Employing staff bookkeepers and accountants can certainly seem sufficient for your business needs. They keep the accounts and reconcile them and give you your profit and loss, cash flow, and receivables reports. They can put together quarterly and annual financial statements, too. But there are elements of accounting that reach into areas of analysis and regulatory compliance that require the services of a Certified Public Accountant (CPA). Here is how you can use a CPA to avoid some serious mistakes in your business operations.
Exempt and Non-Exempt Employee Determinations
Even though it sounds simple, employers across the country have difficulty determining the difference between, and correctly managing, exempt and non-exempt employees. Exempt employees are professional, administrative, executive or scientific positions that are paid a salary. Their salary must exceed a minimum amount, which can vary from locale to locale, and they must receive the salary for any week that they work - no matter how much or how little. On the other hand, the company is not required to pay them overtime for work over 40 hours in a week. Alternately, non-exempt employees have no management/decision-making authority, are paid hourly, are required to be paid at least minimum wage under the Fair Labor Standards Act (FLSA), and must be paid for all time that they work over 40 hours.
As easy as this sounds, there are many companies that are fined every year - paying penalties and back wages - because they mischaracterized employees. A CPA can make sure you understand the regulations, correctly identify the category applicable to each employee, and make sure they are paid - and managed - accordingly.
Comp and “Volunteer”Time
Wage and Hour regulations stipulate that non-exempt employees, those with no management/decision making role who are paid hourly, get a thirty minute lunch break and a ten minute break every 4 hours that they work. If they work through those breaks, your business must pay them for the time. An employee cannot waive breaks or volunteer their time to do extra work. So any additional hours must be tracked and paid in the same pay period the breaks were ignored.
Employee Separation and Termination
Regulations on firing personnel can vary from state to state and “right-to-work” states allow considerable autonomy to employers in terminating employees. It is important to understand the laws that apply in the state, or states, where your company has employees. For instance, employers will often withhold a final paycheck because the employee hasn’t returned company equipment. This can cause huge difficulties as some states stipulate you have to hand a fired employee their check immediately at the time they are terminated. Not doing so can accrue significant penalties for your company.
Another issue that crops up is firing an employee for taking a qualifying leave of absence, such as for required jury duty, military service, family leave and similar causes. Again, penalties can be huge for making this mistake and a CPA can help you navigate these issues.
There are many more mistakes that small businesses make every day that could be headed off by consulting a CPA. Hiring a full-time CPA for your small business can be expensive and, possibly, unnecessary. Thankfully you have a lot of alternatives, such as hiring a contract CPA firm such as CustomOne CFO & Controllers, contracting for part of a CPA’s time, or using a virtual CPA to consult with online. Whichever way you go, getting the input of a CPA in Des Moines on this type of issues, and avoiding mistakes, is something you can’t afford to ignore.