Fiscal Cliff Creates Payroll Processing Uncertainties

Payroll Processing Uncertainties at Fiscal CliffPayroll processing will become less of an exact science this week because of uncertainties over what payroll and income tax rates will be applicable in 2013. The ongoing negotiations in Washington meant to avert a tumble over the so-called “fiscal cliff” have put payroll managers nationwide in this difficult situation.

At many companies, employee pay must be processed now for paychecks to be issued on a timely basis in early January. Not knowing what eleventh-hour deal might be reached has made it impossible to know for certain how much employers should deduct from 2013 checks. Now, despite lawmakers and the President cutting their Christmas vacations short in order to return to the capital for further bargaining sessions, it seems that a deal might not be reached in time at all.

However, even the assumption that it’s too late to prevent a plunge over the fiscal cliff doesn’t provide certainty on every tax issue. If our elected officials do head out for New Year’s Eve parties on the evening of December 31 without having reached new agreements on taxes and spending, taxes will go up for just about everyone. In some cases, though, there will still be a question of just how much they’re going up.

Every worker will be paying more toward Social Security, because the payroll tax rate will revert to 6.2 percent after having been temporarily lowered once again to 4.2 percent in 2012. Also, that rate will apply to the first $113,700 in wages, an increase from the current figure of $110,100. If Congress doesn’t act, those numbers are certain.

Income tax withholding will be trickier. One component of the fiscal cliff is the expiration of Bush-era tax cuts, which would mean elimination of the current bottom bracket, 10 percent. The new bottom income tax bracket will change back to 15 percent. However, knowing that does not tell employers what the income ranges will be for the various brackets. That direction must come from the IRS. Employers will most likely stick to the old tax withholding tables for the time being, with any necessary adjustments being made later.

There has been a lot of speculation that Congress and the President will eventually work out a deal some time later in January. That means that a new income tax structure could be put into place and the Social Security tax could be tweaked again. Worker used to getting a more-or-less identical paycheck every pay period might see the amount of their checks vary in January until the tax picture is cleared up as political events unfold.

Padgett Payroll Services can take care of the complexities of payroll administration for your small business. Hiring our payroll experts means that you don’t have to be one! Call Padgett Payroll today at 877-244-5842 to find out more about how we can help simplify your life as a small business owner.

Businesses Should Plan for Continual Changes in the Workforce

Employee Payroll ChangesIn some industries, getting and keeping enough workers with the right skill set on employee payrolls is already a challenge, and that challenge is only going to intensify over the next few decades. In fields like information technology and highly skilled, tech-based manufacturing, the pace of change is predicted to become so rapid that whole job categories will arise and then become obsolete within a span of just a few years. The United States, Canada and the industrialized world in general have already become familiar with the reality of job obsolescence, of course. The concept of working one’s entire life at the same factory position and collecting a paycheck from just one employer – a path followed by millions of Americans in the past – has not been a viable career plan for decades now.

In the 1980s, as the pace of technological change continued to accelerate, job and career changing became more common and more frequent. In this decade, at least in some fields, 10 years is considered a long time for a given position to last. In the not-too-distant future, tens of millions of employees will be in jobs that they expect to last for only 5 years – or even less.

The result of this is that, not too far down the road, millions of workers will be in the process of changing jobs or careers, or planning for such a change, at any given time. The implications of this to the economy and society as a whole are not entirely clear. For instance, will home ownership no longer be an American ideal, as more and more people become less and less inclined to invest in a home, if they can reasonably expect to relocate every few years in order to earn a living? Or will some of the same technologies that create this employment environment also make working remotely from home so widespread that a change of jobs will no longer imply a change of geographic location? Either way, there are likely to be unforeseen economic effects.

Businesses can begin making plans to deal with these workforce issues, however. Some businesses will have to find new ways to ensure that they have the employees that they need in the future. Technologically oriented companies who want to stay ahead of the curve that they themselves are creating will perhaps need to change their recruiting and hiring philosophies. They will need to focus less on current skills and more on a prospective employee’s adaptability, ability to learn and comfort level with frequent change. Retaining a labor force of intelligent, adaptable employees who can be retrained as needed may be more beneficial for both a business and its employees than constantly churning the staff to bring in the latest knowledge and skills from outside.

One constant that businesses can count on is Padgett Payroll Services. Over many years and through many changes in the business landscape, Padgett Payroll has always been there with solutions for the payroll outsourcing and tax management needs of small businesses in North America. Visit the Padgett Payroll website to learn about the full range of services we offer to small business at affordable prices. Call Padgett Payroll today at 877-244-5842 to get our expert payroll management services working for you.