When it comes to payroll, rules and regulations can keep changing according to the times. There have been several changes in the past few years due to the COVID-19 scenario and various issues related to that. Payroll compliance means adhering to federal, state, and local regulations that would govern the payment of employees. Employers who violate any of these laws can face penalties. These can drastically decrease your bottom line and even put you out of business! By learning how to navigate your payroll compliance issues, you’ll avoid tax troubles, keep office morale high, and fulfil your obligations to your employees which include ensuring they receive their payments on time.
The payroll compliances require you to pay certain amounts with or without deducting them from salaries. They require you to file certain periodically. You’ll also have to maintain and display certain registers and forms to ensure you’re compliant on multiple levels. If you don’t follow these, you’ll be liable for legal hassles that you’d much rather avoid. Inconsistencies in following payroll compliances are usually due to a lack of proper knowledge. So, instead of facing penalties due to ignorance, ensure you’re up to date in all the areas that you need to be.
Learn about different payroll compliances that affect both employees and independent contractors, check what compliances you need to follow, and take the necessary action.
For independent contractors, there is a liability to pay income tax if their annual total income exceeds INR 2.5 lakh. They can claim deductions for any of the expenses incurred towards work. That includes business entities that run offices. There’s also presumptive taxation, which allows freelancers to calculate taxes on an estimated income or profit. Companies will also have to comply with TDS. Freelancers must also file for ITR and pay taxes as per provisions of the Income Tax Act.
Freelancers must also pay GST if their income is over INR 20 lakhs in most states and INR 10 lakh in the case of special category states. You can charge 18% from companies and claim the eligible Input Tax Credit on those invoices.
The main point of confusion could lie in the complexities of different wages across states. Different states have their limits on minimum hours, wages, and other factors. That means there’s a whole lot of paperwork, complex issues, and more that need to be dealt with. That’s why it’s so important for you to get an expert to handle all these issues. Doing so yourself could mean wasting valuable hours on unnecessary work. It could also mean horrendous errors that could disappoint your employees and set you back financially and in terms of morale.
If you need someone to help you with your payroll compliance, reach out to us. We’ll ensure we sail through these issues smoothly together to make sure your employees get what they deserve.