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Payroll Compliance: What Employers Must Do

Paying your employees is a crucial aspect of your role as an employer, but it involves more than just writing out a few checks and sending them in the mail or on their desks. Payroll laws are governed by both the federal and state governments, as well as occasionally local ones. If you're an employer, you need to be sure you're adhering to all applicable payroll laws or your business could get into legal difficulty.


The Basics

It's helpful to comprehend the fundamentals of payroll if you want to guarantee payroll compliance in your company. Every pay period must end with the payroll process being completed by your company.


Gather some crucial data and complete some preliminary work before you start processing payroll.This include obtaining an employer identification number (EIN) from the IRS, establishing your state and/or local tax IDs, gathering the tax and financial data of your employees, such as their W-4s, and developing a payroll schedule with tax payment dates.


After completing all of this, you are prepared to begin processing payroll. To handle payroll internally, many businesses employ an accountant or payroll manager. Although it provides you direct control over your payroll, doing this can be costly since you need to hire a full-time employee. The fundamental steps in the payroll process, if you decide to do it yourself, are as follows:

  • Calculate each employee’s gross pay, i.e., the number of hours they’ve worked in each pay period by their hourly wage. Hours worked past 40 each work week are considered overtime and non-exempt employees are paid time-and-a-half for it. Note: Salaried employees are paid a set amount regardless of hours worked.

  • Determine each employee’s deductions, including federal/state/local taxes, social security, Medicare, 401(k) contributions, Workers’ Compensation, and other benefits.

  • Calculate each employee’s net pay, i.e., their gross pay minus their deductions.

  • Issue each employee their net pay, via written check, direct deposit, prepaid card, mobile wallet, or cash, and issue the employee a paper or electronic stub which contains the details of gross to net pay.

  • Keep comprehensive records for each payroll transaction.

  • Remember ongoing payroll considerations, such as quarterly business taxes, annual business taxes, and new hires.

The Rules

To ensure payroll compliance, you must be aware of the laws that are relevant to your company. There are some general criteria for the majority of firms, even though some states have separate payroll standards and some municipal governments have their own payroll regulations.


Employers are responsible for making sure payroll taxes are calculated properly and paid on time. Find out if workers' compensation insurance is required by your state, and if it is, make sure to give it to your crew. As an employer, it is also your duty to handle any court-ordered wage garnishments.W-2s, which must be mailed out by January 31 every year, and 1099s, which must be given to any contractors you use, are just two examples of tax documents that must be filed by the due dates.


According to the law, employers must make sure payroll reporting requirements are met and keep payroll records for three to four years. These documents include time sheets, new hiring paperwork, year-end tax filings, and pay stubs. As long as your business complies with all applicable laws regulating tipped employees, you must pay your employees the legal minimum wage. The proper overtime compensation must be given to non-exempt workers. Finally, you must ascertain whether offering employees a variety of payroll options is mandated by your state.


The Solution

We at Southeast Texas HR are committed to offering top-notch payroll services to business owners like you. Dedicated payroll professionals that understand the value of payroll compliance make up our payroll service franchise.With our boutique-style service approach, we offer payroll solutions as well as HR solutions, background checks, and more.Learn more about what Southeast Texas HR can do for your company by getting in touch with today!



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