Stay On Top Of These Payroll Changes: Payroll is that one task every manager and business owner has to complete every single month but loathes to actually do. For starters, it always eats up a lot of time and is riddled with challenges left and right.
What Are Common Payroll Challenges?
- Manual payroll processing is slow, tedious, and prone to errors
- Staying compliant with federal and state laws and regulations
- Mandatory record-keeping
- Under or overpaying your employees
- Incorrectly classifying employees
- Managing payroll taxes accurately
- Staying on top of employee information changes (like a change of address)
- Payroll fraud
- Managing employee satisfaction with accurate payroll
In reality, we could keep moaning about payroll challenges but you get the point by now. Payroll is a necessary evil!
And it’s about to get worse. I know, sorry to be the bearer of bad news.
This year, many payroll changes have rolled out at the federal, state, and local levels. And if you haven’t been paying attention, then pay attention now to avoid any future grumblings. These are the six payroll changes in 2021 that you need to know about.
6 Payroll Changes In 2021 You Need To Know
1. Paycheck Protection Program (PPP) Loans
While PPP did end on May 31, 2021, existing borrowers can apply for PPP loan forgiveness. Refer to the SBA’s frequently asked questions here.
- Raise In Minimum Wage Per State
At the federal level, the minimum wage stays the same at $7.25 in 2021. However, there are numerous states that have increased their minimum wage rates. The complete list per state is on the DOL site.
As an employer, you must comply with all minimum wage rules, whether it’s at the federal, state, county, or city level. Just ensure that you are up to date on all the laws that apply.
3. Raise in Social Security Wage Base
This year, the Social Security wage base also increased from $137,700 in 2020 to $142,800.
This means that for annual salaries up to $142,800, both the employer and employee must pay a 6.2% Social Security tax.
4. Contribution Raise For Health Savings Account Limits (HSA)
As an employee, if you offer your employees a high deductible healthcare plan (HDHP) with an HSA option, then be aware that contribution limits have gone up 1.41% for individual and family plans.
Basically, the change is $50 for self-only coverage and $100 for family coverage.
The annual limit for HSA contributions will be set to $3,600 for self-only and $7,200 for family coverage. This equals close to a 1.5 percent increase, as mentioned.
5. Changes in Workers’ Compensation
Depending on which state you’re in, then you have your own law regarding workers’ compensation. This then means that your premium rate may increase, decrease, or stay the same. This all depends on your state as mentioned, but also your business classification code and industry group.
Check your state’s workers’ compensation rate here.
6. Hang Up Posters for Labor Laws
The DOL (Department of Labor) requires that all employers with at least a single employee to display federal and state labor law posters in plain view for employees.
So, you must make sure that the posters you hang up are the latest version. However, as more employees are remote then you may want to consider sharing the posters via text or email.
For full payroll updates in 2021, and per state, visit OnPay’s guide here.
Avoid Payroll Challenges With A Digital Solution
If you really want to avoid future payroll challenges, save valuable time on payroll management, and keep your employees happy then you must join the 21st century.
Manually crunching numbers may seem like the safest bet but it isn’t. It only opens you up to errors, time lost and money lost. Not to mention, unhappy employees when they’ve been underpaid.
Check out this list of the top employee time tracking app that makes payroll a breeze. A digital app now only reduces errors and saves time, but it also increases security, distributes reports easily, simplifies tax filing, holds all tax records, and so much more.