Dear Valued Merchant,

As a business owner, one of your biggest expenses — and perhaps worries — is payroll. There are some things you can do now to save time, ensure all government requirements are met and guarantee your employees are paid on time. Knowing how to avoid common payroll mistakes — like double-checking data entries — can help you streamline your payroll process.

This issue of Payments Insider provides helpful tips on how to avoid payroll mistakes, as well as how to start a gift card program. Read on, and you’ll also learn why it’s important to have a manual imprinter at your business and when you should use it.

As always, if you have any questions about payments — including payroll, gift cards or manual imprinters — please call your relationship manager, account manager or your Heartland servicing team at 888.963.3600. Feel free to also e-mail us at Heartland@e-hps.com.

Best regards,

Heartland Payment Systems

Payroll is likely one of the biggest expenses your business incurs — and one that can cause the most headaches. Whether you have one employee or hundreds, you have a legal obligation to pay your employees accurately and on time. While that’s intuitive, there are many other not-so-obvious legal payroll requirements that may not be. These 10 tips will help you avoid some common payroll mistakes.

1. Note important payroll deadlines. Report and deposit your payroll taxes to federal, state and local agencies on time. Late deposits can result in penalties and interest charges.
2. Classify employees appropriately. Classify your employees into the appropriate categories such as temporary employees, consultants and other independent contractors to ensure payroll reporting for tax purposes is accurate.
3. Report and calculate overtime pay. Here’s where the proper classification of “exempt” and “non-exempt” employees is really important because it can be costly. According to the Department of Labor, litigation claiming non-exempt employees who were treated as "exempt" employees and, therefore, not entitled to overtime — but should have been — continues to increase.
4. Distribute 1099 forms on time. Give your independent contractors who earn more than $600/year a 1099 form by January 31 of the following year. This will help you meet your filing deadline and avoid late penalties — $15 for every 1099 form that is 30 days late, $30 for every form filed by August 1 and $50 for all 1099 forms filed after August 1.
5. Double check data entries. Data entry mistakes — including incorrect hourly wages and the wrong number of employee hours per pay period — cost companies millions of dollars annually. In addition to potentially increasing expenses if workers are paid for hours they didn’t work or at a higher hourly rate than they should be, this can result in government penalties. Be sure to double check your entries for accuracy.
6. Send court-ordered payments to the proper recipient. If you don’t follow court-ordered garnishments such as levies or child support, you may be prosecuted and could be fined up to $1000 — or even imprisoned.
7. Don’t rely solely on your software program. Be sure to enter all of the necessary payroll data. Your payroll program is only as good as your input. It can't perform accurate calculations without all of the necessary information.
8. Save payroll records. Keep time sheets, cancelled checks and W-4 forms — in a safe and accessible location — for four to six years. Failure to do so could lead to criminal penalties and/or civil actions. The Wage and Hour Division of the Department of Labor must be able to inspect your records within 72 hours of notifying you.
9. Maintain payroll confidentiality. Keep your payroll information within the payroll department and the senior management team. Failure to do so could lead to criminal penalties and/or civil actions by disgruntled employees.
10. Train more than one employee in payroll functions. Have more than one employee trained to do payroll in case the employee who is primarily responsible is out of the office. The IRS, the state and employees need to receive payments on time. Also, have a manual backup system in case a computer fails.

Following these tips can help you foster and maintain employee satisfaction — as well as prevent headaches with federal, state and local agencies. You can also avoid payroll mistakes by outsourcing. If you’re considering outsourcing, turn to Heartland. We’ll take away your payroll processing worries — so you can focus on operating, improving and growing your business.

During the holiday season, a great way to increase sales and promote your business is to offer gift cards. Customers are often looking for a quick, thoughtful present, and a gift card to your business — for a meal or merchandise — can be the perfect solution. Here’s how you can start a gift card program and increase sales during the holidays and any time of the year.

1. Leave logistics to the experts. Work with a company that’s familiar with retail and restaurant operations and technology — so you don’t have to worry about the details. A good place to start is with your payments processor. At Heartland, we’ve helped thousands of merchants create successful gift card programs. And, since most gift cards are supported on several different terminal lines such as Hypercom and VeriFone, it may not be necessary to buy new equipment.
2. Invest in cards that work with your budget. Next, figure out how much you can budget for the program. The biggest investment will be the cards themselves, and even those costs can be minimized. If you’re budget-conscious, use a generic, single-color card featuring the name of your business. If you have a bigger budget, you can customize the cards with your business’s name, logo and company colors. Custom cards pack a stronger marketing punch by reinforcing brand awareness, but both options publicize your brand and increase your sales.
3. Promote gift card sales. Once you have a gift card program in place, let your customers know about it. Place signage around your business, and train your staff to suggest a gift card as a part of their final “thank you.” (See the sidebar “Top Tips for Boosting Gift Card Sales — and Your Profits” for more gift card marketing ideas.)

Another reason to consider starting a gift card program is that, while the average restaurant gift card is $25, most recipients spend about 35% more than that. Adding a program to your business is an opportunity to increase your customer base — and your profits — while providing your customers with an easy, thoughtful gift for any occasion.

Manual card imprinters may seem like “technology of the past” — especially with today’s point-of-sale (POS) systems and terminals. But don’t discount your imprinter. If you’re a retailer who performs face-to-face transactions, a manual card imprint can help you avoid fraudulent-transaction chargebacks — credit card transactions that eventually get “charged back” to you by customers who claim they did not authorize them.

To respond to a fraudulent-transaction chargeback, you need to prove to the card-issuing bank that the customer’s card was present at your business during the transaction. The fact that your POS system or electronic terminal produced a printed receipt and you obtained the customer’s signature on the receipt is NOT proof the card was physically present, according to the Visa® and MasterCard® rules. Only an electronic swipe of the card’s magnetic stripe or a physical imprint of the card are accepted as proof of card presence in a fraudulent-transaction dispute.

Be sure to keep your manual imprinter near your POS or terminal so it’s readily accessible in case your electronic card reader malfunctions. If you need to key-in your customer’s card information because the card’s magnetic stripe can’t be read, always produce a manual imprint of the card in addition to the electronic receipt. A manual imprinter is also essential if your POS device doesn’t have an electronic receipt printer or if you’re working off-site without an electronic POS device.

Remember, in the eyes of Visa and MasterCard, if the card isn’t electronically read or manually imprinted at the point of sale, the cardholder’s claim that he/she wasn’t present to make the purchase will stand — even if an electronic receipt is produced and a signature was obtained. Always swipe the card through your electronic POS device so its magnetic stripe is read, and whenever that’s not possible, have your manual imprinter handy along with an adequate supply of sales drafts — the two-page forms used to record manual transactions. Proving the card was present will level the playing field in any fraudulent-transaction dispute.

Payments Insider is published by Heartland Payment Systems.

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Information published in Payments Insider is not to be construed as legal advice. Please contact your attorney for more information.

© 2008 Heartland Payment Systems, Inc., 90 Nassau Street, Princeton, NJ 08542.