Payroll is one of the most important aspects of any company. It is usually provided for by people who give accounting services in Malaysia and they talk about a lot of things pertaining to the employees of the organization.
Today, I am going to be talking about the information that you need to know about payrolls so that you and your company will not get into trouble.
Independent Contractors VS Employee
According to a 2012 press release by the U.S. Department of Labor, companies have misclassified their employees, stating that they are independent contractors.
You have to understand that they are quite different. An employee works under a company and is included in the company’s payroll. The independent contractor, on the other hand, is someone who is an on-call employee and usually operates on their own (therefore, they are not part of the company).
Misclassified employees will not get their usual benefits such as family and medical leaves, overtime pay, unemployment insurance, and many more.
Exempt VS Nonexempt Employee
Much like the above statement, misclassified exempt and nonexempt employees could potentially give a lot of problems down the road.
Typically, all workers are exempt employees except those that are classified as hourly workers or those that are deemed by the company as such. In addition, there are certain states that have requirements or criteria for exempt status.
An easy classification would be that exempt employees typically operate within a timeframe, while nonexempt workers work more than what is required of them (typically, more than 40 hours a week).
Misclassified workers will not be able to get their overtime pays.
When you process payrolls, it is important that you understand your country or local government’s minimum wage laws. That is because there are certain states that require a much higher minimum wage than others. If this is the case, then naturally, the employee gets a higher rate as well.
There are also some governments in the world that will require employers to have paid rest breaks and that the money should be given at a specific date.
The company’s employment team is required to perform new hire reporting with their respective country or state agencies shortly after getting additional manpower. The team should make sure that all of the new hires are legally allowed to work and they should be given tax forms for them to complete.
In the United States, it usually means that the new employee is required to fill up a W-4 form, as well as a state tax withholding form.
The New Hire Reporting process would also require the employers to submit an information sheet that includes some basic information about the new employee to the state agency. This is required since it will be needed by the child support enforcement agency when it comes to child support withholding decisions.
The employer is responsible for paying and withholding federal, state, and local employee taxes, as well as their own taxes as well. They are also required to conduct tax reporting measures with their respective agencies as well. Criminal and Civil cases may be filed against them if they fail to comply.