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  • steps-for-running-payroll

    How to Run Payroll: The Basics

    posted by Michele Bossart
    Newest Article
  • social-security-wage-base-and-employer-obligation

    Social Security Wage Base: What You Need to Know

    posted by Mike Kappel
    Recent Article
  • How to Run Payroll: The Basics

    As a business owner, you are required to run payroll in regular intervals to compensate your employees for their time worked. How often you run payroll is predetermined by your employees’ pay dates, which normally are weekly, bi-weekly, semi-monthly, or monthly. You will want to run payroll a few days prior to the designated pay date in order to allow for processing time.

    Step One: Getting Ready to Run Payroll

    Employer: Before you can start running payroll, you will want to register your business with both federal and state organizations. This will

    Social Security Wage Base: What You Need to Know

    The social security wage base is used when determining the taxes you owe. Social security is a special type of tax that is withheld from all employees and self-employed individuals who are citizens of the United States.

    Why are social security taxes so important? Because social security taxes fund the trust that pays a living wage to those who are no longer able to work. This includes those who have reached retirement age, those who have lost their spouse and do not work, and those who are disabled. Without this tax, there would be no way to provide these benefits.

    W2 vs. 1099: Choose Wisely!

    It is easy to say W2s are for employees and 1099s are for independent contractors. The hard part is correctly deciding if a worker is an employee or a contractor. Unfortunately, it is not as simple as comparing apples and oranges. And the IRS penalties for misclassification can be steep, so you really want to get it right…

    What Are Nontaxable Wages?

    Nontaxable wages are wages given to an employee or individual without any taxes withheld (income, federal, state, etc.). However, most wages that you pay out to your employee(s) are taxable. So when are wages nontaxable?

    The IRS definition of a nontaxable wage and other tax-exempt income is fairly narrow.

    Understanding Taxable Wages

    When preparing your taxes or doing any paperwork that concerns income, you may see the term taxable wages or taxable income. As the term implies, not all your wages may be taxable. So the amount of income to be reported can actually be less than your total income. As an employer, you will need to understand the concept of taxable wages for tax purposes.

    What Is Third Party Sick Pay?

    Do your employees receive third party sick pay? If so, it is most likely payment for missed hours of work that qualified as short- or long-term disability. It is also likely that an insurance provider made those payments. If you are using a third party for sick pay, it is important to understand your responsibilities for reporting the sick pay and for paying any taxes.

    In many cases, employers add sick pay to their employees’ checks and there is no third party. These payments take the place of a regular salary when the employee is sick, injured, or otherwise temporarily disabled and unable to work. Sick pay is included in the employee’s gross wages for income taxes.

    However, there are some conditions in which a third party — not your business — provides the sick pay as a type of insurance benefit. The amount of third party sick pay is usually calculated as a percentage of what the employee would have been paid for actually working that same pay period.

    What Is SUTA?

    SUTA The State Unemployment Tax Authority, better known as SUTA, is a form of payroll tax that all states require employers to pay for their employees. SUTA is a counterpart to FUTA, the federal unemployment insurance program. Like the federal unemployment insurance program, the state unemployment insurance sets a limit to the wages taxed. This is known as a taxable wage base. The taxable wage base varies from state to state.

    What Is Common Law Employment?

    Common law employment is a legal term meaning any type of employment where the employer controls the work being done and how that work is done. This vague definition is one reason many court cases have been brought concerning common law employment. Over the years, court rulings in these cases have helped redefine and shape what is and what is not considered common law employment.

    How to Calculate Local Income Tax

    Nearly 5,000 different jurisdictions in 17 states have some form of local income taxes. In Ohio, a large number of cities (almost 600) and school districts (almost 200) impose a local income tax, and in Pennsylvania, nearly 3,000 municipalities and school districts combined have some form of local income tax. While this type of tax is more common in the Rust Belt states, all counties in Maryland and Indiana now have a local income tax, as well as some school districts in Michigan and Iowa.

    Do you owe local income tax?

    Depending on where you are, the tax rates vary, and some taxes change on a regular basis. In fact, some local taxes may be temporary and designed to raise funds for specific purposes, while others are permanent and help fund the city’s operating budget. Some taxes are limited and are either not reported as local income taxes or account for less than 0.01 percent of an employee’s personal income. Most local taxes range from around 1 percent up to around 3.2 percent, but most do not exceed that amount.

    What Is the EEO-1 Report for Employers?

    Federal employment law requires certain U.S. employers to submit an annual EEO-1 Report, which is a count of all employees, ordered by job category, ethnicity, race, and gender. Employers must submit the report to the U.S. Equal Employment Opportunity Commission’s (EEOC) Joint Reporting Committee.

    How to Run Payroll: The Basics

    As a business owner, you are required to run payroll in regular intervals to compensate your employees for their time worked. How often you run payroll is predetermined by your employees’ pay dates, which normally are weekly, bi-weekly, semi-monthly, or monthly. You will want to run payroll a few days prior to the designated pay date in order to allow for processing time.

    Step One: Getting Ready to Run Payroll

    Employer: Before you can start running payroll, you will want to register your business with both federal and state organizations. This will

    Social Security Wage Base: What You Need to Know

    The social security wage base is used when determining the taxes you owe. Social security is a special type of tax that is withheld from all employees and self-employed individuals who are citizens of the United States.

    Why are social security taxes so important? Because social security taxes fund the trust that pays a living wage to those who are no longer able to work. This includes those who have reached retirement age, those who have lost their spouse and do not work, and those who are disabled. Without this tax, there would be no way to provide these benefits.

    W2 vs. 1099: Choose Wisely!

    It is easy to say W2s are for employees and 1099s are for independent contractors. The hard part is correctly deciding if a worker is an employee or a contractor. Unfortunately, it is not as simple as comparing apples and oranges. And the IRS penalties for misclassification can be steep, so you really want to get it right…

    What Are Nontaxable Wages?

    Nontaxable wages are wages given to an employee or individual without any taxes withheld (income, federal, state, etc.). However, most wages that you pay out to your employee(s) are taxable. So when are wages nontaxable?

    The IRS definition of a nontaxable wage and other tax-exempt income is fairly narrow.

    Understanding Taxable Wages

    When preparing your taxes or doing any paperwork that concerns income, you may see the term taxable wages or taxable income. As the term implies, not all your wages may be taxable. So the amount of income to be reported can actually be less than your total income. As an employer, you will need to understand the concept of taxable wages for tax purposes.

    What Is Third Party Sick Pay?

    Do your employees receive third party sick pay? If so, it is most likely payment for missed hours of work that qualified as short- or long-term disability. It is also likely that an insurance provider made those payments. If you are using a third party for sick pay, it is important to understand your responsibilities for reporting the sick pay and for paying any taxes.

    In many cases, employers add sick pay to their employees’ checks and there is no third party. These payments take the place of a regular salary when the employee is sick, injured, or otherwise temporarily disabled and unable to work. Sick pay is included in the employee’s gross wages for income taxes.

    However, there are some conditions in which a third party — not your business — provides the sick pay as a type of insurance benefit. The amount of third party sick pay is usually calculated as a percentage of what the employee would have been paid for actually working that same pay period.

    What Is SUTA?

    SUTA The State Unemployment Tax Authority, better known as SUTA, is a form of payroll tax that all states require employers to pay for their employees. SUTA is a counterpart to FUTA, the federal unemployment insurance program. Like the federal unemployment insurance program, the state unemployment insurance sets a limit to the wages taxed. This is known as a taxable wage base. The taxable wage base varies from state to state.

    What Is Common Law Employment?

    Common law employment is a legal term meaning any type of employment where the employer controls the work being done and how that work is done. This vague definition is one reason many court cases have been brought concerning common law employment. Over the years, court rulings in these cases have helped redefine and shape what is and what is not considered common law employment.

    How to Calculate Local Income Tax

    Nearly 5,000 different jurisdictions in 17 states have some form of local income taxes. In Ohio, a large number of cities (almost 600) and school districts (almost 200) impose a local income tax, and in Pennsylvania, nearly 3,000 municipalities and school districts combined have some form of local income tax. While this type of tax is more common in the Rust Belt states, all counties in Maryland and Indiana now have a local income tax, as well as some school districts in Michigan and Iowa.

    Do you owe local income tax?

    Depending on where you are, the tax rates vary, and some taxes change on a regular basis. In fact, some local taxes may be temporary and designed to raise funds for specific purposes, while others are permanent and help fund the city’s operating budget. Some taxes are limited and are either not reported as local income taxes or account for less than 0.01 percent of an employee’s personal income. Most local taxes range from around 1 percent up to around 3.2 percent, but most do not exceed that amount.

    What Is the EEO-1 Report for Employers?

    Federal employment law requires certain U.S. employers to submit an annual EEO-1 Report, which is a count of all employees, ordered by job category, ethnicity, race, and gender. Employers must submit the report to the U.S. Equal Employment Opportunity Commission’s (EEOC) Joint Reporting Committee.