Payroll is one of the Home Healthcare industry’s most important — and challenging — aspects. Employers pay employees in many ways, such as salaried, hourly, part-time, full-time, or temporary. Home Healthcare companies must also consider vacation pay, benefits, sick leaves, and overtime. On top of that, they have to remain in compliance with government regulations. With so many different factors to juggle, it’s no wonder that Home Healthcare companies often find payroll to be challenging.
Thankfully there are many tips and tricks to streamline the payroll process and minimize errors. This article will provide nine helpful tips that will give companies the tools they need to complete payroll perfectly.
It can be difficult to manage payroll effectively, but it’s not impossible. The following tips ensure that the payroll process is efficient, compliant, and easy to manage no matter what type of Healthcare facility — a nursing home, assisted living facility, senior living facility, Home Healthcare company, or more.
Home Healthcare companies should establish and create a manual describing all payroll activities.
Payroll manuals should address activities such as:
Documenting clear policies in a manual will help all personnel comply with legal requirements. Foster transparency and communication by keeping these policies accessible to employees.
Establish a clear process for issuing W-2s, paydays, and accurately paying payroll taxes to avoid late filing penalties and missed deadlines.
Planning payroll a year in advance on a calendar helps Home Healthcare companies stay ahead of the game.
For example, in May 2022 the IRS announced the newly increased 2023 HSA contribution limits for employees covered under high-deductible health plans (HDHPs). Home Healthcare companies can use this information to plan their payroll for 2023 so they remain compliant and minimize financial loss.
Businesses need to have enough money on hand to pay their employees and contractors at all times, so they should have a clear understanding of what impact payroll will have on their finances.
Payroll is a major expense because of the additional taxes that come with regular pay. Medicare and social security withholding matching, taxes, and benefits like 401(K) matching and health insurance can cost 15% to 20% or more of a Home Healthcare company’s total payroll costs. With the rising recruitment of independent contractors and inflation, hospital labor costs rose to over 30% in 2022.
Experts recommend calculating total payroll costs as a percentage of Home Healthcare company revenue. Healthcare companies can then set a budget to ensure that the expenses won’t negatively affect their financials.
Once policies, processes, and the budget are in place, hired workers should be classified as employees or independent contractors.
It’s vitally important to classify them correctly during this process to pay them properly and comply with state and federal requirements. Misclassifying Home Healthcare workers could lead to significant tax penalties due to non-compliance with withholding and tax contribution laws.
Home Healthcare companies must ensure that all employees supply an IRS form W-4 (PDF). Independent contractors must file W-9 forms (PDF). If independent contractors are paid more than $600 per calendar year, companies must complete a 1099 form (PDF) and send it to contractors for tax reporting.
Properly attendance monitoring is the first step in accurately processing payroll. Scheduling and time tracking software reduces simple errors, saves time, improves productivity, and increases the efficiency of payroll staff. Empeon’s Time and Attendance software offers a user-friendly way to manage your staff’s schedule.
Home Healthcare companies can automate their payroll workflows with payroll software. Instead of wasting precious hours making manual calculations and filing and withholding taxes, payroll managers can focus on other tasks and decrease the chance of human error.
Top payroll professionals recommend finding comprehensive payroll software tailored to the specific needs of the Home Healthcare industry, like Empeon, that also handles other tasks such as:
Healthcare companies will get the help they need to manage these duties in a single simple system.
Besides using dedicated payroll software, Home Healthcare companies also benefit from integrating their payroll management solutions with HR and accounting management systems. This streamlines their payroll workflows by eliminating expensive, time-consuming manual entry processes that often have to be completed by each department separately.
Furthermore, integrated payroll systems ensure consistency between HR and payroll data by aligning payroll activities with scheduling, tracking, and employee benefits elections. All databases are also updated in real-time, providing important business insights.
Healthcare companies must comply with payroll rules, labor laws, and tax requirements. These laws exist at local, state, and federal levels and are subject to change.
There are specific regulations regarding wage parity and minimum wage in the Healthcare industry. For example, in New York and the surrounding areas, as of December 2019 the minimum wage for nursing staff — including CNAs — must be no lower than $15/hr.
State and federal requirements can change for various reasons, such as:
It’s the employer’s responsibility to stay updated on the legal requirements and make necessary changes, such as taking off appropriate taxes and updating employee pay rates. They can thus avoid lawsuits, damaged employee morale, and penalties from missed deadlines or incorrect filings. It’s recommended that Home Healthcare companies keep a calendar of tax deadlines.
Employers should always keep accurate, thorough payroll records. Payroll records are legally required by the IRS, the Labor Department, and state agencies.
For example, employers under the Fair Labor Standards Act (FLSA) must retain information such as employee names, addresses, hours worked, occupations, and wages earned for three years. The IRS requires all payroll tax records and important employee information to be retained for at least four years.
Keep these records in an easily accessible, safe location.
There’s no doubt that managing payroll is a challenge in the Home Healthcare industry, but following these nine tips will make it much easier.
Companies should always make and follow clear policies, streamline processes through automated software, and ensure compliance through research and recordkeeping. Doing so will allow them to avoid costly penalties and fees, retain happy, organized staff, and fine-tune their payroll process to perfection.
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