Keeping track of 2023 payroll legislation updates and changes in any year affects the success of your business. The Internal Revenue Service will likely hand down fines or penalties to any size business that does not comply with the year’s new or established payroll rules and regulations. Prepare yourself ahead of time with the most reliable programs so you are ready whether your state makes payroll-related updates for minimum wage rates or alters payroll taxes.
Advanced Micro Solutions supports small businesses that need to navigate payroll changes for each tax year. Skip avoidable penalties by remembering that many of them arise in companies that do not keep complete and accurate records. Invest in our core product and AMS Payroll add-on module to reduce the risk of payroll noncompliance and to maintain better records. Get started with our 1099-etc Demo software to learn more about our features.
What are the Main 2023 Payroll Legislation Updates?
Get into the habit of checking legislation updates for payroll both on the state and federal levels. The following changes for 2023 were specific and could otherwise feel overwhelming without a trustworthy software program. The changes include but were not limited to:
Social Security – The Social Security wage base in 2023 climbed to $160,000. The 2022 limit was $147,000. The Social Security wage base generally changes on an annual basis. Withhold and contribute from these taxes until your employee earns above the set base.
Qualified Fringe Benefits Limits – The 2023 monthly exclusions for qualified parking and for commuter highway vehicle transportation and transit passes are both $300. Regularly review 2023 payroll legislation updates for adoption assistance programs. Report qualifying adoption expenses in box 12 of an employee’s Form W-2. The 2023 exclusion for adoption assistance amounts to $15,950.
Qualified Retirement Contribution Limits – Note which employees participate in a 401(k), 403(b), many 457 plans, and the federal government’s Thrift Savings Plan. The employee contribution limit increased from $20,500 to $22,500 in 2023.
Family and Medical Leave – Check if your state made changes to the date that Family and Medical Leave Program contributions begin. States like Oregon and Colorado changed their respective contribution start dates for Paid Family and Medical Leave and Paid Family and Medical Leave Insurance programs to Jan. 1, 2023.
What are the Payroll Compliance Best Practices?
The 2023 payroll legislation updates may feel as though they come out of nowhere. Stay on top of annual adjustments by keeping certain best practices in mind throughout the entire year.
Write down the important payroll deadlines. Keep track of each important deadline and put the dates in the same location. Missing and failing to report on deadlines is a common yet fully avoidable mistake if you prepare in advance. Do not just write down the filing deadlines. Make sure to include when you will submit withholdings and your payroll processing deadlines.
Confirm that you correctly classified your employees. Many businesses mistakenly classify employees as independent contractors. Avoid the costly error for businesses and employees by reviewing how the IRS classifies workers.
Maintain a regular schedule of when you submit withholdings. The latest 2023 payroll legislation updates should not interfere with your standard business practices. Submit your withholdings promptly and in an organized manner. Payment delays may cause cash flow issues in the future.
Use reliable and comprehensive payroll software. Calculate and process your payroll with accurate and automated software. The best payroll software keeps your business up-to-date and aware of the latest payroll legislation changes. Payroll software may not prevent common payroll mistakes, but it reduces their frequency and overall severity.
Why Small Businesses Use AMS Payroll
Our add-on payroll module to our base W-2/1099 Forms Filer software does more than record payroll and non-employee compensation throughout the year. The program supports “live” or after-the-fact payroll. Users may transfer data to state and federal quarterly unemployment forms, as well as their year-end W-2s and 1099s. Our software automatically calculates your business’s federal, state, and local payroll taxes to minimize the likelihood of mistakes. We additionally include and regularly update state and federal tax tables.
Our payroll software makes staying in-the-know about 2023 payroll legislation updates easier and less time-consuming. Our program supports federal payroll forms, such as the 941, 940, 943, 944, and 1040 SchH. Small businesses and businesses that wish to expand benefit from our scalable software. Our system supports all 50 states, plus the District of Columbia and Puerto Rico.