Payroll Solutions for Your Business
Fully outsourced payroll and assistance with complex compensation issues.
How the business owner pays themselves
How a business owner pays themselves out of the profits of their business depends primarily on the type of business structure under which the business operates.
If the business operates as an unincorporated sole proprietorship perhaps only having filed a DBA or "doing business as" name or "fictitious name" with the state, the income from the business may end up being reported much differently for the business owner's personal tax purposes than if the business was structured under a separate entity structure such as a corporation, limited liability company or partnership.
A business owner who registers and operates a business as an S Corporation, Limited Liability Company, Partnership or C Corporation will likely have to account for contributing money to and withdrawing money from the business differently for tax purposes than a business owner who owns and operates their business as an unincorporated sole proprietor.
Business owners will typically need to work with their tax professional and consider their own personal tax situation. Considerations such as how money is being contributed to and withdrawn from the business and in what way the funds are subject to the employment tax rules and/or self-employment income reporting rules is important for the owner of any business, large or small, to fully understand.
Employer tax filings
Employers must generally file quarterly (sometimes monthly) tax filings with not only the federal taxing authorities but also with the state and local taxing authorities.
These quarterly filings are in addition to annual pay statements that must be filed with the government summarizing the annual compensation paid to each employee and contractor, along with Forms W-2 and 1099.
Each employer's tax filing requirements may be somewhat different, although many similarities will likely exist. Consultation with a payroll tax professional is very important in understanding the applicable requirements.
Calculating employee paychecks
Ensuring that the business's payroll is processed accurately and on time, every time, is critical. This is true not only for tax and regulatory compliance purposes, but also for employee morale and business reputational reasons.
With that said, complying with the various regulations and tax laws relating to paying hourly and salary employees and independent contractors can be complex at times.
Pay types such as overtime pay, disability pay, sick pay, workers’ compensation payments, FMLA, severance and separation agreements and the other forms of payments to employees and independent contractors are in-depth and can be difficult to navigate whenever they arise.
Employee benefits including employee contributions to retirement plans such as 401k plans, health savings accounts, flexible spending accounts, life insurance, medical, dental and vision benefits and accounting for fringe benefits can be equally as complex to contend with.
As an employer, it is very important to be in compliance with not only the federal government and federal tax rules in regards to processing your payroll, but also in regards to the state and local taxation rules and regulations.
How one type of wage or compensation is treated for federal tax purposes may be different than how it is treated for state or local taxes.
Hiring employees
Once the business owner decides to hire a new employee, there are several different tax and new employee registration forms that need to be filed with various government agencies.
Additionally, there are various forms that will need to be completed by both the business owner and by the new employee and stored in that employee's personnel file. These include forms utilized to collect tax withholding information, to verify the employee's employment status, to determine and define the employee's local residency and to let taxing authorities know that the business has hired a new employee and will be withholding and remitting payroll taxes from the employee's compensation.
If the business will be utilizing independent contractors to perform services for the business, there will be other requirements that will come into play such as obtaining tax status and tax withholding information. There are also specific rules and regulations that define "who is an employee" vs. "who is an independent contractor" that are very important to understand to ensure the business's compliance with government regulations.
Additionally, businesses in certain industries that have employees who regularly receive "tips" from customers, such as in the case of the restaurant and hospitality industry, will have other considerations for their employees.
In addition to hiring employees, there are also several important considerations that must be taken into account in regards to employee terminations. Whether or not there will be a severance package and how to approach the employee's final paycheck are considerations that the employer must contend with in the unfortunate event of an employee termination.
Registering as a new employer in Pennsylvania
If you own and operate a brand new business in Pennsylvania and will be hiring employees, you will need to do a few things from a tax and reporting perspective including, but not limited to:
Registering as a new employer with the IRS, with the Commonwealth of Pennsylvania, as well as with your local tax agency.
Obtaining an EIN from the IRS and setting up federal, state and local employer tax accounts.
Determining what rules and regulations you are subject to as an employer, such as how often you must remit employee withholding to the IRS, to the Commonwealth of Pennsylvania and to the local taxing authorities.
What payroll solution would work best for your business?
1. Outsource Your Payroll To A CPA
Would you like to fully outsource your business’s payroll processing to a CPA?
2. Assistance With Your Payroll Software
Does your business currently use a payroll software program or is in the process of selecting a new payroll software program and:
a) You need assistance setting up the payroll software or troubleshooting issues.
b) You would like training for yourself or for your employees in using the payroll software.
c) You need help in navigating parts of the payroll process that are outside the scope of the payroll software such as local tax withholdings and special circumstances.
3. Guidance With Complex Payroll Issues
Are you looking for a CPA to have on stand-by to assist you with more complex compensation issues as they arise, such as:
a) Employee vs. Independent Contractor Distinctions
b) Employee Fringe Benefits
4. Paying Yourself As The Business Owner
Are you an owner/officer of a business and need guidance on how you should contribute funds to and withdraw funds from the business such as in the case of an S Corporation owner needing assistance with issues such as the “reasonable compensation” rules?
5. Do You Own A New Business?
Do you have a brand-new business and need assistance in getting your accounting, bookkeeping, payroll and tax compliance set up correctly and running smoothly?
Remitting tax withholding to the government
Once the employees' paychecks have been calculated and the employees have been paid, the business will need to remit the taxes that have been withheld from employee paychecks and independent contractor payments to the taxing authorities.
In addition to the taxes that the employer withholds from employees' pay, the employer will also need to calculate their "employer match" of the taxes that were withheld from employee paychecks.
There are various considerations for the different types of taxes and withholding. Some taxes that are withheld are withheld from "the employee's compensation only." Other taxes must be "matched" by the employer. Still others are the responsibility of the "employer only."
In addition to the types of taxes and withholding that employers must consider, how often the employer is required to remit payment of the taxes to the taxing authorities can vary.
Some employers are required to remit payment for their tax payments and withholdings on a semi-weekly basis based on strict calendars set forth by the federal, state and local government agencies. Others are subject to tax payment remittance on a monthly basis or on a different remittance schedule.
Additionally, there are various "triggers" and dollar amount thresholds that can change an employer's tax remittance schedule from monthly to semi-weekly and vice versa. Fully understanding the employer payroll tax remittance rules is very important for any business that has employees or independent contractors to ensure compliance with government regulations.