IRS 1099 Compliance Enforcement Heats Up

In 2010, the IRS took an aggressive step to ratchet up its ability to enforce business compliance with annual 1099 income reporting regulations. Today I will discuss form 1099-Misc and these enforcement changes. I will also share the potential consequences for not filing these annual reports and how to stay out of the IRS’s enforcement cross-hairs.

1099 Self-Incriminate-Reporting

In 2011, two seemingly-innocent questions were added to all business tax returns. These questions are:

1. Did your business make any payments that would require filing form(s) 1099, and
2. If yes, did your business file or will it file form(s) 1099?

The taxpayer is then required to check the box “yes” or “no,” a response made under penalty of perjury when the taxpayer signs the return.

Why is this Significant?

The 1099 Form series is a major part of the IRS’s Information Reporting Program (including forms W2 for wages and K-1, reporting partner and S Corp shareholder income and deductions) which tracks payments made by businesses to other taxpayers. The Information Reporting Program enforces the common taxation rule: The expense of one taxpayer is generally income to another.

The primary role of Form 1099 is to “inform” the IRS of income taxpayers receive. The IRS enters 1099 data into computers that match it against income reported on taxpayers’ returns. Any income shortfall reported by the taxpayer will automatically generate a letter and/or a bill for tax due, plus penalties and interest.

The system is so effective that, if everyone followed the information reporting rules (and deductions did not exist such as with a flat tax), the IRS could simply send taxpayers a bill for their income tax each year. This, in fact, is the procedure for taxpayers who fail to file their income tax returns.

Small Business and Form 1099 Compliance

​Although there are many 1099 forms, the most common one completed by small businesses is Form 1099-Misc, which reports self-employment income paid to unincorporated vendors, contractors, and casual labor totaling $600 or more in any given year. The addition of these questions is an attempt to close the portion of the $450 billion tax gap (the difference between taxes paid each year and taxes actually owed to the US Treasury) attributable to small businesses’ persistent non-compliance.

Back-up Withholdings and Form 1099

In order to issue forms 1099, businesses must obtain the Taxpayer Identification Number (TIN) from their service providers. Generally, this is done by providing Form W-9, Request for Taxpayer Identification, to the individual and/or business to which payments will be made. If the service provider fails to provide the requested TIN, the payer may be required to remove “backup withholdings” (currently 28%) from any payments due the provider, and remit these amounts to the IRS.

The Penalty-Trap

The basic penalty for not filing forms 1099 is generally $50 per un-filed return. This penalty, however, increases to the greater of $100 per return or 10% of the total amount that should have been reported if the IRS believes the failure was due to intentionally disregarding 1099 reporting rules. And herein lays the penalty-trap: If a business affirmatively states that they were required to file forms 1099 but fails to do so, they have intentionally disregarded the 1099 reporting rules. If, on the other hand, the business states that they were not required to file Form 1099 and it is later shown that they were, the business has intentionally disregarded the 1099 reporting rules and lied on its tax return.

An additional fear which looms among many professionals is that these developments may set the stage for what to-date has been a relatively rare penalty: Failure to collect and remit the 28% backup withholdings mentioned above. This penalty carries the same weight as the payroll taxes and is equal to the 28% tax that should have been withheld.

The Take Away

​If you have not already done so, make this a priority to avoid the penalties listed above by following the Form 1099 reporting rules. The form deadlines are January and February each year.Please remember: This or any article does not constitute or replace the advice of a qualified professional. If you have any questions regarding your taxes or would like assistance in preparing your tax returns, please feel talk to your accounting professional.

HOW TO REPORT WAGES FOR A DECEASED EMPLOYEE

If an employee dies during the year, you must report the accrued wages, vacation pay, and other compensation paid after the date of death.

Also report wages that were available to the employee while he or she was alive, regardless of whether they actually were in the possession of the employee, as well as any other regular wage payment, even if you may have to reissue the payment in the name of the estate or beneficiary.

If you made the payment after the employee’s death but in the same year the employee died, you must withhold social security and Medicare taxes on the payment and report the payment on the employee’s Form W-2 only as social security and Medicare wages to ensure proper social security and Medicare credit is received.

On the employee’s Form W-2, show the payment as social security wages (box 3) and Medicare wages and tips (box 5) and the social security and Medicare taxes withheld in boxes 4 and 6. Do not show the payment in box 1.

If you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes.

Whether the payment is made in the year of death or after the year of death, you also must report it in box 3 of Form 1099-MISC, Miscellaneous Income, for the payment to the estate or beneficiary. Use the name and taxpayer identification number (TIN) of the payment recipient on Form 1099-MISC. However, if the payment is a re-issuance of wages that were constructively received by the deceased individual while he or she was still alive, do not report it on Form 1099-MISC.

Let’s look at an example

Before Employee A’s death on June 15, 2015, A was employed by Employer X and received $10,000 in wages on which federal income tax of $1,500 was withheld. When A died, X owed A $2,000 in wages and $1,000 in accrued vacation pay. The total of $3,000 (less the social security and Medicare taxes withheld) was paid to A’s estate on July 5, 2015. Because X made the payment during the year of death, X must withhold social security and Medicare taxes on the $3,000 payment and must complete Form W-2 as follows.

• Box a – Employee A’s SSN
• Box e – Employee A’s name
• Box f – Employee A’s address
• Box 1 – 10000.00 (does not include the $3,000 accrued wages and vacation pay)
• Box 2 – 1500.00
• Box 3 – 13000.00 (includes the $3,000 accrued wages and vacation pay)
• Box 4 – 806.00 (6.2% of the amount in box 3)
• Box 5 – 13000.00 (includes the $3,000 accrued wages and vacation pay)
• Box 6 – 188.50 (1.45% of the amount in box 5)

Employer X also must complete Form 1099-MISC as follows

• Boxes for recipients name, address, and TIN – the estate’s name, address and TIN
• Box 3: $3,000.00 (Even though the amounts were withheld for Social Security and Medicare taxes, the gross amount is reported here).

If Employer X made the payment after the year of death, the $3,000 would not be subject to social security and Medicare taxes and would not be shown on Form W-2. However, the employer would still file Form 1099-MISC.

Employee Vs Independent Contractor

The difference between an employee vs independent contractor can be confusing. It is important for business owners to know if their workers are employees or independent contractors (also referred to as 1099 contractors or self-employed).

For employees, businesses have to withhold income taxes, Social Security, and Medicare from employee’s checks. They also need to pay unemployment tax on employee’s wages. These taxes do not have to be paid if the worker is an independent contractor.

Is my worker an Employee or Independent Contractor?

An independent contractor is a business owner who provides his services to others. You are considered self-employed if you:

1. Own a business or trade as the sole proprietor
2. Trade with a partner or own a business
3. Engage in a business by and for yourself

If a business owner hires you to provide a service, or perform a duty, then you are not an independent contractor, you are an employee, and he is your employer.

If you are a business owner remember it is up to you to determine whether those you hire are your employees or independent contractors. You first need to understand your business relationship before you can determine how to pay for services.

What is the Difference Between an Employee and an Independent Contractor?

Independent Contractors

Accountants, auctioneers, contractors, subcontractors, dentists, doctors, and dentists, and many others are often considered independent contractors because they are part of a profession that offers their services to the public.

However, whether they are labeled as independent contractors or employees depends upon a few things: one is considered an independent contractor if the person paying for the service only has control of the end result, and not how the job is done. This person is responsible for paying a Self-Employment Tax.

If one is told what to do, and how to do it, then this person is not an independent contractor. Even if the employer gives the employee freedom to do things his own way, the employer still has a legal right to tell his employee what and how to do things if he so chooses.

Employee

Common-law rules states that if you can tell somewhat you hire what to do, and how to do it, then they are your employee and you are their employer. You can give your employee freedom of action, but you still have complete legal control of what services they perform for you.

Comparison Between Employees and Independent Contractors

The best way to determine whether someone is an independent contractor or an employee is to consider what degree of control those hiring them have.

Common-Law Rules

Providing evidence of degree of control falls into three distinct categories:

1. Behavioral: Does your company have complete control over what your worker does and how your worker does his job?
2. Financial: Do you control when your worker is paid? Do you supply all the tools and supplies? Do you decide whether or not to reimburse expenses?
3. Relationship: Do written contracts exist that outline such things as insurance coverage, vacation pay, pension plans, etc.? Is this work vital to your business, and is this relationship going to continue?

Determination

Each of these factors is important when a business needs to determine whether a worker is an independent contractor or an employee. Some of these factors may point to a worker being an independent contractor, while others may indicate he is an employee.

Nothing is set in stone about whether one is an independent contractor or employee, and there is not a single factor that determines which category a worker falls in. Factors that may be relevant in one instance may not be relevant in others.

The key to unlocking this mystery is to take into account the relationship, determine the degree of right to control and direct, and document these to make a final determination.

Form SS-8

If, after reading the above, one is still unsure whether their worker is an independent contractor or an employee, they can file Form SS-8 with the IRS. The worker or the business can file this form. The IRS reviews all circumstances and facts related to the case and makes the official determination on the worker’s status.

This process can take up to 6 months just to get a final determination. All businesses that hire this same type of people to work for them should think about filing Form SS-8.

Tax Obligations

After a final determination of worker’s status is decided (either by the business owner or IRS), it is time to file the right forms and pay any and all taxes due.

Independent Contractor Forms

Form W-9: If you are paying an independent contractor then they should complete Form W-9, also titled Request for Taxpayer Identification Number and Certification. This form is used to learn the right name and TIN (Taxpayer Identification Number) of your worker. TINs can be a SSN (Social Security Number) or an EIN (Employer Identification Number). This form should be kept on file for at least four years, just in case it is needed for future reference by the IRS or the worker.

Form 1099-Misc: Form 1099-Misc is used to report all payments made in the trading of services for cash. If you pay someone $600. or more in a year, you must complete a Form 1099-Misc and provide it to the independent contractor by January 31st of the next year. You also need to send a copy of the worker’s form to the IRS. You have until March 31st if your business files 1099s electronically; otherwise, you have send the form to the IRS by February 28th.

Employee Forms

Form I-9: Also known as The Employment Verification Form I-9, this form pertains to U.S. Citizenship and Immigration Services. Employer’s use this form to verify the identity of their employees and to make sure they are eligible to work in the United States.

Form W-4: Your employee fills out Form W-4 so that the correct amount of federal income tax is taken from their check.

Form W-2: At the end of every fiscal year workers must file a Wage and Tax Statement, otherwise known as Form W-2. All wages, tips and compensation received must be entered on the form. Businesses can use Form W-3 (Transmittal of Wage and Tax Statement) to send Copy A of Form W-2 to the IRS.

Misclassifying Employees

If you say your employee is an independent contractor, and have no reasonable basis for this classification, you might be held liable for paying that worker’s employment taxes.

If you can show you have reasons to treat an employee as an independent contractor, then you might not have to pay their taxes. You will need to file all federal information returns that show you are consistent in the way you have treated this employee. You must prove that no former (or current) worker who performed the same services was listed as an employee any time after 1977.

How to Terminate an Employee Properly

Have you ever wondered what the best practices to terminate an employee properly are? Well, having to terminate an employee is the lowest of the low psychologically; but doing it properly is a challenge in itself.

Some managers would choose to go through an audit, or digitizing dusty paper records instead of having to let someone go. The entire process can be emotionally draining for both sides of the equation.

But dollars are on the line. Therefore your have to make the hard decisions that are in the best interest of the company atmosphere, the bottom line, and the stakeholders.

The termination quite literally has an effect on the rest of that employee’s life in a financial and career sense. This will be the final impression your company will leave with the employee.

Terminations don’t take place in a bubble either. And the aftermath can have an effect on the organization as a whole in ways a manager with less experience may not fully appreciate. Additionally, if you do not terminate an employee properly lawsuits can happen. It’s important to prepare ahead of time to make the transition as smooth as possible.

Pre-Termination: Being Proactive Over Reactive

The days or weeks leading to a foreseen termination are very important. You should be vigilant of your interaction with the employee and do your legal homework. Therefore. document issues and review the legal aspect to make sure you terminate the employee properly.

“Documentation, Documentation, Documentation.”

Sometimes you have to terminate an employee over an immediate and egregious offense, but it’s not unusual that the termination could be seen from a long way off. Typically the writing was on the wall for weeks, or even months, beforehand.

If the termination is a result of performance issues, document the steps you have taken to mitigate those performance issues. On the other hand, if the termination is a result of behavior (insubordination, breaking company rules, breaking the law, etc), document warnings and reprimands.

Your company will never regret having a strong paper trail. And decisions to terminate must be made on provable facts, not opinions or hearsay. Some organizations learn the hard way that improper record-keeping can cost them in the long run. Don’t make this mistake.

Laws, Contract & Agreements

There are of course laws across the board on how to terminate an employee properly – obviously you cannot fire someone on the grounds of age, gender, race, orientation etc. However, there are laws that exist in specific jurisdictions, and laws specific to the size of your organization. Consult legal counsel.

A vengeful ex-employee can learn very quickly everything they need to know to sue a company by using Google alone. Subsequently, making sure you’re up to snuff is money and time well spent.

Then there is the matter of employment contracts – some situations warrant a severance package (which can be affected if you don’t have a paper trail). Similarly, union employees have collective agreements that can come into play and there may be specific procedures that you need to follow.

It’s critical to review all of these contingencies pre-termination. Be prepared for the situation at hand.

Termination: Game Day

To terminate an employee properly, you need to follow the following steps on the day you pull the trigger:

Termination Environment

Plan the environment to minimize employee embarrassment and to preserve dignity. Terminate the employee in person and never over a digital medium. Pick a neutral, private location to deliver the news, with an HR representative  or other manager present. They will come in handy if you have to diffuse an emotional situation.

Create space for emotions to deflate. This is much more important than time of day or the day of the week. Some employees might become angry, some might cry, others might be in shock. Regardless, it’s important to give them an opportunity to save their face in front of their former coworkers.

Take Control and Execute Firmly

Be firm, direct, specific, respectful and brief. Employees need to know exactly what is happening and why. Do not be ambiguous. Do not apologize. Script the speech, deliver the speech, and document the speech.

It is important that you choose words that cannot be twisted after the fact in a way that feeds into a potential wrongful termination lawsuit. In fact, it may be a good idea to have a checklist to make sure all important items are covered in the conversation, and that things are kept on track. Be sure to keep the emotional mood neutral and professional.

Recover all company property

Ask the employee to turn over any company identification, keys, electronic devices, company credit cards and anything else. It’s best to remove any temptation of any retaliatory behavior that may arise. If the employee has a company vehicle, arrange an alternate means for them to return home.

Information Security

Involve I.T. and remove access to any sensitive information. Databases, paper files, network access, email accounts, bank accounts, etc. Not only do you want to avoid any potential for retaliatory behavior, you want to avoid giving the employee an opportunity to remove any potentially incriminating information.

Final Words and Clean up

Have HR accompany the employee while they clear their personal effects, say any goodbyes, and escort them off company property. This doesn’t need to be rushed, but should not be drawn out either. Ending employment is a part of professional life, staff will respect this.

Post Termination: Aftermath

To justify your claim of having to terminate an employee properly, follow through with these more important steps.  These will leave a good impression with the former employee and also help his or her dignity.

HR Involvement

Have HR provide any support in areas related to termination of benefits, paying out of vacation time, and applying to employment assistance programs. Final pay typically must be issued immediately – but remember that certain release / buyout documents must be signed before any severance payments are made.

Be Compliant

You documented everything, right? Minds and hearts change. The employee may leave angry but cool down over the weekend. On the other hand, the employee might stew for a few days and concoct a narrative that they can take to a lawyer. Spend the time and effort to make sure you were compliant and you have protected your business.

Do not Burn Bridges

Do make yourself available afterwards if issues arise. This likely won’t be a fun transition for anyone, but it doesn’t have to be a bad one. Remember business is all about relationships, and it’s entirely possible your career will intersect with this individual again.

Conclusion

Terminations are uncomfortable, but keep in mind that the short-term emotions do not override the core responsibility of management to act in the overall best interests of the organization. Use these points as a reference, and role playing can be an excellent way to raise confidence in one’s ability to terminate an employee smoothly. With preparation the impact on the workplace environment and the ex-employee can be minimized.

Nonprofit payroll requirements: Best Practices

Easily the biggest challenge of running a nonprofit is trying to do more with less, to make limited resources stretch further. Following all the nonprofit payroll requirements, laws and regulations is challenging. This is no different for companies with dedicated payroll and HR staff.

Most nonprofits have to make due with a person who’s wearing several other hats in the organization at the same time. Many know 501(c)(3) nonprofit organizations are not taxed on profits. Not as many know that NPOs do pay other taxes.

Lets not forget, however, that having to go through all that hassle is a good thing.

Moving from exclusively volunteer staff to having at least one paid position means your NPO is growing. And you’re accomplishing more of your mission.

Though far from being an exhaustive tutorial, here are some key best-practices to follow when adding paid staff to your NPO:

Salary & Wages Versus Bonuses & Commissions

This is one of those spots where for-profit companies differ from nonprofit payroll requirements. The IRS keeps a close eye on nonprofits for the potential of fraud. To that, wages that are not seen as ‘reasonable’ draw IRS attention.

This is particularly problematic considering that there isn’t a perfect method for determining what’s ‘reasonable’. At best, a company can look at market rates for a employees in similar positions and pick a number that’s conservative.

Bonuses & Commissions aren’t generally well received by the IRS. Reason: typically they’re associated with maximizing sales and profits.

The intended goal of a nonprofit is to direct its revenues towards a cause rather than improving the bottom line.

And it’s implied that bonuses and commissions are counter to this goal. Unless of course they’re seen as “reasonable,” which like above is essentially an educated guess at best.

It’s good corporate governance practice that the board of directors be aware of and approve of the Executive Directors total compensation package. The ED in particular draws attention (in many NPOs this is the only paid position). Just remember, when conducting the ‘reasonable’ test, include everything. This means memberships, vehicle allowance, contributions to retirement plans, etc.

Tread Carefully With Payroll Classifications

Can you save money by paying your staffers as contractors instead of employees? Contractors are workers who are not on your payroll, and instead are paid a flat fee for for their services. You must issue a Form 1099 at the end of the year recording total earnings to all contractors.

Tricky question: considering that paying a contractor means not having to cover payroll taxes, technically the answer is ‘Yes.’ The problem is that nonprofits don’t have as much say here as they tend to think.

The final determination of whether or not a staffer is a contractor or not is decided by the IRS. If the nonprofit thinks it doesn’t have to cover payroll taxes, it won’t. This can be an expensive mistake down the road – one that could sink the ship.

The IRS will hold the nonprofit responsible for the employer portion, the employee portion, and likely penalties and interest.

Check out this extensive research on Employee vs Independent Contractor.

Withholding Payroll Taxes

As far as the IRS is concerned, paid employees must be accounted for just like they would in for-profit corporations. Nonprofit payroll requirements dictate the withholding of Federal and State Taxes, Social Security, and Medicare from employee checks.

Generally speaking employee benefits mirror those of private industry: health and dental insurance, retirement plan contributions, sick/vacation days, etc etc.

In fact, this is considered and industry standard to attract qualified talent to work in the nonprofit sector. All of the same laws governing meal breaks, paid rest breaks, recording of hours worked, payment (or lack there off) for training, travel time, and reporting time pay must be observed.

Also, W-2’s must be issued. Being compliant is very important. It’s easy for managers of let compliance issues drift to the wayside. But remember, you’re dealing with confidential information here, and there are real consequences to making mistakes.

Volunteer Compensation

Occasionally, non-profit organizations will reward their volunteers with a present or a gift card. But there are rules about what counts as a taxable wage. Cash and gift cards definitely yes, other items like a Halloween pumpkin or a thanksgiving turkey definitely no (but that can potentially change, say if the value of the item is in excess of $100).

Consider Partnering With A Payroll Company

The instinct in a 501(c)(3) is to save as much money as possible and attempt to handle all HR and payroll functions in-house. The problem is that the IRS isn’t forgiving of missed remittances due to inexperience. Moreover, there are issues that may burn your organization that can be avoided when dealing with an established service with non profit clients.

In a perfect world you’d have a payroll specialist volunteer their services to your NPO. In a not-as-perfect world you’d have somebody on staff with enough payroll experience that they can spearhead the movement and delegate less specialized tasks to volunteers.

This doesn’t mean partnering with a payroll company is a bad thing. It’s worth starting the discussion and working with some numbers. The benefit of working with a skilled payroll company could far, far exceed the costs. Plus, a payroll company can scale with your organization and allow your team to focus their efforts on serving your stakeholders.

Conclusion

When boiled down, there are basically three critical things a payroll person or service must do.

• First, employees must get paid on time. There is nothing that will shake employee confidence more than being paid late.
• The second is that the IRS needs to get paid by their deadlines.
• The third is that all the appropriate records must be kept and all the appropriate paperwork must be submitted.

That’s about it.

The hassle of moving from zero to one paid employee is more than moving from one to ten. Once your nonprofit payroll requirements are handled, you can get back to focusing on your NPO’s cause.

Best method to pay employees

Have you ever wondered which is the best method to pay employees? Well, it’s a typical Thursday afternoon at the office.

You’ve reached the last leg of the day, and the weekend is just around the corner. One. More. Day.

Glancing through the window of your corner office, you can’t help but notice that there’s a youthful skip in your employees’ steps.

Taking one look at the calendar hanging above your desk, you discover why.

Today is everyone’s favorite day: Payday.

If you weren’t so exhausted from processing the payroll, you might be jumping for joy as well. You need to explore some options.

It’s time to review and implement the best method to pay employees.

Payroll processing that fits your needs

Finding the best payroll solution for your company can be a confusing task.

There are an infinite number of options to choose from and issues to address:

Should you pay your employees through direct deposit? Pay cards? What if there’s a mistake made on someone’s paycheck? What if someone doesn’t even get a paycheck?

Before you panic and start making decisions willy-nilly, you should know that there are a variety of true and tested method to pay your employees.

In fact, there’s probably more than one method to you employees that can fit your needs.

What’s more, while some methods of paying employees might work well for some companies, it is important to note that those methods might not fit your particular business.

Your budget, the size of your company, and the number of employees that work for you are some of the determining factors in finding the best method to pay employees for your business.

Knowing the difference between payment options can help you uncover the best method to pay employees

Finding the right payment procedure for your employees starts with understanding how each payroll processing method works.

Refer to this basic breakdown when trying to find the best payroll processing practice for your business.

Best method to pay employees: Pay cards

In recent years, Pay Cards (also referred to as Payroll Cards) have gained popularity with many employers due to its ease and cost effectiveness. Every pay period employee wages are simply loaded on the card, making them easily accessible. You can set up these cards with a payroll card provider, such as Visa. check with your payroll provider if this option is available.

Best method to pay employees: Direct deposit

In recent years, Pay Cards (also referred to as Payroll Cards) have gained popularity with many employers due to its ease and cost effectiveness. Every pay period employee wages are simply loaded on the card, making them easily accessible. You can set up these cards with a payroll card provider, such as Visa. check with your payroll provider if this option is available.

Best method to pay employees: Manual checks

The more traditional route is the to pay employees using a paper check that they then deposit to the bank. However, you can also use manual checks to make corrections in the event of mistakes made in the payroll process.

For instance, AccuPay systems provides comprehensive  low cost full service payroll to small businesses, giving business owners more wiggle room to select which payroll options work best for them.

However, each system comes with it’s own set of benefits and pitfalls.

Pros and cons of the methods to pay employees

The good news is that there are many pros to each system.

Pay Cards are generally less expensive than issuing checks, making them a cost effective alternative for those who cant, or won’t, use direct deposit.

But keep in mind that payroll cards come with drawbacks as well. One of the most problematic features of the cards is that they are often loaded with fees.

And those fees add up.

Unless you totally despise your employees, (don’t get any ideas) you don’t want a payroll system that might actually cost them a good chunk of their paycheck.

That’s why it’s important to find cards that have low fees, and to give your employees a heads up about any potential charges.

Another thing to remember is that you want to go with a solution that provides the most convenience for both your employees and yourself at a fair price.

Many companies find use deposit as their method of paying employees because it is convenient and totally safe to use.

It saves employees a trip to the bank on a weekly, or bi-weekly, basis and it also bypasses the problem of lost or stolen checks. Additionally, direct deposit saves employers money that would otherwise be spent on printing checks.

Costs and other considerations

The more traditional method to pay employees using paper checks that they then deposit to the bank. However, you can also use manual checks to make corrections in the event of mistakes made in the payroll process. Your selected method to pay your employees is also dependent on the kind of payroll system you use.

Conducting your payroll in-house might mean that your choices are slightly more limited compared to outsourcing.

More importantly, find a solution that works well for your employees. Just because something is cheaper or more convenient for you doesn’t mean it’s a two-way street.

Keep in mind that not all employees will be particularly thrilled if you decide to make pay cards a mandatory option. You should also be aware that changing state laws might make it impossible to enforce such a practice.

Remember, the best method to pay your employees is dependent on your circumstances, which includes the circumstances of your employees.

Conclusion

When trying to find the method to pay your employees that work best for your business, remember that you have options.

If processing your payroll in-house isn’t doing the trick, consider outsourcing.

Companies like AccuPay Systems give you the flexibility to find methods that work best for you.

Maybe the majority of your employees don’t have a bank account and so pay cards work great.

Perhaps the best method to pay your employees is through direct deposit.

You might even find that the best option is to roll these payroll processing methods into one solution.

From our experience, we have found that offering direct deposit as the primary method to pay employees and then allowing employees to opt into a payroll card program works the best.

So go forth and find the best payroll practices that will keep the thrill of payday alive.