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May 2003 Compliance Letter

May is a good time to look at your company to make sure that you are in compliance with important federal, state, and other commercial requirements.

Private list available. There may be items in your business that are not covered in my Compliance Letter. If you want to add some of your own items to my list, I can post it permanently in a private lockbox on our web page. Each may I will remind you in this letter to check you private list.

Poster compliance. The easiest way to make sure you are in compliance for all federal and state posters is to buy commercially prepared posters from Poster Compliance Center. They cover both federal and individual states. There are two ways you can order the posters: 1. Phone (800) 322-3636 2. www.postercompliance.com

Check your licenses Have a look at the expiration dates on your various licenses and permits. Make sure that the licenses are valid through the rest of 2003. May is the month in which most licenses and permits should be valid for the rest of the year.

New W-4’s You should have all new W-4’s for all employees. It is not a good idea to “just go by last year’s W-4.” Unless you have a newly signed W-4, your employee could say that he or she turned in a new W-4 and you did not change the withholdings. If you need W-4’s, please fax us a note telling us how many.

Trial period employees: a really bad idea “I don’t want to fill out all the forms for a new employee until I know that the employee is not going to quit after a week or two.” There are two ways to do this, both are wrong, and you should do neither.

Problem 1:
You report the wages of the trial period employee without having the Social Security Number. Since you reported the wages, we include them in the Quarterly Reports. We ask you for the missing Social Security Number. You did not get it from the employee and now the employee is gone. This forces you to file a W-2 at the end of the year without the Social Security Number. The penalty is $50.

Problem 2:
You do not withhold taxes for the first week or two until you know that the employee will not quit after only a week or two. From day one that person is an employee and you are not supposed to let him start working until you have filled out or received all required forms. This puts you in violation of state labor laws.

Working one employee in two location This problem continues to come up. If you own two entirely separate corporations and one employee works at more than one of your businesses, you must count all the hours together to determine if the employee has overtime hours. For example, if the employee worked 30 hours at one location and 15 at the other, the last five hours of the week are overtime hours.

Paper checks to pay payroll taxes are a bad idea If you are not yet enrolled in the EFTPS (Electronic Funds Transfer Payroll System), you should do so. We are sending our remaining clients who are not in this program new enrollment forms. There are several reasons you should enroll into the EFTPS program:

1. You can make a payment 24 hours a day from any telephone.
   1. You do not have to go to your bank.
   2. It is not a problem if you run out of coupons or one is lost or delayed in the mail.
2. We have noticed a sharp increase in the bank errors in sending the correct amount to the IRS and properly documenting it.
3. IRS must have noticed the increase too because they want to get rid of paper check payments and have plans to do so.
4. If the IRS claims you did not make a payment, you are not entirely at the mercy of the bank’s cooperation to prove that you did.
   INSURANCE AUDIT This is a good time to review your insurance policies. I urge you to get your policies out and review them to make sure that all the situations that you think are covered are actually covered. Your insurance agent should be willing to review your policies with you. One of my favorite techniques is to ask what-if questions. “What if a customer drives through the front door, injures an employee, injures a customer, and destroys $5,000 worth of merchandise? Am I covered?”
   CONDUCT A SAFETY SURVEY Now is a good time to walk through you business to look for safety and hazard issues. Make immediate plans to replace defective equipment. Are all your aisles clear of clutter? Some insurance companies have written do-it-yourself guides.
   An excellent source of checklists, guidelines, and suggestions is the Occupational Safety & Health Administration. I suggest this document as a starting-point:
   on-line
   For other OSHA publications, Click here.
   All businesses should be interested in a safety program. Owners of two or more locations and absentee owners should be very interested because you are no longer there all the time.
   May is “Compliance Month.” There is no federal declaration of May as “Compliance Month.” I declared May as “Compliance Month” for my clients. Every month should be “Compliance Month,” but I picked May because in my judgment, it is the best month to have a comprehensive view of the topics discussed above.
   Sincerely,
   Dutch Hawkins
   Copyright © - 2003 Dutch Hawkins Mandeville, LA USA - All Rights Reserved