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Posts Tagged employees

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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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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What Is ‘At Will’ Employment?

As a small business owner, you’ve probably heard that Indiana and other states are at will employment states. But do you really understand what that means you are allowed to do or not do when it comes to terminating employees? Even in this area of your payroll process, The Payroll Department can help with information you need.

Small business employers need to understand the rules of 'at will' employment - and termination.Basically, at will employment means you can terminate an employee with or without cause, at any time, without adverse legal consequences. However, you cannot terminate an employee for illegal reasons. Additionally, you don’t have to provide advance notice of termination. For example, at-will employers can:

  • Promote and demote employees.
  • Make unannounced pay and benefits cuts. As long as the pay cut doesn’t take the employee’s wage below applicable federal or state minimum wage.
  • Reduce paid time off.
  • Change work schedules – limiting hours or requiring on-call work.
  • Set your own policies.

Alternatively, employees can leave a job at any time, with or without a reason, without legal recriminations, too.

However, there are state and federal exceptions to this law. You cannot terminate employment for any of the following reasons:

  • Discrimination or harassment based on race, gender, national origin, religion, age (40 and older) and disability. This discrimination may occur before, during or at the end of employee’s
  • Retaliation against employees who complain about discrimination or harassment toward themselves or others, or within the company, or who participate in an agency or court proceeding concerning discrimination or harassment.
  • Jury duty attendance.
  • Filing or threatening to file a worker’s compensation claim or claim for unpaid wages.
  • Refusing to perform an illegal act, such as refusing to drive a truck that exceeds legal weight limits, or reporting illegal activity.

Additionally, you cannot terminate an employee at will if:

  • The employee has an employment contract which states the employee is employed for a set time period, or outlines specific situations or employee actions that may lead to termination for cause. Reasons for-cause termination may include poor employee performance, employee misconduct or economic necessity.
  • The employee is covered by a collective bargaining agreement that specifies the employee can only be terminated for cause.
  • The employee gave up job protected status with their former employer to work for you.

As a small business owner, you’re probably more knowledgeable in the actual running of your company rather than every local, state and federal law concerning employment, payroll and taxes. Therefore, to avoid errors that can lead to substantial fines and penalties, consider hiring The Payroll Department. As an experienced payroll services provider, we can handle your payroll and payroll taxes for you, so you can get back to managing your business.

-Ariane of The Payroll Department blog team

Posted in: Hiring and Firing, HR Rules, Regulations and Laws, Human Resources, Operating a Small Business, Payroll, Payroll Processing

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Tips and Service Charges: What’s the Difference?

Do you own a service industry small business, such as a restaurant, hair salon or hotel? Then it’s important as an employer that you understand your payroll responsibilities when it comes to calculating wages, employee reporting and tax requirements. One factor that affects your business’s payroll tax obligations is when your employees receive gratuities for their services. Do you know the rules? (more…)

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

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It’s Just a Number, Right? Not to the IRS!

As an employer, whether you are a big or small business, you have the responsibility to hire employees who are authorized to work in the United States. One of the ways many employers ensure workers are legally able to work is by getting employees’ social security number. Easy, right? Well, not so much. Let me tell you a story from the offices of The Payroll Department. (more…)

Posted in: IRS and Tax forms, Payroll, Payroll Processing, Payroll Taxes, Rules, Regulations and Laws

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Make Small Business Ownership More Predictable during the Unpredictable Days of Winter

The sunny days of summer are now a distant memory, and we are entering the dark and cold days of winter. In addition to the shorter days, longer nights, and generally colder weather, winter also brings with it an increased unpredictability. More severe weather events occur in the winter than in any other season, including snow, ice, sleet, and extreme cold. We usually get some advanced warning of these kinds of events, but the predictions of severity often do not match the reality of what actually transpires. (more…)

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

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Paying Employees “Under the Table” – Is It Worth the Risk?

Have you ever had an employee ask you to pay their wages in cash – unreported? Or, maybe you’ve thought about hiring employees and paying them “under the table” to simplify your bookkeeping. What does it really mean to pay employees in cash? And more importantly, what are the consequences? (more…)

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

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The Payroll Department Opens a New Office in Zionsville

It’s happening!

I am opening a new sales location for The Payroll Department in Zionsville!

As all of my clients already know, The Payroll Department recently completed a complete conversion to a new software that allows us to better serve them. It was a huge process and one that offers complete transparency and accessibility to our client employers and their employees.

While it has been a challenge to get every little detail in place, it was well worth every hour and every bit of effort. We now have more capabilities and options than ever before. (more…)

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

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Botched Payroll Makes For a Bad Day!

You know you’re having a bad day when a mistake you made gets covered by the local newspaper. Not exactly the kind of publicity you want! As this article reports, the town of Windham, Connecticut, recently found themselves in the middle of a payroll mess that resulted from problems with a new accounting system. (more…)

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

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