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Things to Know About Withholding County Taxes

A tax is a tax is a tax, right? Well, as anyone who has ever read a single paragraph of the state or federal tax code knows, there is rarely a simple answer to any tax-related question. If you’re a small business owner, you probably understand a little bit about the complexity of payroll taxes. Besides the responsibility of withholding federal taxes, small businesses must also withhold state and local taxes. As you will see, the rules governing county taxes alone can make you feel a little dizzy. (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing, Payroll Taxes

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Are You Opening Up Your Small Business to Payroll Fraud?

According to an article in Forbes by Matthew Garrett, payroll fraud is a problem. A really big problem. He says that 27% of all businesses are the victims of payroll fraud. And, small business owners beware, because Garrett says payroll fraud occurs nearly twice as often (14.2%) in small organizations with less than 100 employees than in large ones (7.6%). (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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Employers Must Pay for Short Employee Breaks

As an employer, you set the policies for managing your small business and your employees. But you better make sure your payroll policies follow government rules. Otherwise, you may have to pay back wages and fines. Just ask Progressive Business Publications. The Pennsylvania company owes current and former employees about $1.75 million in back wages and damages for docking its employees’ pay for bathroom breaks. (more…)

Posted in: Operating a Small Business, Payroll, Rules, Regulations and Laws

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Minimum Wage – more than meets the eye

Minimum wage is a hot topic in the media these days, but we aren’t going to debate increasing the minimum wage to $15. The amount may be under debate, but the one thing that doesn’t change is the fact that employers have laws to follow regarding minimum wage. (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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The Truth about Payroll Taxes

In the politically charged atmosphere during the couple of years preceding a presidential election, the topic of taxes – and payroll taxes in particular – takes center stage. It is payroll taxes that take a bite out of both employees’ paychecks and small business owners’ bottom lines. (more…)

Posted in: IRS and Tax forms, Operating a Small Business, Payroll, Payroll Processing, Payroll Taxes, Rules, Regulations and Laws

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Employee Record Retention and Destruction: Make Sure Your Business Is in Compliance

Business owners accumulate substantial volumes of employee records like employment applications, performance reviews, payroll records and disciplinary actions. At the beginning of the year, when many employers can’t stuff another piece of paper into crowded filing cabinets, they often decide it’s time to purge old files. But, before you start throwing out any documents, you need to make sure you’re in compliance with federal, state and local laws that require you to retain employee records for a specified time period. (more…)

Posted in: IRS and Tax forms, Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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Words Small Business Owners Don’t Want to Hear: Pay Back Wages

One thing a small business owner never wants to hear in connection with his payroll is BACK PAY. Don’t be confused, Back Pay is not when you give an employee a raise and make the start date in the past and allow for retroactive pay. No, Back Pay is a remedy for wage violations. It’s an order that the employer make up the difference between what the employee was paid and what the employee should have been paid. It’s a serious situation. (more…)

Posted in: IRS and Tax forms, Operating a Small Business, Payroll, Payroll Processing, Payroll Taxes, Rules, Regulations and Laws

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Payroll Leap Year…and Other Payroll Oddities

Every four years, the calendar offers up a dilemma to the world: How exactly will you spend that extra day in the wonderful blustery gray month of February? Well, actually leap year doesn’t really present too much of a problem. It’s pretty predictable – it comes every four years at the same time. So not a whole lot of preparation is required. But there are other calendar irregularities that can cause a bit more of a problem. (more…)

Posted in: Operating a Small Business, Payroll, Payroll Processing

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Employer Obligations: Paying Taxes on Employees’ Tips

Do you have employees who receive tips? Did you know, as an employer, you have certain obligations when it comes to the income on your employees’ tips? Do you – and your employees – know that they must report the total amount of taxable tips to you by the 10th of the month following the month after receiving the tips? If your employees don’t know this, you need to educate them.

Employees and employers have tax liability for tips. Know what you are required to do.Generally, your employee’s tips are not taxable unless they make more than $20 per calendar month. If they do make over $20 in tips per month, you’re responsible for withholding income and FICA (Social Security and Medicare) taxes on the employee’s reported tips (all tips, including the initial $20) – even though you don’t have control over the amount of tips your employee receives.

Also, you’re required to pay the employer’s portion of FICA and FUTA (federal unemployment) taxes on these tips. Additionally, you must withhold the 0.9% FICA Medicare surtax, too, if the employee’s tips (in combination with the wages you pay them) exceed the $200,000 withholding threshold.

However, your obligation to pay your employee’s portion of the FICA and income taxes due is limited to the amount of non-tip wages you pay the employee. If your employee’s paycheck isn’t big enough to cover the withholding taxes, you should withhold taxes in this order:

  1. The employee’s portion of the FICA tax due on the non-tip wage payment.
  2. The income taxes you’re obligated to withhold on the non-tip wage payment.
  3. The employee’s portion of the FICA tax due on the tip income.
  4. The income taxes you’re obligated to withhold on the tip income.

However, if this process still leaves you with insufficient funds to collect your employee’s FICA tax, your obligation to withhold the uncollected portion ends. As for collecting outstanding income taxes, these payroll taxes should be withheld from the employee’s next paycheck.

It’s important to note, if your employee doesn’t report their tips of $20 or more per calendar quarter to you, you can only be held liable for your portion of FICA. This liability only arises when the IRS makes a written notice, demanding payment.

Managing restaurant payroll and the payroll taxes can be complicated, but it doesn’t have to be if you have a payroll services provider like The Payroll Department handling your payroll and taxes for you. We can take the hassle out of figuring out what taxes you owe on the income from your employees’ tips and make these payments for you. Contact us for more information on how we can help you.

-Ariane of The Payroll Department Blog Team

Posted in: IRS and Tax forms, Operating a Small Business, Payroll, Payroll Processing, Payroll Taxes, Rules, Regulations and Laws

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Why put your payroll – and business – at risk?

Are you an employer or employee who likes to get that paycheck in your hand every pay period? There are people who like that trip to the bank to make deposits. However, they may be putting themselves – and their employers – at risk by getting that paper check.

When paychecks go missing…

It’s not an uncommon event to have paychecks stolen. One small business owner found himself in a pickle. A man simply parked his car at a hotel to have dinner with a friend and when he returned, the bag containing the checks was gone. The thief may not have even known he was stealing checks because they were completely out of sight in a bag. But in any event, the employer now has a big problem that has to be resolved right away. Employees are waiting for their wages.

Replace your paycheck system and improve processes

Protect yourself and your employees with alternatives to paper paychecks.Entrepreneurs have to take leadership roles and sometimes that means dictating processes that ensure safety and security – like with payroll. And most often in today’s workplace, payroll is paid in one of two ways:

  1. Automatic deposit into employee bank accounts
  2. Credit to a payroll card and used by the employee

Small business owners have enough to think about to keep the workplace running. In addition to using automatic deposits, more and more employers are outsourcing their payroll to a payroll provider. Not only does hiring out for payroll services ensure accuracy and efficiency, it keep the budget in line.

Employers are realizing that it is just not worth the risk when dealing with taxes and employee wages to keep it in house. The payroll fees are far outweighed by the costs of in-house processing and definitely as protection against error in payroll taxes, reporting and making deposits.

Streamlining the payroll process so that it can be handled virtually from start to finish eliminates the potential of having paychecks stolen from the back of a car during an errand run. And, with it being automated, it can be handled efficiently, which means it is cost effective.

If you are ready to save yourself time, money, headaches and worry, contact The Payroll Department. Let us put our years of experience to work on your payroll and payroll taxes. Outsourcing your payroll may be one the best decisions you make for your business this year. Contact us and let’s set a time to talk!

-Teresa Ray, Founder and Owner

The Payroll Department

Posted in: Operating a Small Business, Payroll, Payroll Processing

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