Is Your Company Eligible For Small Business Health Care Tax Credit?

by National PEO National PEO No Comments

Tax season is upon us, which can be an incredibly stressful time for small business owners who aren’t incredibly familiar or comfortable with filing taxes. Even personal taxes can be confusing and overwhelming, so if you’re trying to file for your company, there are a lot of factors that go into the process. Because there are so many, we’re going to focus this blog on whether your business is eligible for a health care tax credit. We know that for a small business, it’s essential that you save as much money as possible. Companies everywhere take advantage of tax credits as a money-saving method, but how do you know if you’re eligible?

At National PEO, we want to clear up any of the confusion relating to health care tax credits. And while we’re at it, we want to take payroll tax filing off your plate as well. Our payroll services can ensure that everything is done correctly, will be filed on time, and most importantly, will give you the time you need to focus on growing your business.

Payroll Services ScottsdaleLet’s Dive Into Small Business Health Care Tax Credits

One of the big things you need to know about health care tax credit eligibility is SHOP (Small Business Health Options Program). If you own a small business or a non-profit, you are eligible only if all of the following apply:

  1. If you have fewer than 25 full-time (FTE) employees.
  2. The average employee salary is around $50,000 a year, or less.
  3. If your company pays at least 50 percent of the full-time employees’ premium costs.
  4. SHOP coverage is offered to all of your full-time employees. You don’t need to provide this option to dependents or part-part employees (those who work less than 30 hours per week) to qualify for the tax credit.

This seems pretty straight forward, right? If you need more information right away, here are some additional facts to help you out. If you have any further questions, you can always get in touch with someone at National PEO and our payroll services, we are more than happy to help you understand the process.

  1. For small businesses, your company needs to pay half of your full-time employees’ premium costs. However, if you are a tax-exempt company, you only need to pay 35 percent.
  2. The small business tax credit is only available for two consecutive taxable years beginning in 2014 and beyond.
  3. Small businesses typically need to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible for the tax credit.

How Will the Tax Credit Make a Difference?

What you really want to know is how much money will you get back, right? Well, there isn’t a definitive answer to this because it depends on certain factors, including how many employees you have, what their salaries are, and what percentage of their premiums your company pays. However, the credit is based on a sliding scale, so if you have a smaller business (less than 10 full-time employees and the average wage is less than $25k), you will receive a bigger credit.

Don’t Owe Taxes This Year?

According to the Internal Revenue Service, if your company doesn’t owe taxes for the year, you can roll the credit over to next year, or roll it back to previous tax years. In addition, when you’re paying higher premiums than what the amount of the credit is, you can also claim a business expense deduction for the excess.

Payroll Services ScottsdaleHow to Claim the Tax Credit

When you are filing your taxes, use Form 8941 to calculate the amount of the credit. Add the amount as part of your general business credit on the income tax return if you are a small business. If you’re a tax-exempt company, add the amount of line 44f of the form 990-T (Exempt Organization Business Income Tax Return).

Tax credits can be confusing and overwhelming, especially when filing taxes correctly is so important for a company, whether it’s a small business or a non-profit. At National PEO, our payroll services can make the process easy. With our PEO and ASO services, you can be confident knowing that our team has everything under control.

Here’s some of what National PEO can do for you:

  • Withhold and submit your payroll tax payments.
  • Manage payroll tax filing paperwork.
  • Help employees adjust their withholding.

With April 15th coming up quickly, it’s important to get a head start filing taxes and making sure that it’s done right. When you have a to-do list that keeps getting longer, don’t stress out about filing your taxes and trying to make sure you’re getting the best return possible. National PEO wants you to focus on growing your company, not filing your taxes. With our payroll services and tax filing help, you can put your time and effort into what matters, and we’ll take over the human resources responsibilities.

Give us a call today to learn more about how our payroll services can help.

Streamline the Interview Process

by National PEO National PEO No Comments


An important part of any business, whether it’s large or small, and whatever industry it’s in, is hiring. For a successful company to grow and to continue to be competitive, it takes the right team of people who know how to work together toward a common goal. It takes seeking out and recruiting knowledgeable, talented, and hardworking people who want to be successful not only in their own professional life, but who also want to see the company they work for be successful. That doesn’t sound too hard, right? Well, with an unorganized, inefficient, and time-consuming interview process, it definitely can be. And that’s why National PEO wants to provide you with exceptional HR outsourcing services. We can take over your current interview process and ensure that each step of the process is done thoroughly and efficiently. With our PEO and ASO services, you can spend your time ensuring that your company will be successful with the team of people we recruit, interview, and hire. So how do we streamline the interview process?

HR Outsourcing Services ScottsdaleInvolve Team Leaders

As an HR outsourcing service, we understand the importance of hiring people who are right for your company’s goals, culture, and standards of professionalism. When you hire people who fit your company’s culture, they are more likely to be there long-term. This saves time and money from having to train and eventually go through the interview and training process again when an employee, or your company, realizes that it isn’t a good fit. While National PEO hasn’t been with your company since the beginning, we value and want to utilize what has already been established. We want to incorporate your leaders and managers who know the company inside and out and learn what matters most to them. With this knowledge, we can begin the process of finding employees who will be with you long term to see your company succeed.

Define Roles

You wouldn’t buy a car before you knew what purpose the car needed to serve, right? Well, we wouldn’t want to interview and hire a candidate before we knew what role they needed to fill in your company. Before you even begin advertising an open position, you want to have clearly defined roles and responsibilities for that position. But don’t get too excited when you have this step completed, there’s still one more thing that our HR outsourcing services can help with before you are able to start looking and interviewing people who are qualified to fill a role.

Write Better Job Descriptions

We’ll continue with the car analogy: when you’re shopping around for a vehicle, you might want to know what gas mileage it gets, how many people can it hold, and what the lifespan of the make and model are. If there was a piece of information that was missing, you probably wouldn’t buy the car. When writing a job description, keep in mind the type of role and responsibilities that go into the position. This will better inform anyone who reads it and you’re more likely to get applications that are a better fit. Try to be specific and even unique! A job description that reflects your company’s culture will help a candidate feel excited about the position. If you want a professional team to ensure that your job descriptions are flawless, reach out to our HR outsourcing service and we’ll be glad to take this step off your plate.

HR Outsourcing Services ScottsdaleMake Cuts

When you do reach the point where you are interviewing candidates, a crucial step is making cuts. Create a list of parameters and stick to it. When a candidate doesn’t reach your minimum qualifications, thank them for their interest and move on. The more cuts you make throughout the process, the less time you will be spending down the road on more thorough interviews.

Remain Objective

There will always be candidates who may have a more personal connection to the hiring managers. This can be a positive factor regarding fitting into the culture of the company, but when it comes time to looking specifically at their qualifications and talent, there should be an objective viewpoint on all of the candidates who interview for a position. When there are any subjective feelings toward a candidate, the process could become unfair and potentially lead to a wrong hiring decision.

Make the Offer

The interview process doesn’t end when you decide to make an offer. The potential employee is quite possibly considering other offers and making an assumption about them accepting yours could be a mistake that costs you a great employee. When you do make an official offer, be sure to send a thorough letter that explains what salary you’re offering and any other perks that the position or company has to offer.

There are several steps during the interview process that can cause the process to lag, stop completely, or when not done correctly, can cause you to need to start the process over entirely. With the help of an experienced HR outsourcing service, you can have a team of professionals who are thorough and detailed to ensure that you hire employees that will help your company succeed.

Get in touch with National PEO today for help writing job descriptions, recruiting, interviewing, and so much more.

Payroll Tax Series Part 3: Unemployment Tax Filings

by NPEO Media NPEO Media No Comments

When employees lose their jobs through no fault of their own, typically they file for unemployment compensation from their state to ensure that they continue to earn at least a portion of their income while they find a new job. The funds for this compensation come from employers themselves, who pay both federal and state unemployment taxes on their employees’ earnings.

Unemployment taxes are paid under the rules established by the Federal Unemployment Tax Act, or FUTA. States also require companies to pay unemployment taxes in addition to the federal requirements; in some cases, the state rules are actually different from, and supersede, the federal rules. In most cases, employers are responsible for paying the entire unemployment tax bill, and do not withhold the tax from employee pay.

Who Has to Pay Unemployment Tax?

The first step in calculating your FUTA tax is to determine if you actually have to pay the tax, as some businesses are exempt. The IRS has a two-factor test for determining FUTA obligations. Your company only has to meet one of these qualifications in a calendar year in order to have to pay FUTA taxes:

  1. You pay employees $1,500 or more in any calendar quarter.


  1. You have at least one employee on any given day in each of 20 different calendar weeks (defined as a seven-day period beginning on a Sunday). The employee does not need to be the same person each week.

If either of these qualifications apply to your business, then you must pay unemployment tax for the current calendar year and the following calendar year. That being said, in some states certain businesses are exempt from paying unemployment taxes, and organizations with 501(c) 3 status are also exempt. In addition, you do not have to pay unemployment taxes if you hire your parent or spouse, or your child if he or she is under age 21.  Check with your payroll processing company or your state department of labor to determine if your business is exempt from the tax.

How Much Do We Have to Pay?

Determining your FUTA tax bill can be complex, since most businesses receive credits for the amount that they pay for their state unemployment taxes. Currently, the federal unemployment tax rate is 6 percent, paid only on the wage base, which is the first $7,000 the employee earns in the calendar year. However, most employers receive a credit of 5.4 percent for the state unemployment taxes they pay, making the effective tax rate .6 percent. This works out to a maximum FUTA bill of $42 per employee, per quarter. Some states, though, are considered “credit reduction” states. This means that the state borrowed money from the federal government to cover unemployment benefits, but has not repaid that money within two years. The result is that the credit reduction applies to all employers in that state.

However, state tax rates vary considerably, and the wage base thresholds are generally much higher. In Wisconsin, for example, the maximum state unemployment tax rate is 12 percent, with a wage base of $14,000; in Washington, the maximum rate is only 5.7 percent, but applies to a wage base of $45,000. Not all businesses pay the maximum rates, and a number of factors go into determining the actual rate for a specific business, but these taxes are paid in addition to the federal tax bill. Most states also have a “new employer” rate. This is a flat tax rate charged to employers who have only recently hired employees, and remains applicable until the employer has established “experience” with the state.

In some states, including Alaska, New Jersey, and Pennsylvania, employees are responsible for paying the state unemployment taxes, and as an employer, you are responsible for withholding the taxes and paying them on behalf of the employee. And if you have employees in multiple states — for instance, someone lives in Maryland but works in Virginia — you need to pay state unemployment taxes to both states.

How Do I Pay My Bill?

Employers are required to submit unemployment tax payments quarterly, typically within 30 days of the last day of each quarter, if they owe more than $500. When the business files its annual tax return, it will submit Form 940 indicating how much has been paid thus far, as well as the remaining payment for the any amount owed.

If your business owes less than $500, then the tax obligation carries over to the next quarter. If you do not reach $500 during the calendar year, then you will pay the balance when you file your annual tax return. Keep in mind that state procedures may differ, so be sure to check with your state department of labor to determine payment policies and due dates. Failing to pay unemployment taxes when they are due can lead to significant penalties and interest.

The complexity of handling all aspects of your company’s payroll can lead to costly errors, missed deadlines, and other issues. Working with a payroll company like National PEO can help ensure everything is handled properly and your business stays on track.

Expert Insight: How to Improve Office Morale & Keep Employee Retention High

by NPEO Media NPEO Media No Comments

Employers hear a lot about the importance of employee engagement and keeping morale high. And with good reason: Engaged, happy employees are among the best assets that any company can have. Not only are they less likely to leave (limiting costly turnover), but they are more productive, have lower rates of absenteeism, and are more likely to support great customer service and a healthy bottom line. In short, when your employees like their jobs and are happy to do them, it shows in every aspect of your business.

The question then, is how do you go about improving office morale and building that engagement? We’ve gathered advice and inspiration from thought leaders in multiple industries to help you get started on providing office morale boosters.

Bring Fun Back Into the Office

Is your workplace a quiet, dull place where everyone keeps to themselves and focuses on nothing but work — and everything is serious all the time? Do employees ever get the chance to kick back and relax with each other, and have some fun? According to author and communications expert Cheryl Conner, if not, you are doing your office morale a major disservice. Conner notes that when employees get the chance to play together — whether it’s an afternoon spent at a bowling alley, a summer barbecue bash, or a full-on overnight retreat — they build relationships that helps to improve employee retention. Having some fun not only lets your team blow off some steam, but also gives you the chance to remind them that you appreciate their work. So, don’t be afraid to incorporate some fun into your workplace and let loose a little bit.

Celebrate Accomplishments

Everyone likes a pat on the back for a job well done and acknowledging your employee’s hard work and accomplishments can contribute to better morale. One of the primary reasons that people leave their jobs is lack of acknowledgement, which is why Marcus Erb, the CEO of Great Place to Work, recommends that companies take the time to recognize and celebrate employee accomplishments. According to Erb, some companies ask employees to list their biggest achievements each year, and then choose some of the best ones to share company-wide. However, you can start smaller: During department meetings, ask your team to share their “wins” for the week or month for recognition, or develop a reward and recognition program that recognizes employees who achieve great things.

Seek Feedback

One cause of low morale is employees feeling like they don’t have a voice in the company, or that they aren’t being heard. However, business coach Neen James says that actually listening to employees and paying attention to them is key to a happy and engaged workforce. She recommends surveying employees for their opinions and ideas about their work and the company and establishing focus groups to give people the chance to provide feedback and share ideas. Doing so, she says, provides better insight into what excites and motivates your employees, while also identifying potential barriers to engagement.

Provide Career Development

Andrew Chamberlain, the chief economist at Glassdoor.com, has a great deal of experience and insight into what leads to employee turnover, and what keeps employees engaged. He recently worked with other data scientists and identified the factors that encourage employees to stay — and career development opportunities are close to the top of the list. He points out that when employees are allowed to stagnate in a role, and don’t have any opportunity for new challenges and titles, are more likely to leave for a better opportunity elsewhere.  Therefore, while pay and company culture are important to maintaining morale, ample opportunities for advancement and development are just as important.

Get to Know Your Employees

Almost everyone has been taught that professionalism demands that employees leave their personal life at the door when they come to work. However, Kevin Delaney, the vice president of Learning and Development at LinkedIn, notes that it’s all but impossible to keep “real life” out of the office, and the expectation that workers put aside the things happening in their lives outside of work is not only unrealistic, but detrimental to individual mental health and the overall morale of the office. Delaney recommends creating a culture in which employees don’t have to keep their work and personal lives separate, and where leaders know what’s happening and can provide support when necessary. When employees believe that their company cares about them as people, they are more likely to be loyal and engaged.

Fostering an engaged workforce is a complex mix, and not all office morale boosters work with all teams, However, a common thread among most thought leaders is that to keep morale high, it’s important for employers to treat employees as people, not just cogs in a machine. When you let them be themselves, help them grow, listen, and acknowledge them, then you’re more likely to have a happy workforce and keep employee retention high.

Monthly HR News Roundup: February 2018

by NPEO Media NPEO Media No Comments

Now that 2018 is in full swing, we are back to keeping up with the latest news and trends in HR. Here are some of the stories that have caught our eye this month.

Employers Starting to Use Apps for Payday

Sometimes, waiting for payday can feel like an eternity. And fo r many people who work on an hourly basis, who don’t have much financial leeway, having to wait up to two weeks to get paid can feel even longer — or even be disastrous. To help these workers access cash sooner, some employers with a large number of hourly workers have started using mobile apps that allow employees to withdraw some of their earnings in advance. Apps like Instant Financial and Daily Pay allow employees to withdraw some or all of their earnings before payday, so they can cover expenses immediately without having to turn to high-cost options like payday loans.

Depending on the app, employers may be charged a monthly fee for each employee (Instant Financial charges $1 per month per employee) or per transaction (Daily Pay charges up to $2.99 per cash advance). On average, employees withdraw less than $30 at a time using these apps, but the real beneficiaries are proving to be employers, who see increased employee loyalty and engagement as a result of offering these apps. Payroll industry experts expect that most payroll providers will begin offering their own versions of “same-day pay” within the next year or two, giving employers another benefit to offer their employees.

2018 Predicted to Be Great Year for Hiring

According to a recent survey by Manpower, 21 percent of employers plan to hire new staff in the first quarter of 2018. And in another survey conducted on behalf of job listing site Indeed, more than half of the 1,000 companies that responded said that they plan to hire more people in 2018 than they did in 2017 — and that most of those hiring plans are to support business growth. While hiring is predicted to increase across all regions and in all sectors, among the areas predicted to see the biggest spikes in new jobs include Florida, Georgia, Hawaii, and Utah; the industries with the most growth potential including hospitality and leisure, transportation, utilities, construction, and manufacturing.

The Fastest Growing Worker Segment? People Over Age 65

Speaking of the jobs market, it might be surprising to learn that the fastest growing segment of workers are people over age 65 — and it’s expected to remain that way for the next six years. More people are working past retirement age than ever before; there has been a 31 percent increase in workers in this age bracket since 2011. The most common reason that people are working longer is a lack of retirement savings, although a desire to stay active is also common among aging adults.

What does this mean for employers? On the positive side, employers are benefitting from the talent and experience of these workers longer, and the growth of the “gig economy” and the contingent workforce means that not only can older people work longer and continue to use their expertise, but companies can benefit their experience and knowledge, without paying the higher salaries and benefits that typically come along with older workers. At the same time, though, many employers fear a “brain drain” when their older workers do begin retiring, which will only be worsened if the predicted future labor shortage occurs.

More Employers Offering Fertility Benefits — And Benefitting Themselves

Struggling with infertility can come with significant emotional and physical effects, and treatments typically come with a significant effect on the wallet. However, more companies are recognizing the importance of helping employees grow their families, and either adding or expanding coverage options for infertility services as part of their benefits package.

According to FertilityIQ, the number of companies adding fertility treatment coverage to their plans is expanding considerably, and well beyond the tech sector, which has long been a leader in this area. Other companies are expanding their offerings, including raising or even eliminating dollar limits on coverage, and offering coverage for up to four complete cycles of IVF.

Research from RESOLVE: The National Infertility Association, shows that this is a positive step for employers. Companies that offer these benefits report higher rates of employee retention, as well as more loyal and productive employees. Simply put, employees are less likely to be distracted by their fertility struggles and more able to focus on work. Not to mention, the RESOLVE research shows that employees are more likely to have positive feelings about their employer, including believing that their employer cares about families, cares about their well-being, and takes their feelings into account when making decisions.

These are just some of the stories that recently made the news. Stay tuned next month for more updates as we keep our finger on the pulse of everything HR.

Monthly HR News Roundup: January 2017

by NPEO Media NPEO Media No Comments

2017 may have come to a close, but that doesn’t mean the world of HR is slowing down at all. Here are some of the top stories that we are following as we turn to the new year.

Facebook Reveals Its Sexual Harassment Policy to Help Smaller Companies

In the wake of a seemingly endless stream of high-profile sexual harassment and assault revelations, social media giant Facebook is making its sexual harassment policy public as a means to help other companies develop their own policies. The company, which recently received the prestigious “Best Place to Work” honor from Glassdoor, admits that the policy is not perfect, but hopes that by sharing the document and the company’s sexual harassment training program, other companies can learn from it. Facebook leaders noted that many smaller companies and startups do not have the resources in place yet to create comprehensive policies, and that by sharing their policy, they hope to help them — and start a trend in which companies can all learn from each other.

National PEO offers harassment awareness training for businesses needing help in setting their own policies and more.

Be Aware of This I-9 Scam

With the recent announcement that U.S. Citizenship and Immigration Services would be ramping up their I-9 audit programs, it seems some enterprising scammers are using that news to target unsuspecting employers. A number of businesses have received official-looking emails purporting to be from USCIS demanding information about and copies of employees I-9 forms. The emails, which appear to originate from a uscis.giv address and contain official seals and other information, are not legitimate though, and could open your company up to a data breach.

USCIS will never send a request for information via email — and employers are still not required to submit I-9s to the agency. The only time that USCIS will review I-9s is when your company is being audited, and if you’re selected for an audit, you will be notified by mail. If you receive a phony email, do not respond, do not click any links that may be present, and report the message to the FTC. If you receive a different email claiming to be from USCIS, you can check its legitimacy by forwarding it to uscis.webmaster@uscis.dhs.gov.

Department of Labor Proposes Tip Sharing Rule

Early in December, the Department of Labor proposed extending tip sharing to “back of the house” restaurant workers — including chefs and dishwashers — under the Fair Labor Standards Act. Currently, labor laws allow for restaurant owners to require front of the house staff who receive tips (such as wait staff and bartenders) to pool their tips and share them equally. Under the proposed rules, that sharing would include those who don’t typically get tips, provided that the restaurant owner pays them minimum wage, doesn’t take the tip credit, and tip pooling isn’t prohibited by state law.

Democrats and worker advocates strongly oppose this rule, which would nullify a 2011 rule that prohibited tip sharing with the back of the house. Opponents of the rule say that it effectively amounts to stealing wages from the tipped workers, and does nothing to prevent other back of the house employees, including managers, from taking tips as well. However, supporters of the rule say that it would support more wage equity among all of the staff. The proposed rule is open for public comment until Feb. 5.

SHRM Reveals Top Compensation Trends for 2018

The Society for Human Resource Management released its list of top compensation trends for the coming year in mid-December. Among the trends the organization predicts for 2018 include:

  • Performance reviews are evolving, with many companies doing away with them entirely in favor of other coaching programs, or using them as a chance to focus on the positive while addressing performance issues on an ongoing basis. As a result, pay and bonuses are becoming less tied to the performance review process.
  • Bonuses are likely to shift even more to the variable pay model. Rather than raise salaries based on performance only, companies are switching to variable pay models that reward employees for meeting individual, team, and organizational goals, with high performers earning the biggest bonuses.
  • As more states and cities ban employers from asking job candidates about their salary histories, companies are looking for new ways to determine the value of specific roles and changing their interviewing approaches to better assess a candidate’s potential compensation package.
  • And finally, new rules regarding pay and reporting will affect payroll. Expect to see a new proposal related to overtime pay in 2018, as well as increases to minimum wage across the country.

No Flu Shot, No Job?

In November, 50 employees of the Duluth, Minn.-based Essentia Health were fired for refusing to get flu shots. An additional 100 employees initially refused the vaccination, but opted to receive the shots when they were threatened with termination. The health system’s policy requires employees to receive the flu shots as a patient safety precaution, as severely ill patients are at a greater risk of dying from complications from the flu. This position is supported by data indicating that 80 percent of workers went to work sick last year — and that fewer than 50 percent of individuals typically get the flu shot every year.

Although the policy is opposed by several unions, which were unable to get an injunction to block the policy, it is legal. Employers can establish policies requiring employee vaccinations, provided that they are located in a city or state that allows such policies. Many states have laws on the books that require employers to offer flu vaccines, but don’t allow them to demand mandatory vaccinations. Others do allow companies, in particular healthcare businesses, to require the shots. That being said, companies do have to allow exemptions for health or religious reasons. Bottom line? Before you implement a flu shot policy, check with your state laws to ensure you aren’t overstepping the boundaries.

These are just some of the news stories companies should be aware of. Stay tuned for more updates and contact National PEO if your company needs HR, payroll, or benefits help.

Payroll Tax Series Part 2: State and Local Payroll Tax Filing

by NPEO Media NPEO Media No Comments

Payroll tax filing is an important task for any business. Failing to file and pay taxes on employee earnings can have major consequences for your company, so it’s important that you understand exactly what your obligations are, and how to best go about managing them.

Employers are required to file both federal and payroll taxes. Federal payroll taxes, which include income, Social Security, Medicare, and in some states, unemployment, taxes are standard no matter where you do business. State and local taxes, on the other hands, vary according to your location. By working with a payroll company, you can eliminate much of the guesswork when it comes to filing state and local payroll taxes, but to get you started, here are some of the most important things that you should know.

Who Pays Tax — And How Much?

Generally speaking, if you have to pay personal income tax in your state, you need to pay state payroll taxes. Currently, the only states in which you are not responsible for filing state payroll taxes are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. However, even if you do not have to pay a state payroll tax, it is possible that you’re still obligated to file a local tax. Research your local laws to determine if your city or county requires a local payroll tax filing.

The amount of tax you need to withhold from your employee’s pay varies by state. Some states, like Arizona, use a percentage calculation, in which the withholding amount is determined either by a percentage of the employee’s gross taxable earnings, while other states use a flat withholding percentage, regardless of earning amount; for example, Illinois businesses must withhold 4.95 percent of earnings for state payroll taxes, while Pennsylvania withholds 3.075 percent. Supplemental or bonus earnings, such as overtime or annual bonuses, are also taxed in most states, typically at a flat rate that may or may not me the same as the standard rate.

The majority of states, however, use tables to determine the amount of state payroll tax to withhold, in which the exact amount to pay is determined by the amount earned and the applicable tax bracket. The same applies to local taxes: If you need to file local payroll taxes, you’ll need to follow the municipal guidelines for calculating the proper amount.

Filing Taxes

State and local payroll taxes are filed with the appropriate revenue agencies. Most states require businesses to file payroll taxes if they have one or more employees in the state, and they are required to issue a W-2 Wage and Tax Statement at the end of the year. If you have contract employees to whom you will issue a 1099 at the end of the year, you do not need to withhold state payroll taxes on their behalf.

To file taxes, you need to apply for an employer withholding account with the appropriate state. In most cases, you will use your federal employer identification number (EIN) to establish this account. When it’s time to file your state payroll taxes, you will do so under this account number.  If you don’t file for a withholding account in your state, and you are required to, you could face significant penalties. In Idaho, for example, businesses that do not establish a withholding account when required are subject to a fine of $100 per day that they don’t have the account.

Depending on your state and the amount of tax you’re paying, you will need to submit your withholdings weekly, biweekly, monthly, or quarterly; some small businesses are able to file annually if they meet certain qualifications. Many states offer the opportunity to take care of this online, and pay via electronic transfer or credit/debit card. You may also be able to file on paper.  However, it’s vital to pay on time, since late and partial payments are subject to interest and penalties, which can add up quickly.

Employees in Other States

One common question regarding state payroll taxes is how to handle employees that reside out of state. The rules are complex.

Generally speaking, when a company has employees who live out-of-state, the business is required to set up accounts in both the state in which the company is located and the state where the employee lives. However, only in Arizona, District of Columbia, Hawaii, Maryland, Michigan, Montana, New Mexico, Oregon, and Wisconsin are employees required to pay state income taxes to both states. In California, Connecticut, Delaware, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oklahoma, Rhode Island, Utah, Vermont, and Virginia, employers need to withhold state taxes for both states, but only to the extent of the difference of in the withholding. For example, if a Maine resident works in Massachusetts, he or she will pay the full amount of the state tax to Maine, and then a smaller amount to Massachusetts to make up the difference in tax rates.

Further complicating matters are the states that do not withhold state taxes. If your employee lives in a state that does not have state income taxes, do not withhold taxes. There are also some states that do not withhold taxes for residents who work in another state; Alabama, Arkansas, Colorado, Georgia, Idaho, Illinois, Louisiana, Mississippi, Missouri, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, and West Virginia only require residents to pay taxes to the state in which thy work. Some states also have reciprocity agreements with neighboring states, meaning that an individual who works in a different state than his or residence will only pay tax in the state of residence.

Clearly, managing state payroll taxes is complex, and there are a number of rules and exceptions to those rules that employers must follow. The potential pitfalls and penalties associated with getting it wrong can be devastating to your business, so it’s a good idea to get professional help from National PEO with your withholding.

HR Done Right: 3 Big Companies That Are Leading the Way

by NPEO Media NPEO Media No Comments

Creating a great place to work can be challenging. There are so many factors that go into creating satisfied, productive employees, from the actual work that needs to be done to the benefits package and other perks that come from working for a company — not to mention, the actual leaders of the company and their management styles.

However, there are some companies that have crea ted excellent and desirable places to work. The one thing they have in common? Great human resources management, and a commitment to making their employees happy to be at work. Read on to learn more about three major companies that are well-known for their HR, and what they are doing that can influence your own HR practices.


Google receives millions of resume each year, and with good reason: Not only is the tech giant known for being an innovative and exciting place to work, it also has one of the most buzzed-about workplace cultures in the world. In fact, Workforce magazine rated Google No. 1 on its 2017 Workforce 100 list for HR excellence, recognizing the company’s leadership in the core areas of HR.

So, what makes Google so great when it comes to human resources? National HR experts note that it comes down to a few key aspects of the company’s culture:

  1. Google focuses on building a happy, healthy workforce. One of the hallmarks of working at Google is work/life balance: Leadership makes it a priority for employees to be happy and healthy both at work and at home. This means everything from providing plenty of time off from work and healthy meals in the office, to hiring managers that focus on training and development of employees — as well as plenty of recognition for high achievers.
  2. Google managers must meet specific criteria. Managers themselves must complete specific training and coaching requirements, but overall, Google managers must have certain traits and skills themselves in order to be in their positions. These skills range from empowering your team and expressing a clear vision and mission, to having the technical skills necessary to do the job.
  3. Google uses data. It should come as no surprise that Google uses data for everything — including HR decisions. Nothing happens at Google without data to support it. Managers act on information, not gut feelings or outdated ideas or policies.

In short, employees at Google are assigned to work that they are happy and engaged with, receive plenty of reward and recognition for their work, have opportunities to continuously grow and develop, and most of all, are treated as a person — not just a cog in the wheel.


Holding the No. 2 spot on the Workforce 100 list is Facebook, another tech company that’s gained a lot of attention for its HR policies and strategy.

One of the pillars of Facebook’s HR strategy, according to VP of people Lori Goler, is a culture of continuous, honest, and frequent feedback that permeates every aspect of the company. Whether you are running a meeting or working on a big project, she notes, asking for feedback on what is working and what isn’t creates a culture of continuous learning and improvement. This also allows Facebook employees to take chances and be more innovative, which keeps engagement high.

However, Facebook does more than just create an environment of innovation. The company takes a unique approach to keeping morale and engagement high, by not using the term “work/life balance,” which HR leaders believe places a priority on one over the other. Rather, they focus on “work/life flexibility,” which makes employees’ lives easier and gives them more ownership over their work, so they can pursue interests and passions when and where they want to.

Some of these innovations include plenty of food available in the office, “chill out” lounges for relaxing and recharging, and plenty of opportunities to keep families involved, with dedicated family events, the option to bring spouses and children along on work trips, unlimited sick days, and plenty of maternal/paternal leave and “baby bonuses” for new parents. Combined with the company’s unique recruiting and hiring policies and procedures (no college degrees required, contest-based job openings, and encouraging employees to refer others for jobs) and it’s no wonder that Facebook is rated No. 1 for employee satisfaction by Glassdoor.

The Walt Disney Company

Coming in at No. 6 on the Workforce 100, the Walt Disney Company takes happiness seriously. After all, when you’re known as the “happiest place on Earth,” you can’t have grumpy, dissatisfied employees, can you?

The foundation of Disney’s HR management is to treat employees (“cast members”) like customers, focusing on their happiness. In turn, those happy employees will treat customers the same way, going above and beyond to deliver excellent service, even in the most challenging of circumstances. What this translates to in real terms is rewarding and recognizing excellent performance, making executives accessible (and executives themselves doing whatever it takes to create a great experience), offering plenty of services and perks to employees, including free park tickets and the ability to take care of errands at work, such as registering to vote, and finding innovative ways of solving problems. For example, performers complained that acquiring and returning costumes at the start and end of each shift was taking too long, so leaders went to work developing a computerized system for managing the clothing that eliminated wait times.

If there is a common thread among these leaders in national HR excellence, it’s that they put employees first, and focus on employee satisfaction and morale. Happy employees are productive employees. Even if your company cannot go to the lengths of these multinational corporations, you can still work on policies that will keep your employees engaged and happy to be at work.

How to Create a Paid Time Off Policy for Your Company

by NPEO Media NPEO Media No Comments

Among the benefits that employees want from their employers, paid time off (PTO) is often at the top of the list. Everyone needs time off to regroup and recharge their batteries — or take care of things in their personal lives — and the availability of PTO allows them to do that without a significant financial impact.

However, despite the fact that a majority of American companies — including 73 percent of small businesses — offer PTO, there is no one-size-fits-all policy for this benefit. Not only do companies need to determine the most fiscally responsible way to pay employees for hours they aren’t at work, but they also need to consider productivity and staffing levels, how PTO is earned, how it can be used, and a host of other issues. In short, a paid time off policy is a bit more complex than simply offering two weeks of paid vacation per year.

So, how do you develop a paid time off policy? Follow this guide to create a policy that is both attractive to employees and supportive of your bottom line.

The First Question: How Much Time — And Who Gets It?

There are several types of PTO, which generally fall into two categories. In the first category is the time off that you are required to offer by law, including jury duty, disability, parental leave, and bereavement leave. In the second category, is vacation, holidays, personal time, and sick leave. The latter are the types of PTO that you will need a policy for.

Some companies break their paid time off policy into multiple categories, providing paid time off for specific holidays, as well as a set number of sick days and vacation days. If you opt for this route, you need to specify exactly which holidays are covered, and how many sick and vacation days each employee receives. One option is to use a formula, in which you calculate the number of billable hours required to cover overhead and reach your profit goals multiplied by an employee’s average billing rate. Given that most employees are able to bill (or are productive) for about 75 percent to 80 percent of the time, an offer of 20 percent to 25 percent of the calculated overhead is usually a fair amount of vacation.

Many companies take a simpler route, and offer vacation time based on seniority. The longer you work for the company, the more time you earn. A typical tier breakdown is 10 days for one year or less; 15 days for years two to five; 20 days for up to 10 years, and so on. Another option is to allow employees to accrue time off based on hours worked, with the amount of PTO earned increasing each year. For instance, an employee might earn 10 minutes of PTO per hour worked in the first year, with an additional minute of PTO earned for each year of service. Employees can then deduct hours from their PTO “bank” when they wish to take time off. In some cases, this pool of hours covers all time off, including holidays and sick days.

Typically, a paid time off policy is a benefit for full-time employees, although some small businesses do offer less PTO to part-time employees. Your first order of business, then, is to determine who is eligible for PTO, and when. Some companies will only allow employees paid vacation time after they have worked for at least 90 days; others require a longer period of employment, up to six months or longer.  When developing your policy, specify a time period for the PTO, usually either a calendar year or employment anniversary. In other words, when does the “two weeks per year” begin and end?

In summary, then, your PTO policy must:

  1. Outline what types of PTO your company offers.
  2. Specify who qualifies for PTO.
  3. Specify when employees can begin earning PTO.
  4. Specify how much PTO an employee receives, and how it is earned.
  5. Specify any holidays that employees are paid for.
  6. Specify the number of sick and personal days an employee is allowed, if applicable.
  7. Specify the time period for PTO accrual and use.

Dispersing PTO

Once you determine who qualifies for PTO and how much they get, you need to outline the process for using the time. Among the points to include:

  1. How do employees request time off?
  2. How much notice is required?
  3. Which employees get priority for popular dates? If two employees request the same time off, what is the procedure?
  4. How many days or weeks can be taken off consecutively?
  5. Any requirements in terms of minimum amount of time taken.

Your paid time off policy also needs to address what happens to unused PTO. Some companies have a use-it-or-lose-it-policy (which is illegal in California), which could mean that any unused vacation time is forfeited at the end of the year. Others allow employees to roll over all or some of their unused time to the next year. Although California does not allow use-it-or-lose-it policies when it comes to PTO, they do allow companies to cap the amount of PTO an employee has earned.

This often comes into play when an employee leaves the company. In some states and jurisdictions, employers are required to pay out all PTO that an employee has earned when he or she leaves the company. This isn’t required in all states, but if your company is located where this law is in effect, an employee with an excessive amount of PTO saved up could be costly. Therefore, your policy needs to address how earned time is rolled over (if at all) but also what happens when one’s employment ends.

Mandating Time Off

Some companies have adopted use-it-or-lose it policies to encourage employees to actually take time off from work. Americans take the least amount of vacation days in the world, but research shows that taking time off is vital to productivity, creativity, and overall work-life balance.

Therefore, your paid time off policy should address requirements for using PTO. Consider requiring employees to take at least one week of vacation per year, and limiting the amount of time that can be rolled over to the next year to ensure that the PTO is used.

Following the Law

Finally, before communicating your PTO policy to employees, confirm that it complies with all local and state laws. Again, rules may vary, and you may be required to offer certain types of PTO or adhere to other guidelines. Keep in mind that remote workers are typically governed by the jurisdiction in which they are working, so you may need to adjust your policies according to other rules.

Some companies have taken their PTO policies to the extreme, offering unlimited vacation and sick time, paid sabbaticals, and even stipends to help cover the costs of vacations. If your company is in a position to offer these perks, don’t hesitate to include them in your policy. However, even if you just offer the standard two weeks and major holidays off with pay, you need a clear, detailed policy to ensure it is fair and effective.

If you need help developing and implementing a paid time off policy for your business, contact National PEO today.

Monthly HR News Roundup: October 2017

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From holiday hiring trends to new interpretations of federal employment law, October was a busy month in HR news. Check out some of the stories that National PEO is followed last month.

1. Department of Justice Changes Stance on Transgender Protections

In a controversial move, Attorney General Jeff Sessions announced that transgender individuals will no longer be protected by federal law from workplace discrimination based on sex. The move marks a reversal of a policy that has been in place since 2014. Under the previous administration, former Attorney General Eric Holder interpreted Title VII of the Civil Rights Act to prohibit discrimination based on gender identity, including transgender individuals. AG Sessions based his memo on a legal interpretation of Title VII that does not extend those protections, as the statute does not prohibit the discrimination of individuals based on gender identity per se.

However, Sessions noted in the memo that the re-interpretation of Title VII guidelines does not give employers the right to discriminate against transgender individuals, or remove or replace protections against discrimination based on sex as outlined in Title VII. Sessions pointed to several other federal laws, including the Matthew Shepard and James Byrd Jr.  Hate Crimes Prevention Act and the Violence Against Women Reauthorization Act.

Still, the new interpretation conflicts with EEOC’s stance regarding transgender individuals, and multiple state laws specifically prohibit discrimination against transgender individuals. Many advocates and employment law experts are advising that HR departments should take a “wait-and-see” approach to this new guidance, as it is likely to be challenged.

2. Changes to EEOC Wellness Program Requirements Delayed

In 2017, the EEOC issued new regulations requiring workplace wellness programs to comply with the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. Among the changes were limits on financial and tobacco-cessation incentives, requirements for reasonable accommodations for disabilities, and new requirements to protect confidentiality. Many of the rules contradicted requirements of the ACA, and AARP challenged the EEOC on the definition of “voluntary” as it related to the limits on financial incentives. A Washington, D.C., court ruled that the EEOC must revise the guidelines.

What this means for employers is that the 2016 EEOC guidelines remain in place, and any substantially different regulations will not take effect until 2021 at the earliest. Stay up-to-date on all HR, payroll, and benefits news with National PEO.

3. Holiday Hiring Trends

We might still be putting the finishing touches on our costumes, but retailers are gearing up for the 2017 holiday season by hiring temporary and seasonal help. Despite the bankruptcies and closures of a number of major bricks and mortar retailers this year, holiday hiring is expected to be on par with previous years. Experts predict that just over 600,000 jobs will be added this holiday season — but these jobs will be different than in previous years. With more consumers opting to skip the mall and shop online, the number of warehousing, transportation, and call center jobs is expected to be much higher than the number of retail jobs. In fact, many call center jobs can even be done from home, creating new opportunities for jobseekers who might otherwise be shut out of the seasonal employment market.

There is concern that despite the availability of jobs, there may not be enough people to fill them. The improving economy has vastly reduced the unemployment rate, and fewer individuals will be looking for work. Therefore, it’s important to begin hiring early, set fair wages for seasonal jobs, provide adequate training and support for seasonal workers, and allow employees to fill multiple roles within the company to ensure that staffing meets demand.

4. Concerns About Algorithms

Anyone who has looked for a job in the last five to 10 years knows that the “old way” of searching for a job is no longer valid. The days of scouring newspaper classified and sending printed resumes are over, as nearly all employers use some type of electronic system to collect and evaluate applicants.

While using technology has made things easier for employers, it’s beginning to cause concern for many jobseekers. According to a new report from the Pew Research Center, 67 percent of survey respondents expressed concern about algorithms being used to select and hire job candidates. Simply put, most people don’t trust machines to make the right decisions, as an algorithm may not be able to accurately evaluate one’s skills, talents, and suitability for a job. As AI and computer-based evaluations become more prevalent, HR needs to consider how it will balance the benefits of an objective evaluation with a human evaluation of applicant skills.

5. OSHA 2017 Safety Violation Report

At the 2017 National Safety Congress & Expo, OSHA revealed its top 10 list of safety violations for fiscal year 2017. The violations changed very little from 2016, but there was a new addition to the list: Fall Protection Training Requirements, coming in at No. 9 with just over 1,500 violations.

The complete list of top violations includes: 1. Fall Protection (6,072) 2. Hazard Communication (4,176) 3. Scaffolding (3,288) 4. Respiratory Protection (3.097) 5. Lockout/Tagout (2,877 6. Ladders (2,241) 7. Powered Industrial Trucks (2,162) 8. Machine Guarding (1,933) and Electrical – Wiring Methods (1,405). OSHA officials believe that by listing the top violations, companies can better understand which hazards to avoid, and identify better ways of avoiding common hazards.