An essential requirement for payroll is the compliances that come along with it. Regardless of where your company and your employees are stationed, you’ll have to be sure you’re following all the laws and regulations applicable to that location. Without proper knowledge of all the necessary compliances, you can be hit with hefty penalty fines. To prevent this, it’s important that you stay up-to-date on all regulations and compliance requirements.
What Are Compliance Regulations Your Company Should Follow?
Awareness is the first step towards ensuring your business’ compliance. There are a number of compliances that range from states to local districts, as well as regulations that come with the size of your company. We want to focus on the key laws and regulations your business should follow.
Taxes
Paying taxes – the correct amount, to be exact – is not only a requirement for companies, but it’s a law. It’s imperative that your company follow any tax laws that may apply to it. There are a number of laws to keep track of, but here is a list of the most common ones.
Income Tax
Income tax is dependent on the type of business you run but is important nonetheless. For instance, C corporations pay a flat tax rate, while pass-through entities report business income on personal tax returns. The way your business is structured will determine which IRS tax form you’ll fill out.
Estimated Tax
If you are self-employed and you’re expected to owe $1,000 or more, you’ll have to pay estimated taxes throughout the year. The number for a full corporation is $500 or more. There are a number of IRS tax forms you can use to figure out how much you should be paying in estimated tax. For estimated taxes, the year is split into quarters, requiring you to pay during four different pay periods throughout the year.
Employment Tax
Having employees requires that you withhold additional taxes from each employee. These taxes include income tax, Social Security, Medicare tax, and federal unemployment tax.
State Taxes
States may have their own additional income taxes as well. You’ll have to ensure that your employees who work in different states are complying with their state taxes. It’s important to keep up to date on your local state tax requirements as well.
Labor Regulations
One of the most essential resources you have is your employees. You’ll want to ensure that you’re following government regulations not only for legal reasons but to also improve the working life of your employees.
Minimum Wage
The federal minimum wage as of 2023 is $7.25 per hour. However, states have begun imposing higher minimum wages around $12-$15 per hour.
Health Insurance
Businesses with 50 or more full-time employees are required to offer health insurance to their employees. Failure to offer health insurance can lead to the company having to pay a penalty.
Family and Medical Leave Act (FMLA)
Eligible workers within your company are entitled to twelve work weeks of leave per year. This encompasses the birth and care of a newborn, caring for ill family members, or the employee’s severe health conditions.
Reporting Pay
The U.S. Equal Employment Opportunity Commission (EEOC) collects data from employers to determine the pay based on different demographics. This ensures that employees with different backgrounds are being paid equally.
Workplace Anti-Discrimination and Harassment
The EEOC, along with collecting pay data, also enforced anti-discrimination and anti-harassment laws in the workplace. This includes equal pay for equal work regardless of gender, race, sex, religion, and other protected categories.
Harassment is a type of workplace discrimination and the behavior is unlawful as well as creates an abusive work environment. There are federal, state, and local laws that have additional anti-discrimination and harassment laws that businesses must follow.
Privacy
It’s important that businesses ensure the privacy of not only their employees but their customers as well. Depending on the type of business and what field it’s in, there may be additional privacy laws and regulations you should follow.
Healthcare
Health Insurance Portability and Accountability Act (HIPAA) is one of the most known healthcare laws for businesses. HIPAA prevents disclosing patient health information without the informed consent of the patient.
Financial Services
The Gramm-Leach-Bliley Act includes steps that financial institutions must follow to keep their sensitive data safe. They also include requirements for institutions to inform their consumers of their information-sharing practices, ensuring that nothing gets shared without the consumer’s knowledge and consent.
Consumer Privacy
All businesses, no matter the field, are required to have a privacy policy set up. This privacy policy must outline how they protect their customer’s personal information.
Children’s Privacy
The Children’s Online Privacy Protection Act (COPPA) allows parents control over what information websites can collect from their children. This is designed for websites that are directed at children, requiring that they get parental consent for the collection or use of any of the user’s (the child’s) personal information.
Anti-Trust Regulations
These federal laws and regulations prevent businesses from participating in unfair practices that aim to reduce competition. The practices that are banned under these laws are as follows:
- Conspiring to fix prices
- Price discrimination
- Conspiring to allocate markets or customers
- Conspiring to or forming a monopoly
