PayCycle - America's #1 online payroll service

The Art of Wooing Customers

Having trouble attracting new customers? You’re not alone. In a recent survey with over 400 small businesses, we found that attracting new customers is a huge challenge, especially in this economy.

So, what’s the magic answer? There is none. If you’re looking for shortcuts, stop reading…now.

But if you have the tenacity to work at it, and take risks and try different approaches, you’ve got a good shot at success.

It all starts with the right product. One that solves a real pain point and hopefully offers something that customers value and that your competitors can’t easily clone. This topic is a candidate for a blooooog, not a blog, so I’ll save it for another time. Let’s just assume you have the best product in the world for now.  Now what do you do?

The process of finding customers is very akin to scoring a date with the man or woman of your dreams.

Show up. Think about where your ideal date could be. Bar? Animal shelter? Cruise? You get the picture. You have to think about what kind of customer you’re looking for, and then determine where they live, what they read, what products they use etc. and make sure you’re right there to greet them with a friendly smile.

Get professional help. Friends and family is a great way to get the word out that you’re looking. But if you need professional assistance, there’s a ton of options to meet any budget. Google ad words is a great self-serve tool, but if that’s intimidating, check out services like www.reachlocal.com that will hand-hold you through spreading the word locally.

Dress to kill. First impressions matter. A lot. Most people make up their minds about others in a few seconds. Your marketing materials are no different. So test, test and test until you hit the right tone, look, color, image, message, subject line, language. You’re never done with this one. You change clothes every day. So why’s your website 5 years old?

Buy the first drink. Yes, you’ll be a few bucks short, but isn’t the extra time to tell your story, learn about the other person and create a favorable impression worth it? Same goes with your customers. Offer a free trial, waive setup fees, do whatever it takes to get their attention and your foot in the door.

Show your stuff. Ok, now the lights are dimmed and all eyes are on you. Have you got what it takes? Don’t be shy. Show your product. I’m talking about live demos, real customer testimonials, before/after stories. Anything that helps people get a real taste of what you have to offer.

Schedule a first date. Set up a time right then and there, while you’re still relevant. Make a commitment to meet at a webinar, at a conference, at the office, over the phone, over Go To Meeting. Show that you care and can’t wait to talk again.

Be ready to be followed.  As you walk away, make it easy for customers to find you. Blogging, twittering and having a complete profile on LinkedIn are terrific ways to keep the lights on just in case anyone’s out there.

The Bicycle Commuter, Part II:

Getting your ride in shape

Bike to work day attracts legions of new riders eager to find out what bicycle commuting is like. Unfortunately for the growth of the cycling community, many people find themselves on poorly adjusted bikes that are uncomfortable and inefficient to ride. Some become frustrated, and decide not to repeat the experience. But if you make a few adjustments up front, your ride will be smoother, faster, and more fun from the start. And if there is one thing bicycling should be at all times, it's fun.

Start with a bike in good mechanical condition, one that fits you. You’re going to want to inflate the tires to the recommended level, and lubricate the chain to have the smoothest riding experience. After you do both of these, bicycling will immediately be 30% easier. You’re that much closer to becoming a bicycle commuter, and you haven’t even started!

The most common mistake I see among occasional bike riders is seat height that is too low, making the thighs and knees do all the work. If your knees are flying up in the air, you need to raise your seat. Correct seat height requires your knee to be slightly bent when the pedal is straight down, as you sit on the seat. You’ll discover you have 50% more power when the seat is raised after being too low.

If you have an old mountain bike like my first commuter, chances are that it has the wrong tires for commuting (unless you’re riding to work on a trail). Big knobby tires are great for mud riding, but they will make your commute a lot slower if you’re riding on pavement, because of all the extra friction and the energy absorbed by the compression of the protruding knobs. These tires can easily be removed and replaced with low cost street tires (about $15 each) that, when fully inflated, will make your bike go much faster with far less effort. (Be sure to get tires that fit your rims.) You’ll be astounded by the difference this makes; riding will be at least another 30% easier by switching to street tires.

Get yourself a helmet that fits, right away. It’s your best protection against serious injury in an accident. Remember, accidents are usually the result of a mistake by someone else, so it doesn’t matter how good a rider you are, you need a helmet. Get one. Now.

Padded gloves will make your ride more comfortable, and avoid numbness in your hands from vibration on the handlebars. Avoiding numb hands makes you enjoy riding more. Which makes it more fun. Enough said.

Get a good lock. Even if you have a grungy old bike that “nobody” would steal, chances are someone will eventually take it if you leave it around unlocked. Hey, you’re using the bike as transportation, so somebody else might think of it the same way and just want to “borrow” it. It’s happened to me. It will happen to you too, if you don’t use a lock.

See you on Bike to Work Day, Thursday, May 14!

Payroll Shmayroll

When I first started in payroll, when I didn't know much about it, I came from a financial services company and had a few years of experience running accounting departments for small companies.  I had peripherally dealt with payroll, once even creating year-end forms by hand when our small local payroll provider mysteriously went out of business.

"How hard can this be?" I mused.  I was more interested in the service delivery and customer support implications of working for a SaaS company than I was in payroll as a domain.  In some ways, that hasn't changed much.  The thrill of empowering someone to complete a somewhat tedious, possibly odious task gives me the biggest thrill.  Thinking about how to deliver the best value at a terrific price and creating support experiences that turn customers into evangelists is more me than payroll.

And yet, payroll is a terrific space to be in, because it is only simple on the surface.  Myriad regulations and obscure rules define the payroll landscape and modern employers simply don't have time to keep track of all these by hand, on their own.  Today's employees also expect a certain level of professionalism in payroll: they want access to their paystubs online, they want direct deposit, and when necessary, they want professionally printed payroll stubs.

Being able to deliver this value to the emotional heart of America's economy -- to the small business employer -- well, heck yeah, I get a big kick out of it.  Often, mistakes or the not knowingness I had when I first got started in the biz are the drivers of the payroll Google search.  In case you are one of those small business employers, wanting to know if you are making mistakes or how to recover from the ones you already know about, here's some general advice for you.

1) What is the most common mistake made by small business employers?

The most common mistake is putting off doing the administrative things required to get off on the right foot. Employers are so anxious to get started, and to pay employees, that they neglect their employer responsibilities, feeling they can do them later. Common things left not done are:

• Registration for an employer identification number
• Employee tax withholdings from paychecks
• Registration with EFTPS to make federal tax payments. Many employers may not know that the IRS no longer sends out coupon books. They're making it tougher to make manual payments, as they want everyone to be electronic!
• Tax payments and filings on the proper schedule
• Generally, understanding the obligations and requirements of being an employer

2) If I haven't gotten off to a good start in payroll (not doing proper withholdings or tax filings) how can I best move forward?

There are a few general things to do to start with:

• Firstly, get your resources in order. Publication 15, also known as Circular E, is an annual must have for employers who are doing payroll themselves, and it is available on the IRS website. It's not a fun read, but it's a necessary one. Don't be intimidated by the size of this resource: most of the good stuff employers need to know is condensed to 20 pages or so; the rest of the pages are tax tables, which are good for reference but not necessary to read straight through. Also, call the state in which you are doing business to understand your state responsibilities as an employer. Most states also have a website of resources.
• Secondly, don't be afraid to get organized. You may discover that you've paid taxes late or not at all, but this shouldn't stop you from catching up and doing filings properly. The IRS will allow you to make a payment plan, if need be, to get caught up on the necessary taxes.
• If you haven't withheld properly from employees, then you can do a couple of things: you can either have a conversation with your employees and make a plan to get them caught up with subsequent paychecks, or you can do what is called a "gross-up" to add more gross pay to cover taxes based on the net amounts you've paid. In the latter situation, the employer ends up actually covering these taxes, but this gets you on track moving forward.

3) I've made a mistake on my employee payroll for a prior period or a prior year. How can I recover?

As soon as you've made a mistake, it is important to act. In many cases, you will not be charged penalties, even if you owe more tax, if you correct your payroll tax filings as soon as you discover the error. The IRS is making it easier to file amendments with its new 941-X amendment form. It is much more straightforward to use than previous years' forms. In general, thinking about the mistake made, do the following audit:

• Were taxes deducted from the employee deducted improperly? If so, you must refund or assess the taxes due to the employee immediately, before correcting with the IRS and/or the state agency.
• What calendar quarters were impacted by the mistake?
• Once you've identified the dates involved, what forms were filed for those periods? Be sure to think about both state and federal forms, as well as any annual forms you filed. This is the set of forms that needs to be corrected. The IRS has specific procedures, forms, and instructions on their website. For individual state corrections, call the state directly. Many states will just say "Produce a correct form and fax it to us" and in this way, you can easily recover from your mistake.
• Do you owe more taxes or happily, are you owed a refund? If you owe more taxes and cannot pay them right away, work out a payment plan with the agencies to pay the extra tax.

Bicycle commuting for a smarter you

If you’ve ever commuted to work by bicycle, you know that it gives you time to reflect and even listen to your favorite music.  It’s great fun and it’s good for the environment.  And you get to travel on one of the most remarkable machines ever invented by humans.

But you may be surprised to learn that bicycle commuting gets your brain warmed up for a more productive day at work. This is something small businesses should take advantage of, especially in these challenging times.

The latest brain research, described in such books as Spark: the Revolutionary New Science of Exercise and the Brain (John Ratey, MD) and Brain Rules: 12 Principles for Surviving and Thriving at Work (John Medina), confirms that direct improvement in learning immediately follows exercise. It turns out that you can think more creatively and solve problems more effectively in the hours just after you exercise. In effect, exercise tells the brain “it’s showtime”, and the brain goes on full alert.

Yes, we all know we should exercise to be healthy and alert. But it turns out that for peak brain performance, when you exercise matters.  A lot.

And the benefits are much larger than you might think. According to Spark author Dr. John Ratey, individuals that exercised just before taking a variety of mathematical and verbal tests typically scored 20% higher than members of the control group that did not exercise before the tests.  Some school districts have discovered that by switching physical education from sports-oriented waiting games in the afternoon to fitness programs first thing in the morning, they can get dramatic improvements in student performance across the curriculum.

Bottom line: You should exercise either before work or at lunch time to get the maximum benefit in performance at work.

With Bike to Work Day coming up on May 14^th, it’s a good time to consider how your commuting method affects your work performance. Not surprisingly, commuting in a car does nothing for your brain and may leave you feeling sluggish and tired, not to mention frustrated from sitting in traffic. Traveling by public transportation usually involves a lot of sitting too, but this is generally supplemented by walking at both ends, which is a good way to get the brain going. In fact, walking briskly for a mile or more to work would be a great way to start your day. Most of us don’t live close enough to walk to work, but many of us do live within 6 miles of our work, which can be traveled comfortably by bicycle within 30 minutes.

When I became a regular bicycle commuter 18 months ago, I had forgotten just how much fun it is to ride a bike. If you haven’t been on one for a while, get ready for a real surprise. My bike commute is a short one, just under 2 miles, but it leaves me with a feeling of well-being as I start my work day, and I’m wide awake. I regularly ride home for a quick lunch, too. As a result, slow mornings and sleepy mid-afternoons are a thing of the past.

Bike to Work Day is a great opportunity to try out the bicycle commuter experience. You’ll have lots of other new riders for company. You’ll pass aid stations with maps and refreshments and encouragement from people who regularly commute on bicycles. Usually there’s a more direct and prettier route from your house to work once you get off the high speed roads you normally drive on. And you’ll discover that nearly all bicycle commuters are not dressed in spandex, but are wearing regular clothes. Imagine that: you don’t have to look like a professional cyclist to ride a bike to work!

Two simple steps will go a long way toward making your bike commute successful: pump up your tires and lubricate your chain. Properly inflated tires greatly reduce road friction, and will get you to your destination with half the effort. And a lubricated chain will give you a quieter and smoother ride, with easier shifting and reduced friction losses.

Try it out. Bike to work on Thursday May 14^th, and see if you don’t find yourself feeling better and more alert. Then you can get down to more effectively solving the puzzles of your small business.

If you can stick with it for a couple of weeks, you might get hooked and join the ranks of regular bicycle commuters. And the advantage of having a smarter you coming to work each day just might make a real difference to the success of your small business.

Where have all your customers gone?

Last night, during our family walk around the neighborhood, I stopped to chat with a neighbor, John.  John is a grandfather, retired, well-to-do. He was fretting about how he has 6 trips planned this year but is thinking about cutting down. Not because he can’t afford it. He just doesn’t feel right about sipping his margarita on a leisurely 10 day cruise at a time when everyone else is cutting back.  I tried to use all kinds of tricks to help him re-think his logic, to do his bit to revive the economy, keep the cruise business afloat, but to no avail.

I came home and called my brother in India, who works for an outsourced firm. 3000 miles away, he is feeling the effect of John’s decision and wondering whether he’ll wake up without a job tomorrow.  His company provides HR consulting services to large U.S. companies, such as cruise lines.

Wow! If large companies across the planet are reeling from decisions like John’s, imagine how hard small businesses are affected. The good news is, if you are a small business, you are not alone. Even though you may only have 5 or 10 people on your payroll, there are thousands of folks working on your behalf, to support your dreams, to make you successful.

PayCycle is a great example. We’ve taken a complex, mind-wrangling task, and made it super easy, and very affordable. We realize that you didn’t start your business to do payroll or get buried in paperwork. So that’s what we do, so you can focus on the more important stuff, like taking care of your customers or finding new ones.

And where are these customers? They’re hiding.  It’s your job to find them, show them what you have, and prove why it’s better.

Stay tuned if you want to learn more. Over the next few weeks, I’ll share more about the art of finding and keeping customers – for life!

The Power of Communicating with Customers – Often

“Knowledge is listening, wisdom is understanding.”  I saw this quote once on the window of a small business in my neighborhood during one of my early morning runs.  I was struck by the truth in this statement and how it can apply to both the individual and the organization.  I will leave the application to the individual for another venue and for those more qualified, but the application of this to an organization providing services to customers has had me thinking about the value of communicating with customers often.

 

PayCycle provides payroll service to small businesses via its Software as a Service (SaaS) architecture.  Otherwise known as cloud computing, the basic concept is that you don’t purchase PayCycle from a retail store in a box.  It is not a software program that is static and requires additional purchases to get  the newest features or updates.  With PayCycle, you pay a monthly fee to access a software program hosted with industry leading security.  Each month, the software is updated and for no additional fee, a customer gets all the benefits of the new features and updates.  This benefit coupled with the anytime, anywhere access, lower cost, improved security, and better customer service are features that are widely published on the web and touted by leaders in the SaaS category. 

 

However, one feature that I don’t hear discussed often is the dialogue a SaaS company can have with their customers to improve their product, marketing and support.  When I joined PayCycle over three years ago after a long career in consumer packaged products (Coca-Cola, E&J Gallo, Diageo), I was immediately struck by the conversation PayCycle was having with its customers every day.  At Coca-Cola we spent millions of dollars trying to glean consumer insights.  We were constantly looking for new insights into  why consumers chose Coca-Cola, fielding price sensitivity studies, trying to understand how consumers shopped their local grocery store or convenience store, who influenced their decisions, how brand perceptions and consumption habits changed over time and with the age of the consumer.  Hours and millions of dollars were spent with focus groups, in stores using the latest in GPS technology to track grocery carts traffic patterns, on syndicated data from a wide variety of demographic and psychographic sources.  But in the end, all these research methods paled vs. having random but frequent conversations with consumers and customers.   It was not because Coca-Cola did not try to have conversations with consumers and customers often, it was because the nature of their distribution model did not make it easy.  To speak to your consumers, you either paid them to participate in a focus group or tried to interrupt them in the aisles of their local market while they were attempting to complete their shopping and get home.  Both methods were flawed; focus groups required good recruiting and incentives and interrupting customers during shopping trips at the market was just that, an interruption that the consumer did not always appreciate.  At Coca-Cola we did a lot of listening to our customers to gain knowledge.

 

Our SaaS model enables PayCycle to have informed and contextually relevant conversation as opposed to random, uninformed listening sessions.  Before we have a conversation with our customers, we have the ability to review their actions within the product; a benefit  that simply doesn’t exist with retail or non SaaS products.  Therefore, we come to the conversation not as a stranger trying to learn about our customer, but more like a friend who already understands where you have been and can focus on helping you get to where you want to go.  It is not unlike the difference between a conversation with a stranger vs. a conversation with a friend.  Your friend knows your history and uses that to help you with your problems and questions.  A stranger has to gather a lot of information before they can ever provide the same value as a friend.  A stranger may not be able to gather their information effectively through questions.  But a friend who knows your experience is more likely to be able to help.  PayCycle is like that friend you never had in payroll.  We know where you have been and we can help you get to where you want to be.  PayCycle is able to understand a customer and therefore provide wisdom.

 

At PayCycle, customer conversations and stories are at the heart of our culture, product, support and marketing.  The daily conversations PayCycle’s customer support team has with our customers are funneled into our design meetings to ensure we have a good understanding of the customer need.  If a particular customer responds to a customer satisfaction survey indicating they are really dissatisfied, we call them.  The customer appreciates the call because they genuinely have a problem and appreciate the sincere effort of PayCycle to help them.  Imagine the look on a customer’s face when the CEO or CFO of PayCycle calls them to discuss PayCycle’s pricing with the customer.  We may not be able to solve the customer’s desire for a lower price, but the sincerity and honesty of our executive’s attention to this customers pain point creates an impression that cannot be measured.   I am sure that at the conclusion of the call, the customer at least feels like he or she was heard and that the company appreciates their time and attention to their needs.  Moreover, our executive team has gained valuable insight into our customer’s needs that will influence their decisions.  This is more wisdom we can impart on our product, our support and our marketing.

 

As a marketer, these customer conversations are invaluable.  During our busiest time of year,  January, our marketing team spends time on the sales lines answering questions from prospective customers.  The number of insights gleaned from this experience are too numerous to count.  From these conversations we have learned how our customers talk about our product, where they go for information about payroll services, where our website falls short or creates confusion about our product, how our competitors describe our service or are trying to compete with us, what problems they have and are trying to solve, and what benefits they are looking for in their payroll provider.  Since PayCycle does not have a direct sales force, the wisdom gleaned from these customer interactions are invaluable for our marketing team.  More importantly, the conversation is direct with customers and not through the lenses or bias of a sales person.

 

I am in awe of the wisdom at PayCycle at all levels.  I know it is because we have smart team mates, but I think it is more a result of the conversations we have with our customers – often.

Improving small business “fitness” during the recession

Just like cholesterol, not all expenses are bad for you. And not all profits are good for you, either.

Despite the steady flow of news about consumers and small businesses cutting back on their expenses, not all small businesses are thinking smaller.

And it’s not even true that everyone is simply cutting expenses. A lot of people are reallocating their expenses to be more effective. And that means opportunity for you to do the same and make your business healthier.

First, let’s talk about your expenses.

You should be sure you are spending effectively on things that make a difference to your customers. And it may be that you should be spending more, not less, on certain things that make you more effective as a small business.

This may seem surprising, so let me explain.

Years ago, it was widely believed that all cholesterol was bad for you. But now we know that there is good cholesterol and bad cholesterol. Good cholesterol actually improves your health and must be present at a certain level. Cutting good cholesterol is just as bad for you as increasing bad cholesterol.

Like cholesterol, there are good and bad expenses for your small business. And you can improve your small business “fitness” by increasing good expenses and reducing bad expenses.

The first step is to divide your expenses into three groups: good, bad, and essential.

On the good expenses list, include all expenses that increase your productivity, such as online services (generally more efficient), your laptop (makes work portable and efficient), and your internet access (essential for doing your research and communicating). Include those expenses that attract more customers at an acceptable cost, strengthen your ongoing customer relationships, and retain employees in whom you have invested time and training. And add those expenses that are important to the quality of your products and services. For this list, the real questions are 1) Are there opportunities to switch to more efficient, lower cost providers of key products and services, at the same or higher level of quality?; and 2) Are you actually spending enough on these good expenses?

If you blindly cut good expenses in an attempt to cut back everywhere, you may hurt your business. In particular, since so many people are switching, you should be careful not to stop investing in new customer acquisition. Maybe your old techniques are no longer working, but if you become invisible to new customers, you’ll miss out on the switchers who might choose you.

On the bad expenses list, include those expenses that have little or no effect on: company productivity or your ability to operate your business successfully; the quality of your products and services; your ability to attract or retain customers; or employee performance, retention and morale. Expenses that have no effect on these important areas can generally be cut significantly without hurting your business.

On the essential expenses list, include the remaining items that cannot be avoided. Many of these can be reduced, but they cannot be eliminated entirely or your business cannot function. Rent, phone, utilities, transport and general infrastructure costs are usually in this category. There may be some switching opportunities here. There are even some businesses that have discovered that they can reduce the expense of a physical location by bringing their service to their customers while maintaining a web presence for active customer communication. But your physical location may serve as an important reminder that you exist, so be careful about this.

The second important step in reaching small business “fitness” is to look for bad profits that might be hiding in your income stream.  In the same way that there are good expenses and bad expenses, there are also good profits and bad profits. Bad profits come from choices that take advantage of your customers, ultimately drive them away, and thereby undermine your business. These include things like excessive late fees, substituting poor quality materials, overcharging for services and parts, and other gotchas of one kind or another.

While these bad profits may appear to be attractive in the short term, especially when profits are hard to come by, they anger your customers and erode your customer base in the long term.  Ask yourself this question: Do you love your bank, credit card company, cable company and cell phone company?  If not, it’s probably because they have all become addicted to bad profits. Don’t do to your customers the same things these companies do to drive you away, with their endless extra fees for stepping over one line or another. If you don’t like these small-minded practices, chances are your customers won’t like them either.

By going through the process of thoughtfully increasing good expenses, cutting bad expenses, and eliminating bad profits, you can improve your level of small business “fitness”, and you may soon begin to see positive results.

In the long run, small business “fitness” is just like physical fitness. You have to work at it regularly to keep your business in shape. Bad expenses and bad profits will reappear over time, and you have to actively keep them under control to keep your business healthy.

Online payroll is the wave of the future

Using desktop software for payroll is like maintaining your own walkie-talkie network for communication instead of using a cell phone. It can be fun to play with walkie-talkies if you are a hobbyist. And compared to the use of messengers or the Pony Express for communication, walkie-talkies are a big step forward. But for most people, a cell phone is a much better, cheaper, and more reliable choice than a set of walkie-talkies for regular communication with the world.

Using online payroll like using a cell phone; the power is in the network. Compared to online payroll, desktop payroll software is inefficient, expensive, time consuming and risky. You must buy and install updates, and regularly back up your hard drive. If you lose your laptop computer, or if your desktop computer is damaged in a fire or a break-in, you may lose all your payroll records. You are responsible for maintaining and protecting a whole system.  

With online payroll, you have no system to maintain. You can use your account securely from anywhere at any time. If your laptop is stolen, it has zero effect on your ability to do payroll online and access your payroll records.  You just go to another computer and log in.

Online payroll is the wave of the future. In 10 years, desktop payroll software will be the province of hobbyists. Most payroll will be done online.  It’s faster, better, cheaper, less risky and frankly, more fun. But don’t tell the hobbyists!

2009 Economic Stimulus Plan--What it means for small business employers

There is lots of energy in the payroll industry right now about the stimulus plan—who is affected and how and what it means for small business employers.  So, I thought I would clarify what the essential elements are, what PayCycle is doing in response, and where you can get additional information.   If you are confused or need answers to most common questions about how your payroll as a small business employer will be affected by the stimulus plan, then this is for you.

The tax stimulus plan, the American Recovery and Reinvestment Act of 2009, has 2 elements that affect you and your employees and former employees.   There are the Cobra credits for Health Insurance, and the  individual tax credit, known as “Making Work Pay”/  Let me start with this one.  This is the big exciting change for employees: more money in their paychecks. IRS has changed the tax tables to reduce the amount of withholding for most workers and this increases net pay.  Most workers will be getting $400 extra spread out over the rest of the year. There is NO additional cost to employers.

As an employer, what actions need to be taken, if any?

It depends on how you do your payroll.  In any case, new tax tables need to used by April 1, 2009.

·         If you are a PayCycle customer, it’s already done for you.

·         If you are using other payroll programs, check with your provider to find out when they will be updating the tax rate tables.  You may need to download new information and update your software.  If you have rates or withholding amounts in a spreadsheet, you’ll need to update them with the new information.  If you manually calculate checks from the federal tax tables, make sure you are using the new Publication 15-T issued 2/21/09. Again, you must change your tax tables by April 1^st. This is available on the IRS website www.irs.gov.

·         Again, if you are using PayCycle, because the service is online, your tax tables are already updated and employees of small business owners using PayCycle  are already getting their bigger paychecks. There is nothing more you need to do.

If some companies make the change later than others, won’t some workers get smaller credits?

a.       Eventually everyone will get the full credit they are owed, regardless of when it is implemented. Here’s why:

b.      Everyone eligible for the credit will be able to claim the full amount of it when they file their 2009 form 1040 income tax return in early 2010.  Employees who didn’t get all the tax reductions in their paychecks in 2009 will get a larger refund (or have less tax due), but they’ll have to wait for it until next Spring.  That would be too bad. The whole idea of the stimulus act is to get more money into the economy by increasing employee paychecks immediately. 

Do employees need to complete a new W-4?

c.       No.

d.      However, there are 2 groups of employees who might wish to complete a new W-4:  One, any  employee that works multiple jobs is likely to get too much money now and owe it in extra taxes later, because he’ll be getting a $400 credit at each job.  Two, if an employee has income from other sources, and his total exceeds $75,000 for an individual or $150,000 for a married couple, he may not even be eligible for the credit.  He could end the year owing all of it as extra tax on his 2009 1040 income tax return.  You don’t want to deal with an unhappy employee next year who faces a big tax bill.  We suggest you tell all your workers to review their tax situation and use the worksheet on the IRS W-4 form to make sure they have the correct withholding selections.   PayCycle customers can print a blank W-4 for their workers from our site.  Or you can go to the IRS website and search for Form W-4. 

How do the new Cobra credits for health insurance work?  

·         Cobra is continuation coverage for workers who lose their work based health insurance.  The goal of the stimulus plan is to make it easier for laid off workers to purchase health insurance through Cobra.

·         WHO CARES about this: Those who already are involved in Cobra health insurance.  You probably don’t need to follow this if you don’t offer health insurance to your employees, or have fewer than 20 workers, or have no involuntary terminated employees since 9/1/2008.    However, there are lots of edge cases.  If you are unsure, talk to your benefit provider or tax advisor.

·         If you currently offer COBRA health insurance to former employees or if you anticipate future layoffs in this calendar year, those employees may be allowed to purchase their coverage at 35% of the actual cost.  You the employer are required to initially pay the 65% difference, but you can claim a credit on your 941 quarterly forms, and get fully refunded.  To claim the credit, you will report the amount of your COBRA payments on your 941 Quarterly Tax form.  You have a few choices:

o   You can wait and claim your credit at the end of the quarter and ask for a refund, or you can apply it to your next quarter tax liability.

o   Or you can enter your credits as you make the payments, and then you can reduce the payroll tax amounts you need to pay by the same amount. To use this approach, your payments have to b e made in the same quarter that you report them. 

As a PayCycle customer, all the new forms will be waiting for you when it’s time to file. 

 Are there any other Cobra requirements people should know about?

Yes, There are a few additional requirements of employers:

·         You need to tell your former employees that Cobra health insurance is available to them , if they were terminated on or after September 1, 2008, even if they already declined coverage. The new Cobra coverage will be available to them until 9 months after the date they were terminated.

·         Documentation is required .  You must keep the following records:

o   Proof of payment of the health insurance premiums you paid for the qualified employees.

o   Notice of involuntary termination for each qualified employee

o   Proof of eligibility, receipt of the payment from your former employee, and the names of the covered individuals.

Where can people find out more about these topics?

e.      If you’re currently doing your payroll manually or with software that needs updates, you may want to look at the PayCycle solution.  Our phone staff can answer questions about the stimulus plan, but also how PayCycle can save you time and money every payday – call our sales line at (866) 729-2925

f.        If you have Cobra questions, especially around eligibility issues unique to your business – talk to your tax/benefit advisor

g.       The IRS and Dept of Labor websites have lots of information, including employee and employer FAQ’s and links to the tax tables, forms, and Cobra rules.  www.IRS.gov for the IRS and http://www.dol.gov/ebsa/cobra.html for the DOL.

h.      Also, small business employers can send us their comments and suggestions of other topics they would like PayCycle to cover at feedback@paycycle.com.

 

Dressing Up Your Payroll

When little girls and boys are growing up, they normally have aspirations of being firefighters or kings and queens or president of the United States.  They do not usually aspire to be a payroll professional.  (Although my little sister used to insist her future career was definitely as a bagging assistant in the supermarket and she practiced diligently by packing and unpacking all the drawers and shelves in our home).

When I first joined payroll, a colleague told me the pink dress story and it resonated as the sort of way people become attracted to helping others in the payroll profession. 

When this colleague--let's call her Darla--was young, she was a tomboy and nothing was better than the torn pair of jeans she'd been wearing for three days straight, and a mostly clean cotton t-shirt.  Her fashion style didn't change much as an adult, but she spent more time making sure her laundry was actually clean and <gasp> unwrinkled.

Darla had done this for so long that she no longer really paid attention to her wardrobe choices.  Life was simple.  Then, her beloved aunt found the love of her life and was entering into that bond which produces (hopefully) life long happiness as well as really, terrifically bad fashion choices which the bride wittingly inflicts on those she loves the most.  In this case, she loved Darla the most, and as maid of honor, she inflicted upon Darla the most heinous dress Darla had ever seen.  The sleeves were puffy, the skirt was bell-shaped and... it was PINK!

Darla gritted her teeth, wore the dress... and she is now a payroll professional.  Are you missing the connection?  As it turns out, wearing the pink dress wasn't as awful as it sounds.  And she had a great time, connecting with family she hadn't seen in years and watching the very special union of two soul mates.  Getting into payroll is a little like that.  You may not intend to do it, but once you do, it becomes a very satisfying career, to take over a task that seems burdensome to a small business owner, so they can get back to the real reason they're in business.

My reason for getting into payroll is slightly less fashion-oriented.  After a few years in the Internet industry, designing and deploying products to market, I was interested in joining a web-based software-as-a-service company, to use my Internet industry knowledge in a different way.  So, how can I help you ad-dress your business needs? :)