Chances are that your startup isn’t fortunate enough to have it’s own accounting, legal, or HR departments. That means when it comes to payments it’s completely on you. That’s why it’s important that you stay up-to-date with the latest news and trends involving payments. The last thing you need is to be on bad terms with the IRS.
Before we take a look at some of the payment changes for 2016, here are a handful of general payment tips that should keep you out of trouble – even when new laws and regulations have been passed.
Be Aware of Specific Banking and Payment Requirements For Various Countries
Unless you strictly conduct business in one country this does not apply to you, but if you have employees or vendors scattered across the world, then you need to be aware of the different banking and tax requirements for each country. For example, in the UK, you’ll need to include the SORT code. The Tax Justice Network has a report to get you started, but it should be in your best interest to talk to someone familiar with these specific requirements to get the scope.
Even if you use bitcoin or blockchain for payment transactions, some countries have regulations in place that could be an issue.
Comply With Tax and Payment Regulations
If you make vendor or supplier payments, don’t forget to collect their tax information in order to complete your 1099.
As for your employees, make sure that you know the difference between full-time, part-time, freelancers, contractors, and interns. Quickbooks has an excellent description of the different workers employers have. Here’s a brief rundown:
- Full-time employees work more than 36 hours per week and fill-out a W-4. Don’t forget to give them an annual W-2 as well.
- Part-time employees work less than 36 per week.
- Temporary employees have only been brought in for a short amount of time.
- Freelancers and contractors are outsourced. Review this guide for a better understanding of this classification.
- Interns are typically college students and can be either paid or unpaid. Look over the FLSA regulations regarding internships.
Keep Your Employees and Suppliers Happy
If you’re running into any budget issues at your, find ways to still pay your employees and suppliers. Whether it’s sacrificing your pay or generating revenue, it’s imperative that you pay these entities first.
To make this process easier, especially when handling mass payouts, use a platform designed specifically for mass payouts. Platforms like Due gives you the ability to automate payments.
Use the Right Software
We’ve come a long way since the days of payments gateways like Authorize.net and PayPal. Today we can use a number of mobile apps to send and receive payments. These include options like the aforementioned Due, Stripe, Dwolla, and Square.
Also pay attention to blockchain. It’s a buzzworthy technology that is going to allow startups to pay employees or vendors anywhere in the world immediately without those expensive transaction fees.
Regulatory Issues and HR Laws to Keep Tabs On
Now that we’ve got those basic tips out there of the way, here are the regulatory issues and HR laws that you should be aware of for the upcoming year and beyond.
According to Business News Daily, these are the ten regulations that are going to impact startup payments this year;
- Overtime – The U.S. Department of Labor is expected to raise the “salary threshold from $455 a week to about $970 a week.”
- Employee Pay – Plan for an increase in minimum wage, as well as new laws on equal pay and paid sick time.
- Worker Classification – “New guidelines from the Department of Labor expand the definition of what an employee is in order to ensure employers aren’t designating some of their workers as independent contractors to save overtime and benefit costs.”
- Privacy and Security – These have been two areas of concern for businesses and individuals. Be prepared to increase data security measures.
- Credit Card Fraud – In October 2015, the implementation of EMV terminals. If you’re a merchant, you’ll need to have this in place.
- W-2 Filings – These will be getting moved up to January 31.
- Retirement Plans – The Department of Labor will release new retirement regulations that will mandate that employees have access to retirement plans.
- Worker’s Compensation – There could be a debate between “weakening requirements related to the insurance costs and processes of workers’ compensations” and the federal government having to step-in to protect worker’s compensation.
- Online Sales Tax – There are discussions that states will start collecting sales tax from online businesses.
Five Areas of Focus
As for the potential HR laws and trends, these are the five areas for startups to focus on according to Matt Straz on Mashable;
- Affordable Care Act Compliance – This will be the first year of ACA reporting, so be prepared for more paperwork and providing employees health insurance.
- Overtime Pay – As mentioned earlier, this is expected to change in 2016. Straz says, “Startups and smaller companies that require employees to wear multiple hats and work long hours need to review how they classify their workers.” This includes if they are hourly, salaried, or independent contractors.
- Paid Leave – There are more than a dozen states reviewing leave from work. These discussions would discuss how much time employees receive and what qualifies as a leave from work.
- Equal Pay – This will vary from state-to-state, but President Obama’s proposed Equal EO-1 rules would require companies with 100 plus employees to “to note pay data in mandatory reports, making potential discrimination more visible.”
- Commuter Benefits – There are new HR laws that would mandate that companies of all sizes provide commuter benefits to employees.
While this can be used as reference, it’s still in your best interest to visit an accountant so that they can offer you the best advice for your specific startup.