Time Is Right to Get Strategic About Your W-4 Management
It’s one of the first items that welcomes new employees into your organization. Yet in a surprising number of companies, the process remains weighed down by traditional labor-intensive HR practices. Near the top of every new employee onboarding checklist on day one is a task to complete all required W-4 tax forms. Despite the increased complexity of state and local tax regulations, many employers have continued to use paper-based tax forms to capture this important information—until recently.
A growing number of progressive organizations already have streamlined the W-4 process during onboarding, and this momentum will only increase. There are a number of factors motivating companies to take a closer look at this part of their HR compliance programs: from wanting to minimize the time needed to manage the bevy of annual regulatory changes to tax forms and improve the operational efficiencies of HR and payroll teams to driving higher employee engagement by improving the employee experience.
In our experience, companies who need to pay the most attention to managing the W-4 process are those who have an employee base dispersed across many locations and also those who experience higher than average turnover rates.
Here is a closer look into the key trends driving adoption of online W-4 management:
Needing to stay ahead of tax regulatory changes
These days, it seems like the only constant when it comes to tax regulations is change. Each year, employers are faced with managing a sea of changes to the federal, state and local tax forms. In fact, CIC Plus already has identified and is making updates to 76 tax forms for 2016—over half of all current forms—as of mid-March. For companies who are managing the collection of tax information themselves, this annual process is both tedious and problematic. And for larger organizations who have diverse employee bases spread across many states, the challenge is exponential. Payroll teams also need to be prepared to quickly manage unique state-instituted changes, such as Pennsylvania Act 32, which required documenting local municipality information for employees, or when North Carolina changed its entire withholding process in 2014, requiring all employees in the state to complete new tax forms. Maintaining proper control over these changing tax regulations and forms is important as more states renew their focus on enforcing tax laws to help offset state revenue deficits.
Enhancing the employee onboarding experience to engage your digitally-driven workforce
As the demand for talent intensifies, a growing number of organizations are placing greater strategic importance on delivering an onboarding experience that makes both a good first impression and effectively manages the influx of new employees. The goal is clear: properly introduce your new employees to the organization and help them reach productivity faster. While having the right HR technology and onboarding procedures are essential, it’s also important to understand the needs of your new workforce. With Millennials now making up the largest generation in the U.S. workforce (Pew Research Center, 2015), HR teams must design the onboarding process to meet the information needs of their changing workforce. Millennials are digital natives who expect to have consumer-oriented experiences when online. They want their information needs fulfilled quickly and have little patience for traditional paper-based methods. Providing them with the tools and information they need will go a long way to driving their desired engagement—a key priority for most C-suites.
Drive to improve information accuracy and HR efficiency
While collecting new employee tax information is a small step within the entire onboarding process, it proves to be problematic if not managed properly. If the wrong tax forms are used or the information entered by employees is incorrect, it leads to problems for both the organization and the employee. Employing the right online W-4 management service will help eliminate those errors using tools like address verification and intelligent-based forms, while also minimizing data security concerns as paper forms don’t need to be faxed and re-entered into your payroll system. Companies who experience higher than normal turnover rates should see significant efficiency improvements and cost savings by automating their W-4 management.
It's likely that these trends will only progress as talent demands and regulatory changes continue to escalate, putting additional strains on the employee onboarding process that employers will want to address.