Keeping Track of Payroll Deadlines
Hiring an employee is a notable day in the life of any business – it is an indication of growth and stability, and is to be celebrated. It also adds a layer of complexity to your bookkeeping responsibilities, as you are suddenly responsible for taking care of payroll taxes. Few people realize what a burden employment and labor laws add to a business’ workload, and even fewer realize exactly how important it is to get it right or that there are such significant penalties for getting it wrong. According to the IRS, nearly $7 million was collected in 2014 exclusively in penalties regarding employment taxes, so it’s important that you get it right.
What is Involved in Payroll?
Taking care of payroll entails far more than simply cutting a check to your staff. You need to make sure that you are taking out and sending taxes to all of the correct agencies, and that goes beyond paying the IRS. States and municipalities all have their own rules, regulations and requirements for payroll tax, and they each have their own specific documentation that is required as well. The more employees you have and the more geographically widespread your business, the more you’re going to need to learn about different filing deadlines and requirements, as different states have different rules and if you have workers in more than one state than you have to file appropriately for each. You also need to keep accurate records so that you can track things like sick time, vacation time, qualifications for full time or part time status, and employee benefits.
The best way to keep track of all of the payroll tax requirements and rules is to be organized from the very start. Establish a system that ensures that you’ve addressed all of your documentation, submission and tracking needs as each employee is hired and you’ll find that things will flow much more easily. Here are the four steps you need to follow:
Make sure that you have all the forms you need and they are completed by the end of the employee’s first day, if not earlier.
There are a lot of forms and documents that you’ll need filled out, and the best time to get that done is on the same day as a new employee is getting oriented, or even before their first day. You’ll need a W-4 filled out so that you know how much to withhold and you have all of the appropriate personal information like Social Security Number and address. Once you have the information on those forms, as well as any other forms required by your state or city, you’ll be able to withhold the appropriate amount and submit the appropriate taxes to the various agencies.
Make decisions early about your payment process and document it.
There are a number of payment variables available to employers, including how often they are going to pay their employees, whether their payments are based on hours worked or on a salary, what benefits are available based upon number of hours worked, and how overtime is defined. You need to make these determinations, as well as how you’re going to handle more complex details such as retirement plan deductions, health care expenses and more, and document your decisions both for your own records and for your employees.
Keep organized by establishing a tracking system
It doesn’t matter whether you’re a mom and pop organization or a big company, you need to track all of your payments, the number of days or hours that employees are present, the taxes that you submit, or more. Whether you’re keeping things documented in pen and paper in a simple ledger book or on a sophisticated payroll system, make sure that you have a system in place and that you stay up to date.
Stay on Track with Deadlines and Paperwork Requirements
The government agencies that require the submission of payroll taxes have established specific deadlines for submission, and it is important that you not only know what these schedules are but that you adhere to them. The IRS must receive payroll taxes within a certain time frame after you’ve paid your workers, as well as specific forms that you must use, so no matter what payroll period or deposit schedule you use, make sure that you’re on schedule and meet all deadlines. Important forms for you be timely with include:
W-2 Wage and tax statements
FUTA (Federal Unemployment Tax Return) (Form 940 or 940EZ)
Return of Withheld Federal Income Tax (Form 945)
Employer’s quarterly payroll tax return (Form 941)
The more you know about your payroll tax obligations and take charge of them, the less you need to worry about. A good place to start is with the IRS Employer’s Tax Guide.
If you are concerned about your payroll tax schedule and deadlines, call us at (913) 712-9336 and see how we can help.