How to Avoid Additional Payroll Fees

April 17, 2019 Erika Yohn

This post is intended for employers paying employees and contractors in the United States. To go to the Canadian version, click here.

Payroll is vital for small businesses. Regardless of whether you use software or pen and paper, you have to pay your employees and manage your payroll taxes. Wagepoint is designed to make the process simple and quick, just how you like it.

We keep payroll straightforward. After all, there are other things occupying your time. We're especially down-to-business when it comes to our pricing — which is basically a base rate plus a per employee fee. If there's a reason we've assessed an extra fee, we want you to understand the reasons why. 

How Wagepoint structures pricing

Per do-it-yourself payroll: "The time cost and chance of making mistakes aren't worth it. Instead, look for a provider that will do it for a low base rate, plus a per-employee fee."
—American Express Trends and Insights

There are a few things to note about how we approach pricing before we get into the nitty-gritty of extra fees. Our biggest focus is to keep things as simple as possible — so you can predict your payroll administration costs as easily as possible. Just like you don't want to pay a handful of prices for different services, we don't want to track all of those costs either!

Simplicity is kind of our thing

Small business payroll in the United States is tricky — especially with federal, state and sometimes even local payroll taxes. Our software is designed to automate a lot of these processes. When everything is as it should be, your payroll is a finely oiled machine. But, a few overlooked details can spell disaster.

(C) Onirikal Studio 

Ushering in the era of the assembly line, Henry Ford famously said, "You can have any color Model-T you want, as long as it's black." We're sort of the same way. Any time we have to break our process to fix an error or add custom trim, the assembly line stops and there's a charge to get things back on track.

General rules to avoid extra payroll fees

Keep your payroll running smoothly by following these simple rules:

1. Make sure there's enough money in your business bank account to cover all your payroll expenses, including pay and payroll taxes.

Cash flow is really important for small businesses, but one of your top expense priorities should be payroll. If you find yourself without enough cash to pay your employees on time, you may incur an extra fee if you don't let us know beforehand.

There are two situations where insufficient funds (NSFs) can result in a fee:

  • NSFs for direct deposit and Wagepoint fees — When running payroll and consequently incurring routine payroll charges, if you run an NSF notice from the bank you will be charged a $100 fee for the first instance. The charge for the next NSF instance will be $150.
  • NSFs for payroll taxes — If you run an NSF for payroll taxes, you will be charged $100. This will double to $200 for the second NSF for the same transaction and triple to $300 for the third.

In both situations, an immediate wire transfer of the necessary funds is required to resolve the issue. There is a $35 charge per wire.

2. Check and re-check your business and employee banking information.

Incorrect info makes for payroll mistakes. If a transaction is pushed back because your bank account was entered incorrectly, you'll incur a $20 charge (per incident) to fix and reprocess the direct deposit.

We always recommend using a voided check or bank statement to enter bank account numbers, especially when it comes to employee and contractor accounts. Don't just take their word for it — get a physical document so you can prevent any entry mistakes. And double check everything thoroughly.

3. Ensure your setup details are correct each time you process payroll.

Every payroll, you should carefully review all the details for your employees and payroll taxes to be withheld. If anything changed during the pay period — someone was hired, your remittance schedule changed, anything — be sure to make those changes before running payroll.

If you realize you made a mistake, let us know immediately. If the payroll is still being processed and you need to suspend the direct deposit, there is a $25 charge to process the suspension request. On that note, it's likely that suspending a direct deposit means you also need to suspend the associated payroll taxes, which is an additional $25.

Suspension requests are time-sensitive and may not always be possible if it's too far down the processing pipeline.

If a payroll run needs to be reversed completely, there's a $50 fee. Again, let us know immediately if this is the case — if the payroll has already been submitted for bank processing and you need to make a change to the amount withdrawn, there's an additional $20 charge.

4. Don't leave any tax IDs as "Applied for."

When you first sign up with Wagepoint, there are specific details you need to enter, including your tax identification numbers (IDs) assigned to you by the IRS, state and/or local tax authorities.

You should apply for and receive these when you start your business, so most of the time there won't be a problem. But if you've started with Wagepoint before applying or during the application process, you have 30 days to receive and enter them or you'll incur a $125 fee. Enter your tax IDs as soon as you can because the $125 will be charged on a monthly basis until they're entered into your account.

5. Have accurate year-to-date (YTD) information

Along with your business numbers, it's also vital to provide all your historical tax information — like how much you've paid in federal, state, and local taxes for each employee and your rates for each tax agency.

Your YTD amounts are the numbers for the current tax year up to the point you join Wagepoint. If you don't provide us the right amounts to date, we don't know how much to withhold in the future — which can result in under- or over-withholding and cause issues during tax time.

The ideal case scenario is for you to enter all your YTD info into Wagepoint before you run your first payroll. If you wait until after you run your first payroll, you'll incur a $10 fee per employee for YTD corrections and $20 per employee for mid-quarter and quarterly corrections.

At the end of the tax year, your YTD information will be vital in generating accurate W2s and 1099s for your employees and contractors. You can always file amendment forms to fix mistakes, but getting your YTD info squared away ASAP can save you from additional fees down the road.

If you have questions about your YTD info while setting up your account, you can contact support and they will help you through the process.

6. Get your taxes in order ahead of time

If you have outstanding payroll tax issues that require amendments, it's best to get these resolved prior to starting with a new payroll provider.

However, if you need help or if you've made a mistake that requires an amendment, like having the wrong rate in your setup details, we charge $99 per agency, per quarter to assist with the resolution process.

If you need Wagepoint to run an additional transaction outside of standard payroll processing, for instance, to make additional tax payments, we can get those taken care of for a $50 fee.

If you're one of the very few who don't require tax reporting at all for federal unemployment, state unemployment, or state withholding, Wagepoint can handle the processing of your zero filing request for a $75 fee.

This is a pretty rare occurrence, so if you think it applies to you contact support and  we can help you out.

I think I need more help...

Payroll can be complicated, especially in the United States. Knowing that your business and its needs are unique, we're here should you need additional payroll help that falls outside the scope of our Terms of Use. If you require professional payroll services, like creating customized payroll reports, we charge $150 per hour to assist.

I know there's a mistake with my payroll. What now?

We're here to help, not judge. You can contact support by phone at 1-877-757-2272 or by email. Let us know exactly what's going on and how urgent the situation is, and include all the details you possibly can. The ultimate decision on assessing fees and charges is made case-by-case.

The information we share on our blog is intended to be informational. It does not replace the expertise of accredited business professionals. The fees listed are correct at the time of the writing of the article. While we make every effort to keep each post accurate and up-to-date, the fees are set by our Terms of Use.

About the Author

Erika Yohn

Erika is a savvy Millenial on Wagepoint's marketing team. Now a retired soccer player, she spends a lot of time browsing Twitter to stay updated on the current trends - especially when it comes to memes. With a hand in all things marketing, she likes to keep things fun and useful for Wagepoint's customers.

Visit Website More Content by Erika Yohn
Previous Article
7 Tips for Managing Payroll When Cash Flow is a Problem
7 Tips for Managing Payroll When Cash Flow is a Problem

Cash flow is a common concern for small businesses. When it affects your ability to make payroll, it become...

Next Article
7 Apps for Managing and Growing Your Small Business
7 Apps for Managing and Growing Your Small Business

Do you need more tools to help manage your growing business more efficiently, but don't know which ones to ...