Payroll Accounting

PAYROLL ACCOUNTING

Whether you are just starting a business or have a grown a business, there may come a time you want to recruit others to help you grow your business. This means hiring employees. Now only you or a specialized adviser can determine who is the best fit for your business. But taking on employees has many other consequences on your business. An employee is someone who is directed by an employer, how to perform a job as well as what that job is. An employee is on the employer’s time table. These are the main differences between an employee and an individual contractor as defined by the IRS. How does this apply to you? Well if you don’t treat employees as employees, then it can be devastating for your business. We at M&T Tax and Business Service don’t want to emphasis the negative or make you fearful, but an important emphasis on this is necessary.

If you don’t withhold taxes from your employee, you could face stiff penalties for not filing tax forms, enough that it has shut down businesses before. Furthermore it is a disservice to your employee. They are likely on a set income, unlike you as a business owner can theoretically have an unlimited income. Come tax time, if you treat them as individual contractor, and don’t withhold taxes, they will be paying much more taxes as they have to pay full self employment taxes, as well as income taxes (since none was withheld).

This can lead to very unhappy employees. Furthermore, if you let them go, and they file for unemployment, that is where you can get in trouble. Because you didn’t pay unemployment tax on them, not only is that a very direct way the government can find out an employee misclassified as an independent contractor, but you will face penalties. If you’ve done that to several employees over a course of time, you could face penalties that could close down your business.

Now that all that negative talk and emphasis is done, how can we help you navigate that difficult path of adding help to your business? Following IRS guidelines, we can help determine if those assisting your business are employees or independent contractors. We can prepare the end of year tax forms for either group. We can also provide payroll check printing. You tell us how much per hour an employee earns (or salary), how many hours they worked during that pay period, and we calculate how much tax to withhold from their paycheck. If you pay for employee’s insurance, we can withhold that from their paycheck.

We are working on where you can enter employee time on our website, but for now you can call, text, fax, or email hours in. Then you can pick up the checks on the day you pay your employees. This can be done on a weekly, bi-weekly, monthly, or other regular basis.

This is a very important aspect of a business and We want to help you navigate this difficult path. Please give us a call at 1-877-466-0271 or email us at payroll@mttaxservice.com if you have any questions.

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