Running a business has its costs — some real, some non-cash, some immediate and some deferred. One continuous cost of doing business comes with making sure compliance is in place, ensuring that laws are followed at the state and federal level, while keeping an eye out for changes on the horizon.
Paychex, the payroll software company, recently put forth some rankings of top-of-mind issues for small business owners in managing compliance, especially in terms of impacting payroll.
The roster reads like a minefield of sorts, with errors prone to bring about fines and scrutiny. Think health care costs (newly pressing through the Affordable Care Act) as one of the bigger concerns, which dovetails a bit with changes in how sick leave is covered and compensated.
In an interview with PYMNTS, Mike Trabold, director of compliance risk at Paychex, said payroll professionals (who, in some cases, for smaller firms, may be the company owner) spend the most time and effort right now on dealing with just how to classify employees and how to compensate them.
Speaking from his own experience, Trabold stated: “Many clients [of Paychex] are looking to make decisions related to the Department of Labor proposal that has added new layers on who is overtime-eligible. The question for those clients becomes: ‘How do we manage that?’”
The real issue is whether employees are classified in the correct manner, as either salaried workers or hourly ones, and SMBs must navigate newly published thresholds on compensation that can further make compliance a bit trickier.
In addition, oversight must extend to tracking attendance and time devoted to tasks in an increasingly flexible economy where workers are not necessarily on site daily, maintained Trabold. “How do you track after-hours emails and hours worked and make sure they are recorded and paid for?”
Keeping accurate tabs on time and attendance can smooth processes at the intersection of human oversight and technology. For payroll managers, automation is key here, with some Paychex options operating across mobile devices via apps and built-in employee dashboards.
Those dashboards, which can be configured via the cloud with geolocation (for those working offsite), can also help manage scheduling across vacations and time off. “That’s easier than managing by scraps of paper,” noted Trabold, and allows SMBs to ensure they are billing their own clients correctly.
Beyond tracking hours and projects, added Trabold, Paychex has found that small employers are concerned not just with the chance that they might be on the hook for fines in the event of non-compliance with changing regulations but that they may lose more “than just getting fined dollars and cents … Whether it is a dry cleaner or a central office, though it may be painful to write the check, the mindset is to keep yourself out of trouble … and to focus on what’s good about running a business.” In other words, falling out of compliance can have far-reaching impacts.
Though fines may hurt financially, Trabold told PYMNTS that SMBs also must be proactive in compliance and payroll efforts in an ongoing monitoring of the firm’s reputational standing in locales in which it does business — what he termed “a pride of standing in the local community.” As the old saying goes, reputations take a lifetime to build but can be torn down in an instant.
Though payroll managers may be aware of what Trabold said may be the changes coming to “basic functions, like taxes, and they are able to do the ‘bread-and-butter’ functions of payroll even with a notebook and pen,” moving to navigate the ACA means that the “employer has to look at automated processes.”
Payroll cards, though an area that has experienced negative headlines as of late, is also an area with increased engagement in the hospitality and restaurant industries, said Trabold. As has been well-documented, the controversies surrounding payroll cards center on just how underbanked and unbanked employees can be served reliably by technology. Trabold said that, in some cases, payroll cards “are not user-friendly,” and the payment mechanism has been the center of increased regulatory scrutiny at the state level, focused on making sure that workers have access to funds when they are scheduled to be paid. Here, again, technology proves a boon.
Online portals and mobile features are key to integrating with payroll. For the employees themselves, the ability to check on account balances and payments made to them (and, in some instances, online bill pays) allows for reduced costs, both in terms of paper and time management.