.
Common Payroll Compliance Mistakes
Making otherwise avoidable payroll compliance errors is easy if you wait until the last minute and need to rush or you do not prepare with the proper forms that reflect payroll compliance updates. Some common payroll mistakes to avoid include:
Equal Pay Act Non-Compliance – Comply with the Equal Pay Act by ensuring that the men and women in your workplace receive the same amount of pay for the same amount of work. Review your business’s salaries, overtime pay, stock options, bonuses, life insurance, and profit-sharing forms of compensation. The government may audit wage rates annually and utilize industry income averages as benchmarks if they notice any discrepancies.
Workers’ Compensation Errors – Conduct an internal audit before insurance companies do them on your business. You will need to base insurance premiums for workers’ compensation on your employees’ classifications, occasionally total hours worked, and total payroll for each class. Check for payroll compliance updates before running an audit to address timekeeping, payroll, or job classification errors. These mistakes may affect an employee’s premium.
Misclassifying Exemptions – Distribute IRS Form W-4 to your employees so they can claim that they are exempt from federal income tax if it is applicable. The IRS may request their own review of an exemption request. Adhere to their lock-in letter if they determine the employee’s request is not valid. The IRS will otherwise potentially hold your business liable for back taxes.
Misclassifying Employees and Independent Contractors – Classify your types of workers correctly to determine which ones you must withhold taxes from their wages. Avoid fines and penalties from the IRS by reviewing the agency’s worker classification breakdown. Submit a Form SS-8 to the IRS if you remain uncertain about a worker’s status.
How to Use AMS for Payroll Compliance Updates 2023
Stay compliant in tax year 2023 with the multiple payroll features that we offer small businesses. Users can automatically calculate federal, state, and local payroll taxes with our software. Print MICR checks when you add our Software Generated Forms module to your accounting suite of tools. We support over 30 different check types and allow users to print their checks individually or by a date range. Check printing is not your only available option. We also process employee direct deposit payroll information.
Deadlines matter when you run your company’s payroll. Consider our other optional add-on modules, including our E-File software. Save your business’s time and resources when you choose between our two e-file options: E-File Direct (add-on) or E-File Services.