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May 2024

7 Different Types of Payroll Reports Every Business Needs

“Payroll problems affect approximately 82 million U.S. employees, with around 25% experiencing paycheck errors. The IRS estimates that about one-third of employers make payroll mistakes annually, leading to nearly $7 billion in penalties collected in 2021. On average, these errors cost employers almost $850 per year.”

Payroll processing is a crucial function for any business, but it’s not just about cutting checks. Keeping track of employee hours, taxes, and deductions requires meticulous record-keeping. This is where types of payroll reports come in. These reports not only ensure accuracy and compliance but also offer valuable insights into your workforce.

Did you know that according to a report, payroll processing errors cost businesses an average of 1% of their gross payroll expenses annually? That’s a significant amount! Utilizing the right reports can significantly reduce this risk.

Let’s understand this in detail.

What is a Payroll Report?

A payroll report is a financial record that tracks employee wages, taxes withheld from their paychecks, and employer contributions. It is like a detailed receipt for your company’s payroll activity.
These reports are used for two main purposes:

  • Compliance: They are submitted to government agencies like the IRS to show you’re paying the correct amount of employment taxes (like Social Security and Medicare) on your employees’ wages.
  • Record-keeping: They help you track your payroll expenses, ensuring accuracy and allowing you to analyze trends like labor costs over time.

The report typically includes information such as:

  • Employee wages
  • Hours worked
  • Federal and state income taxes withheld
  • Social Security and Medicare taxes
  • Reported tips (if applicable)
  • Unemployment taxes
  • Any other deductions (like health insurance premiums)

For companies with international operations, global payroll services can ensure these reports are compliant with regulations in each country where your employees are located.

7 Types of Payroll Reports

Payroll reports are the workhorses of any business, keeping track of employee compensation and ensuring compliance with regulations. But with different types serving various purposes, it can get confusing. Let’s break down the key categories:

1) Employee Payroll Reports (Pay Stubs)

These individualized reports are like receipts for each employee. They detail their gross wages (total pre-tax earnings), deductions (including federal, state, and local taxes, as well as health insurance premiums or retirement contributions), and net pay (the amount deposited into their account).
These reports are crucial for:

  • Transparency: Employees can verify their earnings and deductions, fostering trust and open communication.
  • Accuracy: Pay stubs help identify any errors in pay calculations or deductions.
  • Legal Compliance: The Fair Labor Standards Act (FLSA) often mandates providing employees with a record of their earnings and deductions.

2) Company Payroll Reports

These reports offer a company-wide view of payroll expenses for a particular period (weekly, bi-weekly, monthly). They typically include total wages paid, taxes withheld, and deductions made. This information helps with budgeting and cash flow management.

They typically include:

  • Total wages paid to all employees during the period.
  • Total taxes withheld, categorized by federal, state, and local.
  • Total deductions made, including benefits contributions.

These reports are essential for:

  • Budgeting: By analyzing past payroll data, businesses can create realistic budget forecasts for future expenses.
  • Cash Flow Management: Knowing upcoming payroll expenses helps ensure sufficient funds are available to meet those obligations.
  • Identifying Payroll Trends: Tracking changes in total payroll costs over time can help businesses identify areas for cost-saving or budget adjustments.

3) Time Tracking Reports

If your business uses hourly employees, time tracking reports are essential. They detail individual employee hours worked, overtime, and any paid time off taken (sick leave, vacation days, etc.). This data ensures accurate pay calculations and helps identify potential time management issues. Benefits include:

  • Accurate Pay Calculations: Time tracking data ensures employees are paid correctly for their hours worked and avoids over or underpayment.
  • Identifying Time Management Issues: Reports can reveal inefficiencies, such as excessive overtime, unauthorized breaks, or late arrivals.
  • Project Management: Accurate time tracking data can help businesses analyze project costs and identify areas for improvement.

4) Federal Payroll Reports

The Internal Revenue Service (IRS) requires businesses to submit specific reports quarterly and annually. These reports detail employee income and withholding taxes, allowing the IRS to calculate payroll tax liabilities. Common examples include:

  • Form 941: This report summarizes federal income tax, Social Security, and Medicare taxes withheld from employee paychecks for a quarter. It’s due by the last day of the month following the quarter’s end (April 30th, July 31st, October 31st, and January 31st).
  • Form W-2: This report summarizes an employee’s annual earnings and withheld taxes for federal, state, and local jurisdictions. By January 31st of the following year, businesses must distribute W-2s to employees and submit copies to the Social Security Administration (Form W-3).

Failure to submit these reports on time can result in penalties and interest charges from the government.

5) State and Local Payroll Reports

Many states and localities have their own payroll tax reporting requirements, similar to federal reports but focusing on state and local income taxes and unemployment insurance contributions. Businesses need to stay updated on their specific state and local requirements to ensure compliance.

6) Benefits Reports

These reports track employee participation in benefits programs like health insurance and retirement plans. They help with:

  • Accurate Deductions and Contributions: Reports ensure the correct amount is deducted from employee paychecks and contributed to the respective benefit plans.
  • Benefits Administration: Tracking participation allows for better management of benefit programs.

7) Garnishment Reports

If a court orders wage garnishment for an employee’s debt repayment, these reports track the amount withheld from their paycheck and sent to the creditor.

Besides the reports, you should also have an understanding of “What Is SOC Compliance” to effectively manage your global payroll operations.

Beyond Compliance: Using Reports for Better Business Decisions

While compliance is essential, payroll reports offer more than just meeting legal requirements. By analyzing these reports, businesses can:

  • Identify payroll trends: Track labor costs over time to make informed budgeting decisions.
  • Monitor overtime: Excessive overtime can indicate staffing shortages or inefficiency.
  • Analyze employee benefits: Reports can help assess the cost-effectiveness of benefits programs.

Investing in the Right Tools

Managing these various types of payroll reports can be time-consuming and complex, especially for larger businesses. Fortunately, payroll software and the right employer of record services can automate many of these tasks, ensuring accuracy and streamlining the entire process.

By understanding the different types of payroll reports and utilizing them effectively, businesses can ensure accurate payroll processing, maintain compliance, and gain valuable insights to make better decisions.

global payroll compliance

5 Best Practices for Maintaining Global Payroll Compliance

It’s 2024, and with advanced technology streamlining payroll processes, there’s no excuse for not implementing the best global practices. Managing payroll is a challenge even for local companies, regardless of size or industry. But for businesses operating internationally, the complexities multiply exponentially. Without proper global payroll practices, chaos reigns supreme.
So, how do you get there? This article explores the best practices that will help your team excel in managing their global payroll services.

Best Practices for Global Payroll Compliance in 2024

Did you know that over one-third of businesses struggle with managing payroll for international employees? Navigating a myriad of tax regulations, local laws, and ever-changing currency rates can be a minefield. But fear not, business leaders! By following these five best practices, you can ensure your global payroll runs smoothly and compliantly.

1. Embrace Automation with Global Payroll Software

Gone are the days of manual spreadsheets and late-night calculations. Modern global payroll software streamlines the process, ensuring accuracy and adherence to local regulations. These solutions handle:

  • Multiple Currencies: Eliminate manual conversions and reduce errors with built-in currency exchange features.
  • Complex Tax Calculations: Software automates tax calculations based on location and employee information, saving you valuable time and resources.
  • Automated Reporting: Generate reports required by local authorities with a few clicks, freeing your team to focus on other tasks.

Do check out: The Future Of Payroll Solutions: Predictive Analytics & Automation for a better understanding.

2. Cultivate a Culture of Data Accuracy

Global payroll compliance hinges on meticulous data management. Here’s how to ensure accuracy:

  • Regular Audits and Data Verification: Schedule regular audits to identify and rectify any discrepancies before they snowball into compliance issues.
  • Up-to-Date Employee Information: Maintain a centralized system for storing employee data, including tax IDs, bank details, and addresses, ensuring it’s accurate and current across all locations.
    Remember, a single data error can lead to significant fines and penalties.

3. Partner with Local Experts

The intricacies of global payroll compliance vary greatly by country. Consider partnering with experienced in-country payroll specialists or Professional Employer Organizations (PEOs). Their local knowledge offers several benefits:

  • Staying Ahead of Regulatory Changes: Local experts keep you informed about updates to tax regulations and legal requirements specific to each region.
  • Navigating Regional Complexities: They can guide you through the nuances of local payroll processes and ensure compliance with regional labor laws.

4. Prioritize Ongoing Training and Communication

A well-informed workforce is essential for smooth global payroll operations. Here’s a two-pronged approach:

  • Invest in Training: Train your payroll team on global compliance regulations and best practices. This empowers them to handle complex situations with confidence.
  • Maintain Clear Communication: Communicate clearly with your international employees regarding their pay structure, deductions, and tax obligations.Transparency builds trust and fosters a positive work environment.

5. Schedule Regular Reviews and Audits

Don’t wait for a crisis to identify potential roadblocks. Proactive companies conduct regular internal reviews of their global payroll processes. These reviews offer several advantages:

  • Early Detection of Errors: Regular reviews allow you to identify and address errors before they escalate into major issues.
  • Minimized Risk: By catching errors early, you minimize the risk of penalties and legal repercussions associated with non-compliance.

Implement best practices to ensure your global payroll runs smoothly, efficiently, and compliantly. If you are expanding globally, consider an employer of record services for quick market entry, or partner with a global payroll provider like Procloz for expert compliance across all your locations. Focus on growth, and leave payroll to us!

Workplace compliance

10 Key Workplace Compliance Regulations Every Employer Should Know

Having a compliant workplace is crucial. It safeguards your employees’ well-being, avoids legal trouble, and ensures ethical conduct. Employees might suffer from information overload (compliance fatigue), lose focus over time (complacency), or simply not feel invested in compliance procedures (low engagement). 

Hence it is important to stay informed about the workforce compliance regulations of your organization. And for this reason, we have created a guide that walks you through the 10 key workplace compliance regulations for a more comprehensive approach.

What is Workplace Compliance?

In simpler terms, “compliance” means following all the rules. This includes federal, state, and local laws, as well as your company’s internal policies and procedures. It applies to everyone in your organization, regardless of department or position. Here are some key areas compliance covers:

  • Preventing discrimination
  • Protecting data
  • Safeguarding the environment
  • Ensuring health and safety
  • Paying your fair share of taxes

Beyond these specific rules, compliance also encompasses acting ethically as a company and fostering ethical behavior among your employees. Ultimately, effective compliance protects both your employees’ physical and mental health.

Streamline your international workforce by familiarizing yourself with these legal and regulatory issues in international human resource management.

10 Workplace Compliance Regulations You Must Know as an Employer

Maintaining a smooth-running business goes beyond just products and services. As an employer, you’re responsible for adhering to a set of regulations to ensure a safe, fair, and legal work environment. These regulations, often referred to as “workplace compliance”, can seem complex, but understanding the key ones is essential.

So, here are 10 crucial workplace compliance regulations every employer should know:

1) Anti-discrimination Laws

This is a cornerstone of workplace compliance. Federal laws like the Civil Rights Act prohibit discrimination based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability, or genetic information. Employers must prevent discrimination in all employment practices.

Key anti-discrimination laws include 

  • Title VII of the Civil Rights Act, 
  • the Americans with Disabilities Act (ADA), 
  • the Age Discrimination in Employment Act (ADEA), and 
  • the Genetic Information Nondiscrimination Act (GINA). 

In 2021, the EEOC received over 61,000 charges of workplace discrimination related to Title VII and resolved over 16,000 disability discrimination and 11,000 age discrimination charges.

Preventing discrimination is crucial for avoiding lawsuits, reputational damage, and losing valuable talent. A diverse and inclusive workplace also drives innovation and improves decision-making. Violations can result in costly fines and legal battles.

2) Fair Labor Standards Act (FLSA)

The FLSA sets national standards for minimum wage, overtime pay, recordkeeping, and child labor standards. It dictates overtime pay requirements after 40 hours per week and establishes the federal minimum wage of $7.25 per hour.

Key provisions include paying non-exempt employees 1.5 times their regular rate for overtime hours, as well as restrictions on working hours for youth under 16 and prohibitions on hazardous occupations for those under 18.

Violations can result in costly penalties and litigation. In 2022, the Department of Labor handled over 21,000 FLSA cases resulting in over $264 million in back wages owed to workers.

Employers must maintain accurate payroll records and regularly review policies to ensure FLSA compliance around minimum wage, overtime, recordkeeping, and youth employment standards. Failure to do so can lead to steep fines and damages.

3) Family and Medical Leave Act (FMLA)

The FMLA allows eligible employees to take up to 12 weeks of unpaid, job-protected leave per year for family and medical reasons, including childbirth, adoption, caring for a sick family member, or their own serious health condition.

To be eligible, employees must meet tenure and hours worked requirements. Employers must maintain health coverage during FMLA leave.

FMLA compliance issues are common, with 60% of employers reporting challenges like managing intermittent leave and determining serious health conditions per a 2018 survey.

Violations can result in litigation and hefty damages. Clear policies, proper leave tracking, medical certifications, and legal guidance on complex cases are crucial to avoid costly FMLA penalties.

4) Occupational Safety and Health Administration (OSHA)

OSHA provides guidelines for maintaining a safe workplace environment free from hazards. Employers must comply with OSHA standards on hazard control, personal protective equipment, safety training, recordkeeping, and reporting.

OSHA enforces its standards through workplace inspections. In 2021, it conducted 76,816 inspections and issued $194 million in penalties for violations like inadequate fall protection and failure to communicate hazards.

Many states also have their own job safety regulations that may be more stringent than federal OSHA rules. Employers must diligently follow all applicable OSHA standards to ensure worker safety.

5) Wage and Hour Laws

Beyond the federal FLSA, employers must comply with a patchwork of state and local wage and hour laws. These may include higher minimum wages, paid sick leave requirements, rules around meal and rest breaks, overtime calculations, and more. Penalties for violations can be significant at the state level as well.

6) Employee Classification

Classifying employees as exempt (salaried and ineligible for overtime) or non-exempt (hourly and eligible for overtime) is crucial for FLSA compliance. 

Exempt employees are salaried and ineligible for overtime pay. Non-exempt employees must receive overtime pay when working over 40 hours per week. Misclassifying workers as exempt when they should be non-exempt is a common FLSA violation that can lead to costly back wages, fines, and litigation. Employers should carefully analyze job duties against FLSA exemption criteria.

7) Immigration Law

Verifying employee eligibility to work in your country is essential. Employers must comply with I-9 verification procedures. The Immigration Reform and Control Act prohibits hiring unauthorized workers. In 2021, Immigration and Customs Enforcement conducted over 6,000 audits and imposed $18 million in fines for violations.

8) Data Privacy Regulations

Depending on location and industry, employers may need to comply with data privacy laws like HIPAA for protecting medical information and the GDPR for EU data protection. These regulate how employee personal data, including medical records, is collected, stored, used, and shared. 

Violations can result in significant penalties – HIPAA fines reached over $3 million in 2022. Proper data handling procedures are essential.

9) Unemployment Insurance

Employers typically pay unemployment taxes, which fund unemployment benefits for laid-off workers. Understanding your contribution rates and filing requirements is vital.

10) Workplace Posters

Federal and state regulations often require employers to display posters informing employees of their rights and responsibilities.

Summing Up

This list serves as a starting point. Workplace compliance can be complex, and regulations can vary depending on your location and industry. Consulting with a human resources professional or legal expert is recommended to ensure you are adhering to all applicable regulations.

For companies looking to expand their workforce internationally, utilizing employer of record services can be a valuable tool to navigate the intricacies of foreign employment laws.

By prioritizing workplace compliance, you can foster a safe, fair, and legal work environment for your employees, while minimizing the risk of lawsuits and fines.

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