Author: Susan Prebola

As a small business owner, understanding exactly how much you spend on employee compensation is essential. Your team is your greatest, and often most costly, asset. But do you really know the full cost of keeping your business running?

Having a clear picture of your labor costs allows you to identify trends, make informed financial decisions, and plan strategically for the future. It also helps you prepare for annual raises, budget for new hires, and manage your overall payroll expenses more effectively.

What Is a Total Compensation Statement?

A total compensation statement outlines the full pay package an employee receives annually, including both direct and indirect compensation.

• Direct compensation includes base salary, hourly wages, bonuses, commissions, overtime pay, and profit sharing.
  
• Indirect compensation covers employer-paid benefits such as health insurance, retirement contributions, paid time off, and other perks.

When you add these up, you may find that the real cost of an employee is 120% to 140% of their gross base wages. That’s valuable information when evaluating your bottom line—or explaining your investment in your team.

What to Include in Total Compensation

Here are common elements that should be factored in:

• Base Salary/Wages
  
• Bonuses and Commissions
  
• Overtime Pay
  
• Profit Sharing or Stock Options
  
• Employer-Paid Insurance
  
• Retirement Plans
  
• Paid Time Off
  
• Professional Development Opportunities
  
• Wellness or Recognition Programs
  

Why Sharing Compensation Statements Matters

Once you’ve calculated total compensation, share it with your employees. Many don’t realize how much their employer spends on benefits beyond their paycheck. Providing this information can improve transparency, strengthen trust, and boost morale.

As benefit costs rise, a total compensation, or “total rewards”, statement reinforces the company’s financial commitment to its people. It’s a simple but powerful reminder that employees are valued and supported.

Don’t wait until open enrollment to share this information. Include it during new hire onboarding or performance reviews to maximize its impact.

A Smart Recruiting and Retention Tool

In a competitive hiring market, showcasing your total compensation can also help you stand out to job candidates. It highlights your full value proposition, not just salary, making it easier to attract and retain top talent.

Understanding and communicating total compensation benefits both your business and your employees. It’s a small step that delivers big returns in engagement, loyalty, and long-term planning.

The workplace is evolving faster than ever. Staying competitive means being intentional, flexible, and people-focused. In 2026, success will come from using smart tools, leading with empathy, and offering work environments that attract and retain talent without unnecessary complexity.

Here are key workplace trends business leaders should keep on their radar.

AI-Ready Workspaces

By 2026, artificial intelligence won’t be a “nice to have,” it will be part of everyday work. This means using AI to save time, reduce manual tasks, and improve decision-making rather than replacing people.

Think AI-assisted scheduling, customer service chat tools, marketing support, or payroll and compliance automation. Roles will increasingly blend human judgment with AI support, and employees will be expected to know how to use these tools responsibly. Investing in basic AI training now can give your team a major productivity edge without increasing headcount.

Human-Centric, Empathetic Leadership

Business owners already wear many hats, and in 2026, leadership expectations will lean even more toward empathy and connection. Employees value managers who listen, offer regular feedback, and create a culture of trust.

You don’t need layers of management to do this well. Simple habits like clear communication, aligning employee goals with company success, and recognition for effort go a long way. Leaders who act as coaches rather than controllers will see higher engagement, lower turnover, and stronger loyalty.

Conscious Unbossing

Not every high performer wants to be a manager, and that’s okay. Many employees, especially younger workers, value flexibility, purpose, and skill development over traditional titles.

For business leaders, this trend is an opportunity. Create growth paths that reward expertise, ownership of projects, or cross-training instead of defaulting to management promotions. This keeps top talent motivated without forcing them into roles that don’t fit, and without expanding your org chart unnecessarily.

Total Compensation and Pay Transparency

Raising salaries isn’t always feasible, but employees are increasingly looking at the full picture. Benefits like flexible schedules, remote or hybrid options, paid time off, learning opportunities, and wellness support matter more than ever.

Pay transparency, often influenced by new regulations, also builds trust. Clear pay ranges and open conversations about growth help employees feel valued and reduce misunderstandings. In 2026, retention will depend less on pay alone and more on how supported employees feel overall.

Smart technology choices, people-first leadership, flexible career paths, and thoughtful compensation strategies can help small businesses compete for talent—and thrive—in 2026 and beyond.

For small business owners, time is your most valuable asset. Every hour spent chasing paperwork, reentering data, or fixing payroll mistakes is an hour not spent growing your business. That’s why human capital management (HCM) is about far more than payroll—it’s about efficiency, employee experience, and long-term business growth.

When HCM is done right, it creates a seamless employee experience that helps you recruit great talent, reduce turnover, improve productivity, and ultimately drive revenue. It’s no surprise that HR leaders are prioritizing better technology—and the data proves it. The global HR and payroll technology market is expanding rapidly, projected to grow from $25.89 billion in 2024 to $58.12 billion by 2033. Businesses are investing because the payoff is real.

Today’s business leaders expect more from their HR technology. They want software that is secure, scalable, user-friendly, and capable of supporting every stage of the employee lifecycle—from hire to retire. And with the number of modern solutions on the market, no business should settle for outdated, inflexible, or disconnected tools.

Here’s what the best HCM platforms have in common—and what to look for when evaluating your options.

1. Secure and Cloud-Based

When it comes to employee data—Social Security numbers, banking details, medical information—security isn’t negotiable. Outdated or locally installed software increases the risk of breaches, data loss, and compliance issues.

A cloud-based platform delivers enterprise-level protection. Data is encrypted, automatically backed up, and stored in secure data centers designed to guard against cyberthreats. Role-based access ensures only authorized users can view sensitive information. And because it’s cloud-based, there are no manual updates, servers to maintain, or IT headaches—just secure, 24/7 access from any device.

2. Scales With Your Business

Maybe today you only need payroll. But what about in six months, when you’re hiring? Or next year, when you want to offer benefits or streamline performance reviews?

Choosing a platform that grows with you ensures you’re never stuck starting over with another system or piecing together mismatched software. A scalable HCM platform gives you what you need today with the flexibility to activate new functionality when you’re ready. A single connected platform means fewer logins, fewer manual steps, and fewer headaches.

3. Easy for Employees to Use

Employees expect workplace technology to work just like the apps they use daily. Your HCM platform should be intuitive, mobile-friendly, and simple enough for everyone—from your front desk to your field technicians—to navigate without training.

If your people struggle to use the system, they won’t use it. And if they don’t use it, the investment doesn’t pay off.

4. Reduces Human Error

Payroll mistakes are more costly than most small business owners realize. Research shows that just two payroll errors can push nearly half of employees to consider looking for another job.

A connected HCM platform allows data to be entered once, flowing across the system automatically. Fewer manual entry points = fewer errors.

Ready to simplify HR and strengthen your business?

An intelligently connected HCM platform brings everything together—from hire to retire—ensuring a better employee experience and freeing up your time to focus on what matters most. Let’s talk about how we can streamline your HR needs, simplify your workflows, and support your growth.

Schedule a call today and see what Counter Point HCM can do for you.

On November 21, the Treasury Department and IRS issued guidance for workers eligible to claim deductions for tips and overtime under the One Big Beautiful Bill Act (OBBBA) for tax year 2025. Notice 2025-69 clarifies how employees can calculate deductions even if employers do not provide a separate accounting of cash tips or qualified overtime on Forms W-2 or 1099, which remain unchanged for 2025. The IRS is updating tax forms and instructions to assist employees in claiming these deductions.

Tips Deductions

Eligible tipped workers may deduct up to $25,000 per year, phased out for modified adjusted gross incomes above $150,000 ($300,000 for joint filers). Employees can rely on amounts reported in box 7 of Form W-2, on Form 4070 (tips reported to employers), or on Form 4137 (unreported tips). Self-employed individuals may use substantiated tip logs or third-party payment records, even if tips are included in a Form 1099-K without separate identification.

Overtime Deductions

Employees may deduct qualified overtime pay that exceeds their regular rate—typically the “half” portion of time-and-a-half pay required under the Fair Labor Standards Act (FLSA). Maximum deduction is $12,500 per individual ($25,000 for joint filers), with phase-out at the same income thresholds. Employees must meet FLSA eligibility; deductions apply to both itemizing and non-itemizing taxpayers.

IRS Penalty Relief and Voluntary Reporting

Notice 2025-62 provides relief for errors in filing or furnishing information returns or payee statements under the Internal Revenue Code (IRC 6721 and 6722). While reporting OBBBA tips or overtime is optional, businesses may voluntarily include amounts in box 14 of Form W-2, provide separate statements, or use secure portals.

Bottom Line for Employers

Voluntary reporting can streamline year-end payroll, reduce confusion, and help employees claim deductions correctly. By tracking FLSA status, keeping clear records of tips and overtime, and communicating proactively, employers can minimize errors and support workers as these new 2025 deductions roll out.

Closing out the year doesn’t have to be stressful. Use this checklist to keep payroll accurate, employees happy, and your business compliant.

Before the Final Payroll

1. Verify Employee & Contractor Information
Check that names, addresses, Social Security numbers (SSNs), and vendor Federal Employer Identification numbers (FEINs) are correct. Errors here can lead to penalties on W-2s and 1099s.

2. Review Wages, Benefits & Deductions
Look at year-to-date wages, bonuses, overtime, health insurance, retirement contributions, and other withholdings. Catch discrepancies early.

3. Review Disability Paid to Employees
Review any disability paid to employees throughout the year. The totals will need to be recorded on their W-2. This will need to be done before the first of the new year.

4. Reconcile Payroll & Tax Reports
Compare payroll reports with bank statements and quarterly filings to ensure everything adds up.

5. Handle Special Payments & Adjustments
Schedule final bonuses, reimbursements, and any other special pay runs.

During the Final Payroll

1. Process Your Last Payroll
Run your final payroll of the year, making sure all payments are correct.

2. Pay Out Accrued PTO
Follow your policy for unused paid time off.

3. Apply Any Final Adjustments
Include any remaining bonuses, special payments, or corrections.

After the Final Payroll

1. Prepare & Distribute Year-End Tax Forms

• W-2s: For employees, reporting wages and taxes withheld.
• 1099-NEC: For contractors. Distribute forms by IRS deadlines.
  

2. File With Tax Authorities

• W-3: Summarizes all W-2s for the SSA.
• 1096: Transmittal for 1099s to the IRS.
• 941 & 940: Quarterly payroll and unemployment tax filings.
• ACA: Be aware of your Affordable Care Act  (ACA) filing responsibilities.
  

3. Plan for the New Year
Update payroll policies, review benefit changes, and request new W-4s for employees whose circumstances may have changed.

Following this year-end payroll checklist ensures accuracy, compliance, and a smooth transition into the new year—so you can focus on running your business, not chasing paperwork.

Schedule a call to find out how Counter Point can protect your business and streamline your compliance processes.

Cybercriminals are increasingly zeroing in on HR departments, exploiting their trusted role within organizations to steal sensitive employee and company data. These attacks often arrive in the form of phishing emails disguised as legitimate HR communications, making them especially dangerous.

Instead of the usual suspicious-looking scams, these emails mimic everyday HR processes—vacation requests, W-4 updates, or performance reviews—subjects that employees are used to seeing. Because of this familiarity, research shows employees are more likely to interact with them, with nearly one in three users clicking on suspicious links.

One tactic gaining traction is “quishing,” or QR code phishing. In these cases, the email includes a QR code that, once scanned, directs the user to a fake website designed to steal login credentials or financial details. The blend of familiarity, urgency, and clever disguise makes HR impersonation phishing one of the most effective attack methods today.

KnowBe4, a leading cybersecurity awareness training company, recently analyzed attacks from 2025 and identified four major phishing trends HR and business leaders should watch:

Changes to Payroll and Benefits

Cybercriminals send emails claiming updates to an employee’s salary or benefits elections. These are often customized with the recipient’s name, company logo, and financial details to look legitimate. The goal: to trick employees into sharing sensitive information.

HR Policy Updates

Attackers exploit urgency by requesting employees to review and acknowledge fabricated policy changes. By adding tight deadlines and threatening consequences, they push recipients to act quickly without verifying the legitimacy of the request.

401k Updates

Financial security is top of mind for most employees, which makes 401k updates a prime target. These phishing emails often resemble automated alerts, complete with fake tracking numbers and system-generated templates, and may carry malicious attachments to bypass security filters.

Electronic Contracts and Financial Documentation

This approach involves fake contracts or business documents that appear to come from HR or legal departments. With forged signatures, disclaimers, and even the company’s name in the subject line, they closely resemble authentic automated emails.

As phishing tactics become more sophisticated, HR departments must stay vigilant to reduce cybersecurity risk. Employee education, regular phishing simulations, and clear reporting procedures are essential to building a culture of security awareness. By recognizing these deceptive trends, businesses can protect both their workforce and their sensitive data from falling into the wrong hands.

In 2022, Uber agreed to a $100 million settlement to resolve two misclassification lawsuits involving drivers in California and Massachusetts. The company had been accused of treating drivers as independent contractors rather than employees—enabling it to sidestep costs related to employer-sponsored benefits.

The practice of misclassifying workers to avoid legally required payments for disability insurance, family leave, and unemployment insurance is far too common. A 2020 audit by the New Jersey Department of Labor (NJ DOL) revealed just how widespread the issue is. In a review of 1% of New Jersey businesses, the audit uncovered 7,149 misclassified workers, $443 million in underreported wages, and nearly $14 million in unpaid contributions to state programs.

New Jersey uses one of the strictest standards in the country—the ABC Test—to determine whether a worker can be classified as an independent contractor. Under this test, a worker is presumed to be an employee unless all three of the following conditions are met:

1. The worker is free from control or direction.
   
2. The work is outside the usual course of the company’s business or performed offsite.
   
3. The worker is engaged in an independently established business.
   

For companies like Uber and Lyft, drivers are unlikely to meet the second condition, as their work directly aligns with the company’s core service. As such, they may be deemed employees entitled to the same legal protections and benefits.

In response to these concerns, the NJ DOL has proposed a new rule that would classify drivers for app-based companies as regular employees—not freelancers. This rule extends beyond transportation companies and would bring sweeping changes to the gig economy and signal heightened enforcement statewide.

What Can Employers Do Now?

To stay ahead of these changes and avoid penalties, New Jersey businesses should act now:

• Audit contractor relationships: Review every independent contractor agreement for compliance with the ABC Test.
  
• Examine policies and contracts: Ensure your employment practices align with both existing laws and proposed changes.
  
• Engage in the rulemaking process: Consider submitting public comments if the proposal impacts your operations.
  

Misclassification is a serious risk, with real financial consequences. Proactive compliance is not just smart business—it’s essential. Counter Point can help your organization navigate compliance so you can focus on more strategic tasks. Contact us today!

Navigating the complexities of health and welfare benefits can be challenging, and mistakes are all too common. Missing reporting deadlines, overlooking required notices, or confusing important documents can easily happen. To protect your business and avoid unnecessary risks, it’s important to stay ahead of these key compliance areas.

Affordable Care Act (ACA)

Enacted in 2010, the ACA aims to expand health insurance coverage and make it more accessible and affordable. It includes provisions to expand Medicaid, protect consumers, and support innovative medical care delivery. The ACA impacts employers, employees, insurance companies, healthcare providers, and more. Due to the complexity of the law, compliance can be challenging, making it important to seek guidance from an expert who knows it well.

Employee Retirement Income Security Act (ERISA)

Passed in 1974, ERISA governs both retirement and health and welfare benefits. It is a federal law that sets minimum standards for most voluntarily established pension and health plans. Over the years, numerous amendments have expanded its requirements. ERISA applies only to private sector employers, and most compliance issues arise from documentation and disclosure related to employee benefits.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Enacted in 1986, COBRA is a federal law that allows employees and their families to temporarily continue their employer-provided health insurance coverage after leaving a job or experiencing a qualifying life event. It helps individuals avoid gaps in coverage by allowing them to maintain the same health plan they had through their former employer. Most COBRA compliance failures stem from failing to notify employees of their rights. Like ERISA, COBRA applies only to private sector employers.

Family and Medical Leave Act (FMLA)

Passed in 1993, FMLA requires covered employers to provide eligible employees with up to 12 weeks of job-protected, unpaid leave for certain family and medical reasons. Employers must properly notify employees and administer benefits. Managers and supervisors can be held personally liable for noncompliance. To further complicate matters, FMLA often intersects with other federal mandates. FMLA applies to both private and public sector employers.

Staying compliant with health and welfare benefit laws is critical to protecting your business and supporting your employees. By understanding your responsibilities and working with trusted experts, you can better manage your compliance obligations, minimize risks, and keep your business on track. Counter Point can help you stay on track and support your compliance. Schedule an appointment today.