Do you want your business to succeed? Presumably yes. Then you want to keep your employees happy.
One way to ensure that they are is by paying employees on time. To create a healthy work environment, you need to maintain employee trust by answering their questions in a timely manner — especially about payroll.
Whether it’s an employee’s first job or they’ve worked with the company for years, every employee is bound to have questions about payroll at some point. They might wonder how much PTO they’ve acquired or how much they should withhold for income tax. Whatever your employees’ questions, it’s important to answer them promptly and accurately. This will ensure they have a good understanding of what to expect.
In this article, we highlight common payroll questions and how to answer them.
1. How Often Will I Be Paid?
While federal law doesn’t dictate how often you must pay your employees, laws in most states do. For example, Arizona requires employees to pay their workers twice a month, 16 days apart. States like Pennsylvania, on the other hand, require employers to designate specific paydays.
Depending on your state’s laws, you might be required to pay your employees weekly, bi-weekly, or just once a month. Whatever the case in your state, make those paydays clear to your employees so they always know when to expect their money.
This is especially true with regard to holidays. If payday falls on Memorial Day, does that mean your employees won’t be paid until the following day? If so, make sure your employees are aware so they can plan accordingly.
2. What If I Live in Another Country?
With the growth in remote work comes a vast broadening of the talent pool. If your company has decided to hire international employees, you will need to have an effective global payroll system in place.
Paying international employees is much different from paying those in the U.S. because local laws and regulations are different. To help streamline the process and ensure you stay in compliance, you’ll want an international payroll service to do the work for you.
3. Should I Sign Up for Direct Deposit?
Direct deposit is becoming more and more common in the workplace. According to the American Payroll Association, 93% of U.S. employees are paid via direct deposit.
That said, not every employee wants to go that route. If you have employees who wish to opt out, provide them with their alternatives and explain what those alternatives mean. For example, if they don’t sign up for direct deposit, will their check be sent through the mail? Or will they have to come into the office to pick it up?
4. Why Do I Take Home Less Money Than My Actual Salary?
This is a common question of new employees who aren’t familiar with how paychecks and taxes work. Make sure the employee understands they take home less money because of taxes and benefit contributions.
Explain that their tax withholding is determined by the type of deductions they filed on their W-4 form. Let them also know that they can change what’s on their W-4 by filing a new one. For example, if they want to alter their allowances or filing status, they simply fill out a new form. Their payroll withholding will be altered based on the new information.
5. What Is a W-4 Form?
So, what’s this about a W-4? The W-4 form is an Internal Revenue Service document employees must fill out, usually during onboarding. On this form, employees decide how much they want to withhold from their paycheck to cover their federal income tax obligations. Payroll then withholds that designated amount from an employee’s pay and sends it to the IRS.
A W-4 form can be updated — and should be — if an employee marries, divorces, or has a child. These forms can also be updated if an employee simply decides they want to change the amount they withhold.
6. How Much Should I Withhold From My Paycheck?
As noted, tax withholding is the amount withheld from an employee’s paycheck to be sent to the IRS by the employer. It includes federal, state, local, and FICA taxes. The amount is based on an employee’s income, filing status, and how much they decide to withhold on their W-4 form. Steer employees toward the IRS’s tax withholding estimator to help them make this determination.
While how much an employee withholds is up to them, they should know the consequences. Withholding too little will increase the size of their weekly paycheck, but they will owe the IRS money come tax season. Withholding too much will result in a whopping tax refund — at the cost of lending the government their money for much of the year. By withholding the right amount, the employee will avoid owing tax and most likely receive a modest tax refund.
7. When Will I Get My W-2?
A W-2 reports the amount of federal, state, and other taxes withheld from an employee’s paycheck. Employers are expected to complete these forms for each employee.
The IRS requires W-2s to be postmarked by January 31, but some employers have them completed ahead of time. When an employee leaves your company, make sure you have an updated address for them to ensure they receive the form.
8. Is Overtime Different Than Holiday Pay?
Depending on the company, employees might be paid more for working during a holiday. But legally, they don’t have to be.
It’s easy to confuse overtime pay with holiday pay because they’re both typically one-and-a-half times the normal rate. As mentioned, though, there’s no legal basis for the latter. If your company doesn’t pay more to work holidays, share that with your employees before they volunteer to work on Christmas.
9. How Do I Use The Web Portal?
Having an online web portal where employees can keep track of their own hours and review their paychecks can be incredibly beneficial. Not only does it provide employees with easy access, but it means fewer questions for HR.
That said, not every employee is tech-savvy. And even the ones who are might struggle to find specific information. Consider creating an instructional guide that details where and how an employee can find the payroll information they’re looking for.
While most of these questions can be answered quickly, it’s a good idea to create a payroll-related Q&A page on the company website. This way, employees can find the answers themselves.