Perhaps managing the payroll of employees who don’t work in the same physical office as you was challenging enough before the coronavirus pandemic hit the United States in late February and early March. With millions of people now working from home under government orders, the need to manage payroll efficiently is even more important. We offer some tips below.
Determine if You’re Working with an Employee or Independent Contractor
This question can get tricky for employers, especially when a worker rarely comes to the office. However, it’s essential that you get it right to avoid penalties and other sanctions by the Internal Revenue Service (IRS). Here are some questions to help you make the right determination:
- Do you direct the work of the employee by requiring him or her to work certain hours or when and how to complete the work?
- Does the person work for other small businesses besides yours?
- Is the worker integral to the operation of your company?
- Do you have an ongoing relationship with the employee without a specific start and end date?
- Do you pay the worker’s expenses such as travel and meals?
Except for the second point, the answer to all questions should be no if you’re dealing with an independent contractor. If you still feel confused, don’t hesitate to reach out to Palmetto Payroll for additional guidance.
Determining Taxes for Remote Workers
When you have regular employees, you must withhold federal, state, Medicare, and social security from their paychecks whether they come into the office or work remotely. This can get complex when you have people working in different states. If you have an out-of-state worker, for example, you must register with the state where he or she lives and make tax deposits with that state.
Things can really get complex when you deal with remote workers outside of the United States. Typically, this would require you to open a branch of your company locally and comply with local employment laws. This includes factors such as minimum amount you must pay, overtime, and benefits if any. You can also ask your international remote workers to register in their home country as independent contractors. They would then be responsible for paying taxes and business-related expenses in their own country.
Setting Up Payroll Transfers for Remote Workers
Direct deposit is probably the easiest method for ensuring that those who work from home or another location receive their paychecks on time. You just need to establish an account with a local bank, request the worker’s routing and account numbers, and make deposits on a pre-arranged schedule. Outsourcing payroll entirely to Palmetto Payroll can make things even easier for you. Just provide us with the hours, rate of pay and demographic data of your workers and we take care of everything else.
Contact Us to Discuss Outsourcing Remote Payroll Today
Payroll processing is one of the main services we offer at Palmetto Payroll. We invite you to schedule a consultation to learn more about how we can help your small business grow by taking over some of your administrative burdens.