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New Jersey Minimum Wage Increase?

rich@digitpay.com (Rich Frotton) — Fri, 25 May 2012 20:57:53 GMT

The New Jersey Assembly voted on May 24, 2012 to increase New Jersey's minimum wage from $7.25 to $8.50 an hour. Good news for lower wage employees bad news for businesses. The measure has yet to pass the State Senate and Christie. There has been talk of at least some compromise before it will be finalized. About half of all states have a minium wage of $7.25, the same as the federal goverment, 4 have lower minimum wages and the balance are higher.

The argument that a higher minimum wage will stimulate the economy is quicky refuted by small business owners who argue that higher wages mean less employees.

The 100% Penalty

rich@digitpay.com (Rich Frotton) — Mon, 21 May 2012 02:44:21 GMT

Whether you’re a sole proprietorship, limited liability company, partnership, corporation or any other business entity the “responsible person” can be held personally liable for unpaid payroll taxes. This is one of the harshest penalties, and quite commonly used, for the IRS to collect past due payroll taxes. The underlying reasoning behind this is that the IRS considers payroll taxes, taxes withheld from an employee’s paycheck, as trust fund taxes. These trust fund taxes are different than most other types of taxes, since the IRS considers these funds property of the IRS as soon as the employee’s paycheck is released (dated). The employer has a fiduciary duty is to remit these funds to the proper authorities, mainly the IRS.

The tax law definition of a responsible person is any person responsible for collecting, accounting for or paying over taxes who willfully fails to perform the duty. The mere fact that the person paid other expenses of the business instead of paying the taxes demonstrates willful behavior.

The tax courts have considered the following factors in determining who is a responsible person.

Contents of the corporate bylaws.
Ability to sign checks on the company’s bank account.
Signature on the employer’s federal quarterly tax return.
Payment of other creditors.
Officers, directors and principal stockholders.
Ability of individuals to hire and fire employees.
Individuals in charge of the firm’s financial affairs.

More than one individual can be deemed responsible persons and the IRS can access the 100% penalty on all the responsible persons. A non-owner employee can also be deemed a responsible person.

Digit Payroll can assist your company to ensure that all payroll taxes are remitted in a timely manner to the IRS, avoiding one of the harshest IRS penalties.

7 Tips For Preventing On The Job Time Clock Abuse

rich@digitpay.com (Rich Frotton) — Mon, 14 May 2012 20:07:56 GMT

Every company is aware of time clock abuse, but each company handles this issue differently. Furthermore, wasted company time can come from many areas, such as stretched-out lunch breaks, unjustified sick leaves and excessive socializing among co-workers.

Recent studies have shown that the average worker wastes two to three weeks annually just on preparing to start work and on non-work related interruptions throughout the day. Also, hourly employees often waste company time by waiting a few minutes before they clock out. Experts estimate that the typical worker wastes well over five weeks of company time each year.

Here Are 7 Tips For Curbing Time Clock Abuse In Your Workplace:

Tip #1: Educate Your Employees About Time Clock Abuse - Define what time clock abuse is and discuss the company policies that govern it with your employees. Make sure that they understand how serious the company takes time theft.

Tip #2: Ask Employees For Their Ideas - Make use of a "suggestion box" and place it in a high traffic area, like the lunchroom. Reward any employees who come up with the best ideas for time clock management.

Tip #3: Change Lunch Break Time - Changing one-hour lunches to half-hour lunches will discourage employees from running personal errands. Also, they will tend to stay in the building, which increases the likelihood that they will come back to work on time. The advantage for the employees is that they can leave a half an hour earlier.

Tip #4: Don't Overstaff Your Company - Rather than hiring full-time employees to cover the workload year-round, use temporary help for peak production periods. This will help you to better control employees' paid hours during the off-peak times, because your company will not be overstaffed.

Tip #5: Review Your Company's Overtime Rules - Overtime is another form of time clock abuse. Time thieves can change records to show false overtime hours worked instead of actual time worked.

Tip #6: Warn Time Clock Abusers - Call offenders into your office, and make them aware that they are abusing time. Give them suggestions on how to correct this behavior and a warning that there will be consequences for repeated offenses. For repeat offenders, use write-ups or even termination to remedy the issue.

Tip #7: Reward Correct Time Clock Use - Acknowledge and reward employees who properly manage the time clock. For example, you could give those employees bonuses, gift cards, extra vacation time or even allow them to leave early on a Friday.

Executive Summary:Clearly communicating with employees about time clock abuse and the company policies surrounding it will substantially reduce payroll costs. Remember, if the employees understand the rules, they are more likely to follow them. This will lead to higher profits for the company and increased employee productivity.

Scammed by the IRS?

rich@digitpay.com (Rich Frotton) — Fri, 11 May 2012 19:57:21 GMT

Identity theft victims being scammed by emails and web sites posing to be the IRS is increasing at an alarming rate. Many victims fall into the trap of answering emails which they think is from the IRS releasing confidential information such as social security numbers and other personal information. These scammers sometimes file a fraudulent return under the victims name and have a refund sent the imposter. The taxpayer becomes aware of this when they try to e-file their legitimate tax return and is rejected by the IRS.

To avoid this trap, do not reply to an email that poses as the IRS. The IRS never sends emails out to taxpayers regarding refunds, audits or requests for information. The IRS has set up an identity theft hotline at 800-9018-4490

How to Amend a New Jersey Form NJ-927 for Unemployment and Disability Wages.

rich@digitpay.com (Rich Frotton) — Tue, 08 May 2012 17:53:16 GMT

The State of New Jersey requires the employer to complete a 3-part process in order to amend wages reported to the State of New Jersey for payroll tax purposes. The Form NJ927, State of New Jersey Employer’s Quarterly Report, is the payroll tax return that combines the reporting of gross income tax (NJ State Income Tax Withheld from wages) and NJ wages subject to Unemployment, Disability, Workforce Development and Family Leave payroll tax. Every quarter a New Jersey employer must complete this form, online, and submit with the tax remittance to the State of New Jersey.

The employer logs into their account using their state ID number and a four digit pin the State assigns to the employer. If an error is discovered in filing this form an amended form must be submitted to the State. Similar to the original filing, the amended NJ927 must also be filed online. If the error results in an additional balance due, the employer remits the excess payroll tax with the amended return and the process is completed. An amended Form WR-30 should also be filed with the State. The WR-30 lists the employer’s names, social security numbers and wages for the quarter.

The complications come into play when there is a refund on the Amended NJ927 for State Labor taxes (Unemployment, Disability, etc). Unlike most amended returns that result in a refund, the State does not automatically send to the employer the overpaid tax dollars. The refund will not be sent to the employer unless an additional form UC-9, Employer’s Claim for Credit or Refund by Reason of Erroneous Payment of Contributions, is completed, notarized, and mailed to the State.

We have involved in cases where clients were receiving penalty notices for underpayment of taxes in one quarter but they had a corresponding overpayment of taxes in another quarter. Unsuspecting employers sometimes paid the underpaid quarter (with penalties and interest) needlessly. The other catch is that the employer only has two years to file a UC-9 to obtain the refund or else it is lost forever.

So in summary to amend a NJ quarterly payroll tax return for unemployment wages, where it involves a refund, perform the following three steps:

Amend Form NJ-927 Online
Amend Form NJ WR-30 Online
Complete NJ Form UC-9

The Burden of Payroll Record Maintenance

rich@digitpay.com (Rich Frotton) — Thu, 26 Apr 2012 14:18:31 GMT

To Keep or Not to Keep

Paying employees means more than just issuing checks. Your company also needs to keep accurate records for current and past employees for a certain period of time. There are record requirements from both the IRS and the U.S.

Department of Labor, which enforces employment rules for several other federal agencies.

These records include the following information: name, address, occupation, and Social Security number, as well as details of compensation such as the dates paid, tips, non-cash payments, compensation subject to withholding and payroll taxes, pay period, and fringe benefits provided to employees. In addition, you must keep copies of all pertinent federal forms filed. (See right-hand box for some record-retention guidelines.)

To further complicate matters, there are numerous state, local, and other regulatory agencies that may require additional record keeping. For example, various government agencies enforce their own laws involving unemployment insurance, wages and hours, child support, creditor garnishment, and unclaimed or abandoned wages.

Without the proper records, your company will be unable to comply with regulatory requirements. If you are subsequently audited by federal, state or local agencies, you could be hit with back taxes, interest and penalties.

	Payroll Record Guidelines
Employee earnings	Maintain a minimum of four years to meet various state and federal requirements.
Employee time cards	Keep for at least three years if your business is subject to the Fair Labor Standards Act (engaged in interstate commerce), although it's a good practice for all businesses to keep the files for several years in case questions arise.
Personnel records	Retain three years after an employee has been terminated.
Employment tax records	Keep four years from the date the tax was due, or the date it was paid - whichever is longer.

The Burden of Proof

The burden of proof, or the responsibility to substantiate items on your tax returns, such as payroll and payroll-related costs, at one time rested entirely on the taxpayer. Since the passage of the Internal Revenue Service Restructuring and Reform Act of 1998, the burden has shifted to the IRS in the event of a courtroom proceeding, but only if you meet the requirements to retain proper records and make them available for inspection. So while the law now takes some of the heat off taxpayers, it only applies if your company diligently maintains records and cooperates with reasonable IRS requests.

Obviously good records are vital but maintaining them is a daunting task. Many businesses solve this problem by outsourcing payroll. A payroll service provider can relieve your business of the many headaches involved in preparing paychecks and reporting to government agencies, and it can also store your documentation and provide you with reports as needed. Recordkeeping is just one more reason why outsourcing payroll makes sense for so many businesses.

The Do's and Don'ts of a Holiday Office Party

rich@digitpay.com (Rich Frotton) — Tue, 13 Dec 2011 15:10:20 GMT

‘Ti the season for holiday office parties. Here is a quick rundown of the do’s and don’ts of behavior at a holiday office party:

Don’t

Get intoxicated.
Blabber personal confessions.
Explain what you would do if you were “The Boss”.
Complain about office issues.
Critique the holiday party itself.

Listen as much as speak.
Be remembered for positive feedback rather than embarrassing situations.
Build relationships within your organization.
Talk about family, hobbies and movies.
Eat something before consuming alcohol.

These simple guidelines will help you avoid an embarrassing situation, especially for the day after.

The IRS giveth and then taketh away: FUTA Tax Rate Increases

rich@digitpay.com (Rich Frotton) — Wed, 07 Dec 2011 20:51:54 GMT

Employers in 20 states owe higher tax rates in 2011, including New York, New Jersey and Pennsylvania. The rate increases for states that have not repaid their loans from the federal unemployment fund. The rate goes up .3% from .6% to .9% currently. Here is the timeline of what happened to the FUTA rate for 2011. From 1/1/2011 to 6/30/2011 the rate was .8%. From 7/1/2011 to 12/31/2011 the rate changed to .6%. Then at the end of November the DOL announced the retro rate adjustment for the 20 states. So now the rate needs to be retroactively adjusted from 1/1/2011 to 6/30/2011 to 1.1% and from 7/1/2011 to 12/31/2011 to .9%. Confused? You’re not the only one. This type of retroactive rate adjustment wrecks havoc on payroll systems. Digit Payroll must dedicate an additional 40 hours of development time and 60 hours of customer service time to handle the change.

Corporate Jargon

rich@digitpay.com (Rich Frotton) — Wed, 07 Dec 2011 19:03:42 GMT

Being in the small business world it is not yet an epidemic, but corporate jargon is unfortunately becoming more prolific. Like the late George Carlin in his 1972 monologue "Seven Words You Can Never Say on Television" here are 19 corporate jargon words you should never say anywhere.

Outside the Box
Low-hanging fruit
Synergy
Loop me in
Best of Breed
Incentivize
Mission-critical
Bring to the table
Value-add
Elevator pitch
Actionable Items
Proactive
Circle back
Bandwidth
High Level
Learnings
Next Steps
At the end of the day
Push back

So let's think outside the box, incetivize and be proactive to push back on the use of corporate jargon, then we can circle back at the end of day.

FUTA Tax Decreases 0.02%

rich@digitpay.com (Rich Frotton) — Mon, 03 Oct 2011 19:41:25 GMT

It's not much but we take what we can get when it comes to decreased employer payroll taxes. The FUTA Tax is a Federal unemployment tax charged to employers on the first $7,000 of wages paid annually to each employee.

The FUTA tax rate will also be reduced for employers who are entitled to the maximum credit of 5.4%. This reduction applies to employers who pay their state unemployment in full, on time, and on the same wages that are subject to FUTA tax, provided the state is not determined to be a credit reduction state.

Effective July 1, 2011 the following changes will take place:

The FUTA tax rate will decrease to 6.0% from 6.2%

The FUTA tax rate after the maximum credit will decrease to 0.6% from 0.8%

This is a programming nightmare for payroll service bureaus. Although Digit Payroll Corp has successfully implemented the change.

Refer to IRS Publication 15 (2011) for more details.

Get Milk or Get Fired!

rich@digitpay.com (Rich Frotton) — Thu, 29 Sep 2011 20:19:57 GMT

In a recent article in Life Inc., reported a CEO of a 60-person public relations firm, threaten to fire the next employee who didn’t replace the empty carton of milk for the office coffee. My first impression was this guy has too much time on his hands to worry about the milk. Small business owners are more concerned with bringing in the bread then buying the milk. The article goes on to state that the standing rule in the office is that the last person to finish the milk has an obligation to replace it (on the CEO’s dime). This has been a repeated problem and the CEO felt he had to address it in a rather scathing email to the staff.

The most surprising part of the article, besides the trivial issue at hand, was that 12% of the readers thought he was very wrong and 41% felt he was very right (and the balance in the middle). So the vast majority of the strong reader votes were in agreement with his actions. The common theme amount the strong supporters were that the culprits (milk non-replacers), are inconsiderate, selfish, lazy and disrespectful. They felt the punishment fit the crime.

So the next time you don’t replace the milk remember the way most people feel about you (not just the boss).

What Can You Get For Five Bucks?

rich@digitpay.com (Rich Frotton) — Fri, 23 Sep 2011 17:05:45 GMT

You can get your marketing plan reviewed, have a customized privacy policy written, have your press release reviewed, have a business card designed or have a small web site designed each for just five bucks. There are thousands of other things you can have done for you or your business for that price. Some a bit silly like having someone dance in a hotdog costume to the tune of your choice but others more serious. You say impossible, admittedly I was a bit skeptical myself but I couldn't resist giving it a shot.

The name of the web site is appropriately called Fiverr. People post their “gigs” for a fee of $5. I had a web site designed, a logo designed and some SEO work performed. I also wanted a computer program written but the seller reneged. The outcome? Well I have mixed reviews. The web site was a hit, the logo - not quite my cup of tie, and the jury is still out on the SEO work. But what the hay, it was only 5 bucks.

So give it a shot, what do you have to lose? 5 bucks!

2011 Proposed Jobs Creation Bill

rich@digitpay.com (Rich Frotton) — Fri, 16 Sep 2011 14:27:13 GMT

Much of the business knowledge processes and technical ability that I have gathered over the last 30 years of my business career has been garnered through mistakes and errors. It seems that if there is two ways to do something I inevitably pick the wrong way first time then figure out the right way and fix it. Call it bad luck, lack of proper research or lack of adequate advice that is just the way it has been. Even though this process is sometimes painful and time-consuming, the problem is eventually solved.

Last year the government put together a jobs creation bill in which they gave companies tax credits for hiring new employees. These tax credits could have accumulated into a nice bucket of cash, for small businesses. Digit Payroll telephoned, emailed and sent letters to their clients notifying them of this potentially lucrative proposition. Out of the thousands of small businesses that Digit Payroll is associated with and the tens of thousands of employees that these businesses employ, I am aware of maybe two businesses that the new employee credit was a factor in hiring a new employee. Many other businesses took advantage of the credit, but the credit was just a gift to them. These other businesses hired a new employee irrespective of the credit. Therefore the government gave away an enormous amount of tax dollars for very little benefit of adding additional people to the workforce.

Flash forward to 2011. A similar plan is being proposed. Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results”. I think you get the point.

IRS Denies Tax Benefits for LLC Owners Hiring Their Children

rich@digitpay.com (Rich Frotton) — Fri, 19 Aug 2011 16:00:44 GMT

The general IRS rule is if a business owner of a sole proprietorship (not a corporation) hires his/her child under 18 years of age to work in his/her business, the child is not subject to social security, medicare, and FUTA payroll taxes. This is a huge benefit since these taxes could add up to 16% of the child’s pay. The pre-2009 practice, which made logical sense, was that since a single member LLC is treated as a sole proprietorship for income tax purposes, then the LLC could take advantage of this tax break.

Not any more, the IRS after 2009, has deemed the single member LLC as a proprietorship for federal income tax purposes and a corporation for federal employment taxes. A corporation is not entitled to this same benefit even if the sole owner is the parent of the employed child. Therefore this tax break does not apply to single owner LLC’s

The IRS and YouTube

rich@digitpay.com (Rich Frotton) — Thu, 18 Aug 2011 15:29:09 GMT

YouTube isn’t just for sharing family videos with friends anymore. Many businesses are using YouTube for instructional videos. In fact the IRS is jumping on the YouTube train and has posted 112 informational videos on YouTube. I have reviewed a few and they seem to give the viewer bare bones information concerning a specific topic. The researcher would still need to wade through the IRS instructions and publication to get the rest of the story.

Not only does the IRS use YouTube but they also use Twitter, Facebook, a smartphone app called IRS2Go, and audio files for Podcasts. Honestly, I still don’t get the whole twitter thing. I have enough problems keeping track of my own appointments, to-do lists, staff and family responsibilities then to care about what Lady Gaga is up to never mind a new IRS pronouncement. But then again, when I grew up social networking meant talking on a CB radio to neighbors and passing truckers. 10-4 good buddy!

Have we failed our childrens' generation?

rich@digitpay.com (Rich Frotton) — Wed, 17 Aug 2011 16:15:32 GMT

If you have children under the age of 25, you can’t seem to wonder whether they may be the first generation in decades to have less than what we have. Growing up in my teenage years in the 70’s and 80’s, my family did not have much money but yet I always had a job and pretty much bought anything that I wanted with the money I earned from student part time jobs. I bought a car at 17, paid for my own insurance, and could take my girl friend out (I paid) whenever I wanted to. I never really had to worry about money when I was a teenager. Besides a roof over my head and food on the table in my teenage years I was self supportive for just about everything else. I paid for most of my college education. At age 23 got married, bought a townhouse, and went on vacations to the Caribbean with friends. I wasn’t alone. Most of my friends did the same thing.

Why then do our children have such a tough time becoming financially independent and taking steps to increase the standard of living over their parents? Is it the economy, our parental teachings or a change in attitude? This Generation Y are described to be peer oriented due to Facebook, texting and other instant communication technologies and seek instant gratification.

This generation is facing higher costs for college and housing costs. Even though the housing building market for single family homes is down construction for multifamily (apartments) are up. This is an indication that Gen Y is more comfortable with renting rather than buying. Generation Y is more racially diverse, then are more likely to switch jobs or careers, about 1/3 depend on family financial support, only 58% pay their bills on time, 60% cashed out their 401(k) plans, and they more likely to wait longer to get married if at all.

Generation Y have different priorities than the Baby Boomers. That doesn’t mean we failed as the older generation. The line between work and social life is blurred for Gen Y’s. They like working with their friends. They want to spend their time in meaningful ways. Entrepreneurship is experimented with more frequently. They are young and smart, wear flip-flops to work and listen to iPods at their desk. They are high performers without high time spent at work. They are used to questioning their parents so they are now questioning their employers. Not necessarily a bad thing.

Is Work a Drudgery or an Adventure?

rich@digitpay.com (Rich Frotton) — Wed, 17 Aug 2011 14:32:51 GMT

Do you think making more money, having a nicer boss, having an unpopular co-worker transferred to another state, or working as a surf instructor on the beach would make you happier? According to Srikumar Rao, author of Happiness at Work “The exact attributes of what you are looking for do not exist in any job”. The feeling of being powerless and being the victim of circumstances is the greatest obstacle of happiness in the workplace. If you change your job the same feelings will eventually come back to haunt you if you don’t change the way you think about it. “The knowledge that we are responsible for living the life we have is our most powerful tool,” says Rao.

Rao is a little different than most self help instructors. He doesn’t preach “positive thinking”, he would rather his audience forget about looking at events or situations as “good or bad”. Instead he suggests adopting a “greater vision” perspective. Move from, if I got a raise I would be happy, to “I have a grand vision and I will try my best to make it work. If I succeed, wonderful. If not, wonderful. My purpose is to give it the best I got.”

Cloud Computing -- Is it For Me?

rich@digitpay.com (Rich Frotton) — Wed, 04 May 2011 16:09:00 GMT

Instead of installing software and data on your desktop computer or in house server, a web based application is used to access data stored off site. Business users do not need to worry about upgrading software, internal computing infrastructure is greatly reduced and users can access the application from virtually any where. Seems simple and inviting? Well yes and no. At first glance all the above brings many benefits, cost saving opportunities and possible efficiency boost to an organization. But like most business propositions, when it works as it is supposed to it is a good thing when it doesn't, well it doesn't.

Amazon's recent cloud server application went down for 4 days. If your company is dependent on computing power to generate revenue, that means your business is closed for 4 days with relatively no control to get it fixed. Your business becomes dependent and at the mercy of a third party service provider. Does that mean that cloud computing isn't a viable option to move mission critical applications? Planning and preparation is the key to mitigate damage control on an cloud computing outage situation.

Possible safety nets could mean having a back up in place. This may be internal back up or an alternative cloud back up. Perform due diligence on a prospective cloud provider. Check their data security and just as import plan for a data breach and how your organization would react to such a breach. Employees need to be educated concerning security of sensitive data. Since data can be accesses any where, employees should be aware of connecting to the business data through public computers or internet connections.

Although cloud computing brings many benefits to business computing, owners must be aware of the dangers and plan according before taking the leap.

Snow Storm?

rich@digitpay.com (Rich Frotton) — Wed, 29 Dec 2010 20:40:00 GMT

Sunday into Monday of this week eastern New Jersey was hammered with a snow storm, dumping 1 to 2 feet of slow in our area. If the snow wasn't enough strong wind gusts created snow drifts twice as high. Contemplating work on Sunday night I was preparing to go solo in the office on Monday. I only live one mile away from the office, so if I had to walk so be it.

Making my way into the office around 10 AM monday morning (it took be longer than I thought to dig out my car and rescue a stranded neighbor), I was surprised to see half the staff already in the office. By mid day we were at full staff, except for a few that were scheduled out anyway.

The postal mantra "Neither snow, nor rain, nor heat, nor gloom of night stays these courageous couriers from the swift completion of their appointed rounds" is really applicable to our staff. Our office has been open in snow storms, hurricanes, nor'easters and black outs (with the help of a generator). People need to get paid and darn it, it is our job to make sure they get paid.

I really try to avoid gushing about our company and the people that make everything happen, but we really are dedicated in providing outstanding service to our clients. We go beyond the call of duty to make them satisfied, sometimes to a fault. So the next time you're home because of some natural disaster, think of us. We are probably in the office working to process our clients' payroll.

2011 Payroll Withholding Tables Published

rich@digitpay.com (Rich Frotton) — Fri, 17 Dec 2010 17:25:00 GMT

On December 17, 2010 the IRS released the new payroll withholding tables for 2011. That gives employers and payroll service bureaus about 4 business days to update their systems (taking holidays into consideration). Payrolls are normally generated anywhere from 5 to 15 days in advance of paydate. Payroll systems are complicated, since there are many special tax rules that must be considered to insure the correct payroll tax withholding. Normally tax tables are published in the beginning of November for the next calender year.

The Double Standard:
Lawmakers can take 8 months to decide on the next year's tax structure, and when crunch time comes (November) take off an additional 2 weeks for Thanksgiving break. But yet the business community is given 4 days which in turn, forces technicians, programmers and testing groups to work 12 hour days, through the holidays and weekends to implement the new change.