Payroll taxes are a vital part to our society here in America. The reason why I say this is because both wage earners and payroll professionals combined contribute through collection, reports, and deposits about 68% of the annual revenue of the U.S. Treasury. That’s a pretty good market up, and a good reason why we celebrate National Payroll Week at the beginning of September every year!
Payroll has always been an integral part of businesses worldwide. There are countless of payroll services that offer and specialize in a variety of payroll services that every business needs, depending on where your business is in the business life cycle (introduction. growth, maturity, etc.). You will eventually want a professional to handle your payroll issues.
Fun facts of payroll that you might have not known:
- In 1996, The American Payroll Association founded National Payroll Week
- There are over 1 million accountants hired every year to assist in a business’s payroll taxes
- So, you know how you write a check? The term “check” comes from the game of chess
Serious facts about payroll taxes you need to know:
There are tax Liabilities in other states
If you are a business employing employees from multiple states, your payroll taxes will not be any easier to file. Different states have their own regulations and rules on how business should handle their payroll taxes, as well as different rates issued.
The timing of your bonus checks could be taxed
Little did you know, if you wanted to hand out bonus checks to your star employees, make sure you understand the laws of your states payroll implementations. Let’s say that you are a small business, and you want to hand out a bonus check to one of your employees, in some states, if you don’t line up your bonus payment due date with the due date of your payroll payment, you could be penalized for inadvertently not following the tax rules.
Know who is exempt and who is nonexempt
When you hire your employees, know that every state and its government has their own criteria of exempt and nonexempt rules. Exempt employees are excluded by the FLSA (Fair Labor Standards Act) to obtain overtime pay. While nonexempt employees who work more than 40 hours are liable for overtime pay. Not being able to categorize your employees as exempt and nonexempt will cause misclassification where employees entitled for overpay may not receive it. Employees who receive a salary are usually exempt, but employees who receive an hourly wage are more than often nonexempt; but this is not always the case.
Record Keeping
Corporations must maintain their records for a certain period of time. This is designated by the FLSA, as they set requirements for how long you are allowed to keep your records, and where to maintain them. Records that are mandatory for maintain include your employment contracts, time cards, and the records that show employee deductions and additions to wages.
Don’t touch your funds
It’s illegal for companies to borrow from payroll taxes to pay off operating expenses. The money collected from employee’s paychecks for payroll taxes does not belong to the business. All monies collected from payroll taxes must be submitted to the proper tax jurisdiction.
Always evaluate your payroll taxes and its programs
Setting up payroll program for your payroll taxes isn’t a onetime event. It’s important for business holders to oversee the payroll programs so that they are adjusted accordingly to withhold money from employees for payroll taxes. Many states and municipalities will change their rules and requirements any given time, so it’s important to keep track of these changes, to keep your business running with proper payroll tax implemented.