A question we’ve increasingly gotten as more clients convert to S-Corps and/or add employees is “What is the advantage to going with a payroll service” and “which one should I go with”.
While there are many payroll providers to choose from, At Northern, We proudly partner with ADP. As you’ll see below, there are several steps to obtain various tax ID’s as part of the initial payroll setup as well as a multitude of filing requirements, that if not filed on time, can create costly penalties.
Give us a call today or email firstname.lastname@example.org and let us help you get your payroll started!
Payroll filing requirements can vary depending on your location and the specific regulations that apply to your business.
Here are the typical payroll filing requirements:
Employee Records: Maintain accurate records for each employee, including their name, address, Social Security number, employment status, and withholding allowances. You may also need to keep records of their earnings, deductions, and hours worked.
Form W-4: New employees must complete IRS Form W-4, which helps determine the appropriate federal income tax withholding. Employers must keep these forms on file.
- Federal Income Tax Withholding: Calculate and withhold federal income tax from employee wages based on their Form W-4 and the IRS tax withholding tables.
- FICA Taxes (Social Security and Medicare): Withhold a portion of each employee’s wages for Social Security and Medicare taxes. Employers must also contribute an equal amount.
- State Income Tax Withholding: If your state has income tax, you may need to withhold state income tax from employee wages.
- Local Taxes: Some local jurisdictions may have additional payroll taxes that you need to withhold.
- Form 941: This is the Employer’s Quarterly Federal Tax Return. Employers must report federal income tax withheld, FICA taxes, and their own portion of FICA taxes on a quarterly basis.
- Form 940: This is the Employer’s Annual Federal Unemployment (FUTA) Tax Return. It’s filed annually and reports unemployment taxes.
- State and Local Payroll Tax Reports: Many states and localities require periodic reports of payroll taxes. These forms and filing frequencies can vary widely.
- W-2 Forms: Provide each employee with a Form W-2 by January 31 of the following year, summarizing their annual earnings and taxes withheld.
- Form W-3: Submit Form W-3, which is a summary of all your employees’ W-2 information, to the Social Security Administration (SSA).
- State and Local Year-End Reporting: Similar to the federal requirements, many states and local jurisdictions have their own year-end reporting requirements.
- Recordkeeping: Keep payroll records, including tax forms, for a specified number of years. The retention period can vary by tax and labor laws.
- Compliance with Labor Laws: Ensure compliance with federal and state labor laws, such as minimum wage and overtime regulations. Payroll records should reflect compliance with these laws.
- Electronic Filing: Some jurisdictions require electronic filing of payroll tax forms and payments. Check with your tax authorities for electronic filing requirements.
- Payment Deadlines: Be aware of tax deposit deadlines. Taxes withheld from employee paychecks must be deposited with the appropriate tax authorities on a regular schedule.
- Compliance with Affordable Care Act (ACA): Large employers must comply with ACA reporting requirements, which involve providing information on employee health coverage.
Remember that payroll tax regulations can change over time, so it’s essential to stay informed and seek professional advice to ensure compliance with current requirements.