Managing Payroll Managing payroll is one of the most essential parts of running a business. From tracking employee hours to paying employees, to calculating taxes, the process can seem daunting. When it comes to payroll for their employees, financial advisors should be aware of several key aspects. Here are some important considerations:
Payroll Taxes: Financial advisors need to understand the various payroll taxes that apply to their employees. This includes federal, state, and local income taxes, as well as Social Security and Medicare taxes. It would be wise to stay updated with any changes in tax rates and regulations to ensure accurate withholding and reporting.
Employee Classification: It's crucial for financial advisors to correctly classify their employees as either independent contractors or employees. This affects how payroll taxes are calculated, as well as the obligations they have as employees. Misclassification can lead to legal and financial consequences. Therefore, it's important to understand the criteria for each classification.
Wage and Hour Laws: Financial advisors must comply with wage and hour laws, which include minimum wage requirements, overtime pay, and meal and rest break rules. Familiarity with these laws ensures that employees are paid properly and fairly, which minimizes the risk of labor disputes or legal issues.
Payroll Processing: With so many different options, financial advisors must have a reliable payroll processing system in place. This may involve using payroll software, outsourcing payroll to a third-party provider, or handling it internally. Financial advisors need to understand the process of calculating employee wages, deductions, and withholdings accurately, as well as managing payroll schedules and deadlines.
Record keeping and Reporting: Error-free record keeping is crucial for payroll purposes. Financial advisors should maintain records of employee earnings, tax withholdings, and any other relevant payroll information. They also need to file periodic payroll tax reports and provide employees with necessary tax forms, such as W-2s or 1099s, as required by law.
Benefits and Deductions: It would be advantageous for financial advisors to be knowledgeable about employee benefits and deductions. This includes understanding how to handle contributions to retirement plans, health insurance premiums, flexible spending accounts, and other benefits. They need to ensure proper withholding and reporting of these amounts while considering any tax implications.
Compliance with Employment Laws: Financial advisors must stay up to date with employment laws and regulations applicable to their jurisdiction. This includes anti-discrimination laws, family and medical leave policies, and other legal requirements. Compliance with these laws helps protect both employees' rights and the financial advisor's business. Payroll Audits: Financial advisors should be prepared for payroll audits by
Payroll Audits: Financial advisors should be prepared for payroll audits by tax authorities or other regulatory agencies. Keeping accurate records and ensuring compliance with all applicable laws and regulations will help facilitate a smooth audit process as well as alleviate any issues.y
It's important for financial advisors to consult with payroll experts, such as certified public accountants (CPAs) or payroll service providers, to ensure that they have a comprehensive understanding of payroll requirements and to seek guidance specific to their business's needs. If you want help with managing your payroll, our sister company Continuum Advantage can help! Email or call 515.850.1227 today!