February 12, 2019
Small businesses are thought to employ nearly half of all workers in the U.S., and if you own a small company with employees, you’ll need to make yourself aware of how payroll may differ in 2019. Below is a short guide to some of those changes, but for more detailed advice and guidance, please check with your local and professional payroll provider:
- Revised Minimum Wage Rules:
Effective as of the 1st January 2019, 20 states in total have increased their minimum wage rates. The federal minimum wage remains unchanged at $7.25 per hour, but state and local rates apply if they are higher than the federal rate.
- New employment posters:
Now, employers are required by law to display posters reporting applicable minimum wage rates and certain other information. You can check with your state labor department for free posters.
- Limits for Social Security:
Part of FICA, the Social Security Tax can be applied to taxable compensation up to a set limit. 6.2% of Social Security tax up to the wage base limit is paid by the employer and the employee, and for 2019, the limit is $132,000 instead of $128,400 the previous year.
- Revised limits for retirement plans with salary reduction contributions:
If, as an employer, you offer your workers a qualified retirement plan with salary reduction contributions (elective deferrals by employees) such as a 401(k) or SIMPLE IRA, you’ll need to note that the limits have increased for this year.
- Increased limits to FSA’s:
Medical Flexible Spending Accounts, or FSA’s, now have an increased amount that employees can commit to them, from $2,650 to $2,700, but the limit for dependant care FSA’s remains at a fixed amount that is not adjusted each year to reflect inflation.
- Changes to medical coverage options:
As it currently stands, there is still an employer mandate for companies with 50 or more full-time employees from the Affordable Care Act. Those employing smaller numbers can choose to give coverage but should note the changes for 2019:
- Limits on health savings have increased
- Qualified Small Employer Health Reimbursement Arrangements have increased contribution limits and with Association Health Plans, there may be offers of increased coverage.
- Other employee benefits:
You can receive $270 tax free per month in 2019 if you offer free parking, transit passes or van pooling to your employees. However, you cannot deduct this benefit.
- Check for changes to state unemployment taxes
It would be wise to check with your state as to any changes that may have been made to unemployment tax rates, which are often a result of changes to laws or your claims experience.
- Workers Compensation Costs may vary:
It could be that your premium compensation costs are higher than last year, lower or have remained the same, so it’s wise to check with your state to try and determine what you must pay.
- New Employment Laws:
There could be any number of changes to employment laws that have been made and which are now active in 2019, so again, always check with your state or municipality to avoid.
Understanding and complying with changes to payroll law can seem a daunting task, so always ensure that you work closely with your CPA or other trusted payroll professional to avoid breaking any of those laws and being faced with stiff penalties.