Multi State compliance is a common issue with
payroll service providers. Processing the benefits and payroll services at a
same time becomes critical because each employee has its own record. Compliance
is the rules, regulations or standards a company need to follow defined by
Ministry of Labour and Employment and state. Companies face multi-state
compliance issues when their employees cross state lines for their jobs or have
multi state operations.
There is also an issue of minimum wage
difference. Wage varies widely from one state to another. Ministry laws do not
preempt state laws so that in many cases employees need to pay tax in both
states on the same income. During payroll processing, they cannot apply same
strategy for all employees.
Overtime is paid 1.5 times more than the
standard pay for hours worked beyond 40 hours in a single week. Some states do
overtime calculations on daily basis setting 8 hour as benchmark. Overtime
compensations are pre-empted by laws of employees who have salaries greater than
certain threshold. All the deductions, state income tax withholding or
application of income tax to residents or non residents are also vary by state
Special payroll tax issues may apply to non resident
employees who work in one state and live in another. Some states may have
reciprocal agreements with certain states, simplifying withholding tax
guidelines as income will be taxed in only one state.
State laws vary when it comes to defining
liability for withholding taxes. These are some conditions need to be met for a
company becomes liable for state withholding:
* The company is doing business in the state.
* The employer pays wages to at least one person
in this location for services rendered.
* The company derives some form of income
from this state.
* The business maintains a physical address
in the state.
Payroll Outsourcing
Outsourcing payroll services to a third party
that specializes in this function simplifies the procedure for employers while
ensuring compliance with state and ministry laws.
Preferably, the payroll management companies
must have local and global expertise aside from providing a comprehensive suite
of services to cover payroll services in India, payroll tax payments and
overall payroll processing. Compliance with ministry, state and local tax
jurisdictions should be integrated into the service package. Delhi based Brooks
Consultancy Private Limited process according to your needs and streamlines
administration of these services to ensure compliance in every state where your
business operates.
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