Local Payroll Experts Offer Helpful Insight
One of the top reasons for companies to outsource their payroll operations to a professional company is the many changes which often impact the payroll process. Even if you do get your payroll system running efficiently in-house, a sweeping change can force you to reevaluate, which hurts productivity.
When you trust a company like ours with your payroll needs, you can rest assured knowing our team is constantly keeping tabs on any upcoming changes in the payroll world and making a plan to handle them easily. We have worked with companies of many different industries, from small mom and pop shops to large organizations and everything between.
In the past year or so, there have been some changes made from a legislative perspective which have impacted payroll operations and will continue to do so. In the sections to follow, our team of experts will discuss a few of the most impactful changes and how they can impact your business.
Overtime Salary Threshold Changes
Until recent years, employees who were paid a salary were unable to earn overtime wages. This changed about a decade ago, and the law was updated to state everyone earning under a certain amount, even if it was a salary, must be paid overtime. This law once again changed to reflect a salary amount which is more in line with the current cost of living. On July 1, 2024, the minimum salary for overtime exemption changed to $43,888 per year, and on January 1, 2025, the minimum salary will jump to $58,656. If you have salaried employees working within this range, you will need to make plans to pay them accordingly if they work more than 40 hours in any given week.
Local Tax/Wage Updates
Depending on the location of your business, the amount of unemployment taxes, the minimum wage, and other key payroll metrics are subject to change on a year-to-year basis. Rather than taking a chance on missing one of these changes, it often makes sense for a company to trust a payroll provider to ensure they are always abiding by the most current laws.
Federal Tax Bracket Changes
Federal taxes account for the biggest deduction in almost any paycheck, and this year the brackets which determine which percentage will be taken has changed. This change is due to the massive spike in inflation which has impacted the US, and the tax brackets have moved up slightly. This could lessen the tax burden for some people, and as a business owner it’s important to ensure you are deducting the proper federal income tax from each paycheck you issue.
Social Security Tax Limit Increases
Business owners and their employees are responsible for paying FICA taxes. Social security makes up the lion’s share of FICA deductions, and before 2024, social security deductions were only taken up to a salary of $160,200. This has changed to $168,600, meaning more social security deductions will be taken out of each check for higher earners.
If you have questions about these changes and/or any other aspect of the payroll process, please feel free to contact our team of local payroll professionals today.
