"Payroll Compliance: What You Need to Know"

1. Understand Employment Laws: Familiarize yourself with the Fair Labor Standards Act (FLSA) and other federal, state, and local employment laws. These dictate minimum wage, overtime pay, recordkeeping, and youth employment.

2. Classify Employees Correctly: Properly classify workers as either employees or independent contractors, and if employees, determine whether they are exempt or non-exempt from overtime. Misclassification can lead to penalties.

3. Payroll Tax Compliance: Comply with federal, state, and local payroll tax requirements. This includes withholding the correct amount of income tax, Social Security, and Medicare taxes from employee paychecks and paying the employer's share of these taxes.

4. Timely Tax Deposits and Filings: Adhere to the IRS schedule for depositing payroll taxes and filing required forms, such as Form 941 (quarterly federal tax return) and Form W-2 (annual wage and tax statement).

5. State and Local Requirements: Be aware of additional state and local payroll-related requirements, such as state income tax withholding, unemployment insurance contributions, and local payroll taxes.

6. Minimum Wage Laws: Comply with federal, state, and local minimum wage laws. If different levels of government have different minimum wage rates, you generally must pay the highest rate.

7. Overtime Pay: Pay non-exempt employees overtime at the required rate for hours worked over 40 in a workweek, unless your state has a lower threshold.

8. Maintain Accurate Records: Keep accurate and detailed payroll records for each employee as required by the FLSA and state laws. These records should include hours worked, wages paid, deductions, and other relevant data.

9. Provide Pay Stubs: Many states require employers to provide employees with a pay stub each pay period detailing their earnings and deductions.

10. Handle Garnishments Correctly: If required to garnish an employee's wages (for child support, tax levies, or other court-ordered garnishments), ensure you do so in accordance with the law.

11. Stay Informed on Changes: Payroll laws and regulations change frequently. Stay updated on these changes to maintain compliance.

12. Implement a Reliable Payroll System: Consider using a payroll system or software that helps manage payroll calculations, tax withholdings, and filings to simplify compliance.

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