Veterans Day

Compass-i will be closed Monday, November 12th in honor of Veterans Day. Thank you to all who have served and are currently serving our country. We appreciate all you do for our freedoms.

Fun Fact: Veterans Day was once called Armistice Day. Armistice Day was created to honor veterans of World War I.

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Did You Get a Health Care Rebate?

The Affordable Care Act and Medical Loss Ratio (MLR) – The MLR generally requires that 80% or 85% of the premiums collected by insurance companies be spent on health care services and health care quality improvement rather than on overhead, administrative costs, and profit (healthcare.gov).

Starting in 2012, an insurer that does not spend enough on health care and quality-improving activities must give a rebate to the insured individuals or to the policyholder. Insurers must notify you by August 1st if you will be receiving a rebate.

Well, it’s August 1st today… Did any of you readers receive a rebate or receive a notice?

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Happy Independence Day!

We hope you all had an enjoyable and safe 4th of July celebration!!

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Top Ten Payroll Mistakes Companies Make

Found an interesting article the other day on the “Top 10 Payroll Mistakes Companies Make“. The article begins by stating that the IRS is attempting to close the tax gap. In order to discover the most common areas of employer non-compliance, the IRS launched the Employment Tax Research Project (ETRP) in 2010. Such areas include; worker misclassification, fringe benefits, executive compensation, and payroll taxes. Once their research is complete, the IRS will focus their audits on those issues. After reviewing the article, we suggest all employers make any necessary corrections before the IRS pays a visit. These compliance errors could be costly.

By outsourcing the payroll function to Compass-i, you can potentially eliminate all compliance errors. Give us a call to find out how! (480) 893-1394.

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Help us win $250,000

Compass-i has the chance to win a $250,000 grant from Chase. This $250,000 grant would allow us to add additional value to our services, grow, expand service offerings and more! All we need to qualify is 250 votes. In order to help, please visit https://www.missionsmallbusiness.com , login, search for Compass-i and vote!

Thanks in advance for your support! We appreciate it.

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Office Closed on Memorial Day

Compass-i will be closed on Monday, May 28th to honor Memorial Day. We hope you have a fun and safe Memorial Day weekend!

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Classifying Independent Workers – Are You Doing It Correctly?

Recently, a client of ours had been audited to determine if their contract worker had been “misclassified”. This client had a contract in place with this worker that clearly outlined the structure of their working relationship. However, once out of work, the contract worker filed for unemployment and claimed that in actuality he was an employee of our client, not a worker. Immediately, an audit was initiated.

If the same thing happened to you, would the IRS reclassify your “contract workers”? Reclassification of your independent workers can be a very costly, and time consuming mistake. In order to ensure you understand the difference between employees and contract workers the IRS has published the “IRS 20 Factor Test- Independent Contractor or Employee?” After reading the 20 points, you should have a better idea of how to correctly classify your contracted workers and employees. Alternatively, you can file a form SS-8, “Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding” to request an IRS determination. However, when requesting the IRS determination, keep in mind that the IRS will classify workers as employees if their status if not “clear-cut”. Also, employers will lose certain protections against liability for misclassification if they request an IRS determination.

According to the article IRS 20 Factor Test- Independent Contractor or Employee, “The 20 factors used to evaluate right to control and the validity of independent contractor classifications include:

  1. Level of instruction. If the company directs when, where, and how work is done, this control indicates a possible employment relationship.
  2. Amount of training. Requesting workers to undergo company provided training suggests and employment relationship since the company is directing the methods by which work is accomplished.
  3. Degree of business integration. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees.
  4. Extent of personal services. Companies that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. In contrast, independent contractors typically are free to assign work to anyone.
  5. Control of assistants. If a company hires, supervises, and pays a worker’s assistants, this control indicates a possible employment relationship. If the worker retains control over hiring, supervising, and paying helpers, this arrangement suggests an independent contractor relationship.
  6. Continuity of relationship. A continuous relationship between a company and a worker indicates a possible employment relationship. However, an independent contractor arrangement can involve an ongoing relationship for multiple, sequential projects.
  7. Flexibility of schedule. People whose hours or days of work are dictated by a company are apt to qualify as its employees.
  8. Demands for full-time work. Full-time work gives a company control over most of a person’s time, which supports a finding of an employment relationship.
  9. Need for on-site services. Requiring someone to work on company premises- particularly if the work can be performed elsewhere- indicates a possible employment relationship.
  10. Sequence of work. If a company requires work to be performed in a specificorder or sequence, this control suggests an employment relationship.
  11. Requirements for reports. If a worker regularly must provide written or oral reports on the status of a project, this arrangement indicates a possible employment relationship.
  12. Method of payment. Hourly, weekly, or monthly pay schedules are characteristic of employment relationships, unless the payments simply are a convenient way of distributing a lump-sum fee. Payment on commission or project completion is more characteristic or independent contractor relationships.
  13. Payment of business or travel expenses. Independent contractors typically bear the cost of travel or business expenses, and most contractors set their fees high enough to cover these costs. Direct reimbursement of travel and other business costs by a company suggests and employment relationship.
  14. Provision of tools and materials. Workers who perform most of their work using company-provided equipment, tools and materials are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor finding.
  15. Investment in facilities. Independent contractors typically invest in and maintain their own work facilities. In contrast, most employees rely on their employer to provide work facilities.
  16. Realization of profit or loss. Workers who receive predetermined earnings and have little change to realize significant profit or loss through their work general are employees.
  17. Work for multiple companies. People who simultaneously provide services for several unrelated companies are likely to qualify as independent contractors.
  18. Availability to public. If a worker regularly makes services available to the general public, this supports an independent contractor determination.
  19. Control over discharge. A company’s unilateral right to discharge a worker suggests an employment relationship. In contrast, a company’s ability to terminate independent contractor relationships generally depends on contract terms.
  20. Right of termination. Most employees unilaterally can terminate their work for a company without liability. Independent contractors cannot terminate services without liability. Independent contractors cannot terminate services without liability, except as allowed under their contracts.”

For the complete IRS 20 Factor Test- Independent Contractor or Employee article, or to see an example Independent Contractor Agreement email info@compass-i.com.

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Just Another Benefit of Outsourcing Payroll…

As an employer, you are required to do many things by law. One of which includes maintaining accurate records for current and past employees for a specified period of time. These requirements are enforced by both the IRS and U.S. Department of Labor. Some local and state agencies may also require additional record keeping.

Generally speaking, records should include the following; names, address, occupation, and Social Security number. Compensation details like; dates paid, tips, non-cash payments, payroll taxes, pay period, and fringe benefits, should also be included in the records. Some other possible data that you may be required to keep on file include; child support, creditor garnishment, unemployment insurance, wages and hours and unclaimed or abandoned wages.

Below you will find a table which outlines some record-retention guidelines.

Records Time Required to Keep Records
Employee Earnings In order to meet federal and state guidelines, retain for at least 4 years.
Employee Time Cards If your company is engaged in interstate commerce, you are subject to the Fair Labor Standards Act. Therefore, you must keep employee’s time cards for at least three years. In case inquiries arise, it wouldn’t hurt all companies to keep them on hand for at least a few years, regardless.
Personnel Records After the employee has been terminated, keep on file for three years
Employment Tax Records Maintain for four years from the date the tax was paid, or due- whichever is longer

In order to ensure you don’t accumulate any back taxes, interest, or penalties in result of an audit, you want to maintain accurate records. This problem is widely solved by outsourcing the payroll function. Compass-i can handle payment preparation, as well as state and federal reporting. We will store your company records and provide you with reports at your convenience. Record keeping is “just another benefit of outsourcing payroll”.

Source:  “To Keep  or Not to Keep”,  Digit Payroll Blog
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Still waiting for your tax refund?

Have you filed your taxes, but you’re still waiting on your refund? Follow the link below to check the status of your refund.

http://www.irs.gov/individuals/article/0,,id=96596,00.html?portlet=8

If you have a smartphone, you can use the IRS2go App to check the status of your refund. In addition, the IRS2go App allows you to receive tax updates, follow IRS on Twitter or Youtube, get your tax record or easily access their contact information. Oh, and did I mention it’s free? Check it out!

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10 Year Anniversary

April 19, 2012 marked Compass-i’s 10th year in business! To celebrate our anniversary, our Founder Chip Shank visited our very first client, Lech Lysak. Lech owns and operates the Subway on Central Ave. and Thomas Road (2817 N. Central Ave. Phoenix, AZ 85004) . So, here is a big “Thank you!” to Lech for helping Compass-i get it’s start in 2002 and for being a part of the Compass-i family for 10 years!! We are excited to see what the next 10 years brings.

Check out some pictures of Chip’s visit to Subway below:

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