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Is Your Bookkeeping Killing Your Small Business?

It’s pretty overwhelming when you think about it – one out of five new businesses are destined to fail. The top reasons for small business failures all tie back in some way to financial management. Cash flow, cash management and just knowing the numbers are at the crux of the problem. The reasons for that are probably pretty simple: many small business owners don’t go into business to do bookkeeping and be a financial analyst. They go into business to provide a product or service to the masses. That’s what really floats their boat. (more…)

Posted in: Bookkeeping and Accounting, Operating a Small Business

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What’s the Value of an Employee to You?

Every small business owner understands the value of employees on some level. Day-to-day operations would fail without employees. As a small business grows, more employees are necessary to keep the doors open. And it does not take long for a business owner to recognize the boost that a good employee can provide to the bottom line. But does this understanding make a difference in how employees are treated? As this article explains, some companies have chosen to demonstrate just how much they value their employees by implementing specific policies. Can you learn anything from their example? Read on to find out. (more…)

Posted in: Human Resources, Operating a Small Business, Payroll

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Fraud: Under-reporting Payroll to Reduce Worker’s Compensation Premiums

Worker’s compensation fraud is “the fastest growing segment of insurance fraud,” according to the National Insurance Crime Bureau. One way, small business owners commit insurance fraud is by under-reporting payroll to avoid paying worker’s compensation premiums to their insurance carrier. If your small business is under-reporting payroll to save on premiums, you need to know that you’re playing with fire. If you’re caught, you could face financial penalties and jail time.

Be sure you are not committing fraud with your reporting.

Last year, Sung Hyun Kim and Caroline Choi, CEOs of sewing companies Meriko Inc. and SF Apparel Inc. were arrested, along with their accountant Jae Kim, on suspicion of workers’ compensation insurance fraud. Beginning as early as 2006, they’re accused of underreporting $78 million to more than a half-dozen insurance carriers. The trio conspired to hide payroll to avoid paying workers’ compensation insurance premiums. They fabricated payroll records and paid employees under the table through an undisclosed bank account. Sung Hyun Kim faces up to 28 years in prison, Choi faces more than 15 years behind bars, and Jae Kim could get a 22-year prison term, according to the Los Angeles County District Attorney’s Office.

Creative Under-reporting

Employers can use a variety of “creative” methods to under-report payroll. Some common under-reporting methods used include:

  • Misclassifying employees into “safer” jobs.
  • Paying employees under the table.
  • Hiring employees as independent contractors.
  • Paying bonuses off the books.
  • Paying employees on a non-wage basis, such as a reduction in rent or free meals.
  • Setting up dummy companies to “hide” employees.
  • Understating payroll to insurance companies.
  • Fabricating phony payroll

Perhaps, business owners don’t realize the impact their dishonesty can have on their company, employees and other companies. Employees who are hurt on the job may not have workers’ compensation coverage to pay their medical bills. Or, in cases where there’s no worker’s compensation insurance, your small business may be considered “self insured,” which means as an employer, you must pay the employee’s medical bills and lost wages. If the injury is severe and the costs are high, you may be forced to go out of business.

The Real Cost of Payroll Fraud

Additionally, when you cheat the insurance companies out of the premiums they’re owed, this causes the rates to go up for everyone else. Businesses pass these premium increases on to their customers in the form of higher prices for goods and services. Therefore, fraud hurts everyone. So don’t do it! It’s not worth the risk.

Payroll fraud can be a costly issue for employers. By outsourcing your payroll services to a reputable external payroll provider, like The Payroll Department, you can help ensure your payroll information is secure and reviewed regularly for errors and other discrepancies. Contact Teresa Ray of The Payroll Department at (317) 852-2568 to learn how outsourcing your payroll can protect your company from fraud and give you peace of mind.

-Ariane of The Payroll Department blog team

Posted in: Payroll, Payroll Processing, Rules, Regulations and Laws

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What are the Benefits of Job Descriptions?

As you can see, at the Payroll Department we focus on the key fundamentals in HR services. And the topic of job descriptions is definitely a key fundamental in HR matters for both employees and employers. There are three basic core benefits when it comes to creating a solid job description. (more…)

Posted in: Hiring and Firing, Human Resources, Policies and Procedures, Staffing

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4 Benefits of Outsourcing for Your Small Business

As an entrepreneur, are you trying to do it all when it comes to running your small business? While you may think you’re the only one who can do the work efficiently, that’s not really the case. If you want your small business to grow, you need to learn how to let go and start delegating tasks that really aren’t your forte. However, some entrepreneurs don’t want to hire full- or part-time employees to take on these responsibilities. That’s when outsourcing makes a lot of sense. (more…)

Posted in: Churches and Non-Profit Employers, Operating a Small Business, Payroll, Payroll Processing

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Employers Need to Be Aware of Differences in Federal and State Labor Laws

Employers cannot rely solely on the guidelines in the Fair Labor Standards Act. So, if you think you know that Act inside and out and you are safe … think again. Why? Because each state also has its own set of rules, regulations and laws by which you must abide if you are a resident of their state. And that can get you into trouble. (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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Things to Know About Withholding County Taxes

A tax is a tax is a tax, right? Well, as anyone who has ever read a single paragraph of the state or federal tax code knows, there is rarely a simple answer to any tax-related question. If you’re a small business owner, you probably understand a little bit about the complexity of payroll taxes. Besides the responsibility of withholding federal taxes, small businesses must also withhold state and local taxes. As you will see, the rules governing county taxes alone can make you feel a little dizzy. (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing, Payroll Taxes

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Are You Opening Up Your Small Business to Payroll Fraud?

According to an article in Forbes by Matthew Garrett, payroll fraud is a problem. A really big problem. He says that 27% of all businesses are the victims of payroll fraud. And, small business owners beware, because Garrett says payroll fraud occurs nearly twice as often (14.2%) in small organizations with less than 100 employees than in large ones (7.6%). (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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Employers Must Pay for Short Employee Breaks

As an employer, you set the policies for managing your small business and your employees. But you better make sure your payroll policies follow government rules. Otherwise, you may have to pay back wages and fines. Just ask Progressive Business Publications. The Pennsylvania company owes current and former employees about $1.75 million in back wages and damages for docking its employees’ pay for bathroom breaks. (more…)

Posted in: Operating a Small Business, Payroll, Rules, Regulations and Laws

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Employee Record Retention and Destruction: Make Sure Your Business Is in Compliance

Business owners accumulate substantial volumes of employee records like employment applications, performance reviews, payroll records and disciplinary actions. At the beginning of the year, when many employers can’t stuff another piece of paper into crowded filing cabinets, they often decide it’s time to purge old files. But, before you start throwing out any documents, you need to make sure you’re in compliance with federal, state and local laws that require you to retain employee records for a specified time period. (more…)

Posted in: IRS and Tax forms, Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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