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FLSA Overtime Rules for Small Businesses
Payroll compliance is not optional, and the penalties for getting it wrong are real. IRS failure-to-deposit penalties run 2-15% of the amount due depending on how many days late. State penalties stack on top. Back-pay liability for misclassified employees can run years deep.
This guide covers the compliance topic addressed in FLSA Overtime Rules for Small Businesses and what employers need to know.
Why This Compliance Area Matters
Payroll compliance failures tend to compound. A wrong configuration in month one is wrong every month until corrected. When the correction comes, it often requires amended returns, corrected W-2s, and penalty abatement requests that take months to resolve.
Core Requirements
- Federal income tax withholding. Calculated from the employee's W-4. Must be withheld correctly each pay period and deposited on the IRS schedule.
- FICA (Social Security and Medicare). Employee and employer shares must both be remitted. Social Security is 6.2% employee + 6.2% employer; Medicare is 1.45% + 1.45%, plus 0.9% additional Medicare on wages over $200,000.
- State income tax withholding. Required in all states with an income tax. Multi-state employees require withholding in the correct states.
- Federal and state unemployment (FUTA and SUTA). Employer-only taxes. Rates vary by state and by experience rating.
- Quarterly and annual filing deadlines. Form 941 quarterly, Form 940 annual. State equivalents vary.
How to Stay Compliant Without Hiring a Specialist
The most cost-effective compliance path for businesses under 100 employees is managed payroll from a provider that monitors and applies compliance changes automatically. Tax table updates, minimum wage changes, state rule modifications, and new filing requirements are applied before they take effect -- without your management team needing to track them.
BEG managed payroll handles this continuously for clients at $25-$45 PEPM, all-inclusive.
Managed Payroll, Handled.
BEG manages payroll at $25-$45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
Frequently Asked Questions
What does managed payroll cost?
BEG managed payroll runs at $25-$45 per employee per month, all-inclusive. For a 25-employee company, that is $625-$1,125 per month.
How quickly can you set up managed payroll?
Setup takes 3-5 business days from contract signing to first live payroll run. We handle the configuration, data migration, and tax account setup.
What is included at $25-$45 PEPM?
Payroll processing, federal and state tax deposits and filings, new hire reporting, direct deposit, year-end W-2s and 1099s, compliance monitoring, and off-cycle runs. All included.
Can you handle payroll in multiple states?
Yes. Multi-state payroll is a standard service. We register in each state where you have employees and handle state withholding and unemployment filing in all applicable states.
What happens if there is a payroll error?
If an error occurs due to our processing, we correct it at our cost. This includes amended returns, corrected W-2s, and penalty abatement where applicable.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries. BEG manages payroll at $25-$45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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