Archive for Payroll Processing
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.
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:
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
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.
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.
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:
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
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