Payroll tax management is an essential part of running a healthcare business. As an employer, you must withhold state, federal and local taxes and pay them to the government.
Your team needs to manage this process correctly to ensure you meet your legal obligations. It’s also important for your company’s reputation.
But, with a growing team, keeping on top of your tax commitments can be challenging. Even if you have an accountant, day-to-day bookkeeping can be overwhelming.
Fortunately, you don’t need to do it alone. With a few changes and clever technology, you can simplify the process.
Keep reading to gain insights into your tax obligations and learn how software can simplify payroll tax management.
What is payroll tax management?
Payroll tax management calculates employee wages and deductions and ensures you pay your employees on time while withholding the proper taxes.
There are 5 types of payroll taxes to consider:
Federal income tax
Social Security tax
Medicare tax
State income tax
Local income tax
Late payments come with penalties, and the rate varies depending on the deadline.
For example, if payroll taxes are one to five days late, the penalty is 2% of the unpaid deposit. The penalty is 15% of your unpaid deposit for payments over ten days late.
Your commitments will change over time, but the right payroll tax management processes can reduce errors and meet your obligations.
5 steps to simplify tax management in a healthcare setting
Tax management in the healthcare sector can be complicated given the variation of hours employees work on a weekly basis, contracts may vary and hours may be different. Here are our top tips for healthcare organizations to simplify tax management:
- 1. Maximize your healthcare expenses
- 2. Automate your processes
- 3. Offer multiple payment methods
- 4. Understand your legal obligations
- 5. Keep accurate records
1
Maximize your healthcare expenses
For healthcare organizations, there’s often a reliance on overtime and there can be a high turnover of staff. Plus, your team members may be on different rosters and pay rates.
Depending on the types of employees you have (salaried or hourly) and your local state laws, you will pay your federal income taxes semi-weekly or monthly.
Additionally, you’ll have to meet reporting requirements.
You should also consider how often you pay employee wages. The payday requirements vary between states, and this will influence the way you withhold taxes. For example, in Georgia and Missouri, it’s semi-monthly and in North Dakota, it’s monthly.
2
Automate your processes
Technology can relieve the administrative burden of payroll management. With Empeon’s payroll software, you can automate processes, including:
- Payroll and taxation report generation
- Customizable alerts to flag any irregularities
- Electronic preparation and filing of tax documents
- Automatic updates when rates and regulations change
- Automatic deduction of costs, such as benefits and taxes
You won’t need spreadsheets because advanced software can take care of everything. Other features include built-in tax tables and secure document storage.
Automation helps you meet your payroll tax obligations and leads to a more satisfied, engaged workforce. 49.14% of workers would find it very difficult to meet their financial obligations if their wages were a week late. With automated processes, your healthcare team will receive their wages on time — every time.
49.14% of workers
said it’d be very difficult to meet their financial obligations if their wages were delayed.
3
Offer multiple payment methods
According to a recent survey, 95.15% of employees in the US receive their wages by direct deposit. But many employees like to have the option of how they receive payment, especially if they’re overseas.
Empeon offers multiple payment options for wages — whether that’s direct deposit, paper check, pay card, etc. So you can customize payment methods to keep employees happy, while providing a user-friendly experience with an easy-to-navigate platform.
95.15% of employees
in the US receive their wages by direct deposit.
4
Understand your legal obligations
Intelligent payroll management software will take care of the details and update as tax rates change. However, business owners should be aware of their legal responsibilities.
There is a lot to consider, from wage garnishments to overtime rules. Ensure you know when payroll tax payments are due and understand your reporting and tax filing obligations.
For example, you will have to submit Payroll-Based Journal reports if you run a healthcare facility. The information is submitted every quarter and includes the hours staff are paid to work. This data must be accurate, and there may be civil penalties if you miss the deadline.
There are HR rules, too. For example, you’ll need to give all employees and contractors a W-2 or 1099 report before the end of January each year. The government also needs a copy of these forms by the same deadline. If you can’t meet the due date, the government may grant a 30-day exemption.
5
Keep accurate records
The minimum wage for healthcare workers in California will rise to
$25 by 2026.
There will be federal, state and local laws that every healthcare organization must adhere. These rules can vary depending on your location.
For example, you need to keep your taxation documents for a minimum of four years. If the IRS flags an issue or wants more information, they may request tax filing reports or other documents.
You should also keep a record of all employee wages and overtime for at least three years. The minimum wage for healthcare workers in California will rise to $25 by 2026, and it’s important that you’re compliant with minimum wages in your state and your payroll tax management takes this into consideration.
Accurate record-keeping should be built into your company’s payroll processes — especially as the healthcare industry often has a high turnover of staff. Robust software such as Empeon’s offers in-depth reporting features. You can create custom reports, log employee payments, view employee deductions and more.
Empeon’s software ensures that you’re compliant with the Affordable Care Act (ACA) and automates essential ACA-compliant tasks and provides solutions to run real-time reports on employees’ hourly compensation to track changes in coverage eligibility.
Streamline payroll tax management in healthcare settings
Payroll taxes can be complex and difficult to manage. Tax regulations can change with little warning, and your healthcare employees need timely payment.
By automating your payroll tax management, you’ll remove any confusion about your obligations and maintain a digital paper trail for the record. Automation also helps you avoid unnecessary penalties, simplifying the tax management process to ensure you don’t miss any important due dates, even when the rules change.
Empeon’s payroll management software has all the features you read about in this article. We remove the stress of manual payments, so you’ll never miss a deadline.
If you want to simplify the payroll process, our platform is the solution. With built-in tables, easy navigation and expert support, Empeon is the only partner you need.
Get in touch with one of our industry experts to learn more.
