Payroll Services are part of small business tax preparation. Whether your small business is your town’s favorite eatery, the best lawn care service around, or provides healthcare services, you’re probably better at running your small business than tax preparation or running payroll. So ask yourself, do you really want to do payroll services in your dining room after work? Do you really want to leave the family reunion early to finish those FUTAs? Is your payroll simply one of those things you dread?
There were simpler times when a business owner could do most of the paperwork, but things have changed. The ledger book was carried with both hands and the pages and entries held memories. Memories and paperwork are your enemies now as day to day accounting and payroll services have become an integral daily part of a comprehensive tax preparation plan that helps keep your business in focus and headed in the direction you have chosen.
Your small business, payroll services and tax preparation walk hand-in-hand and the IRS and other taxing entities have a lot to say when it comes to tax filing (which the IRS is more concerned about than your preparation), and they weigh in pretty heavy. As to payroll, payroll services and employees, the IRS has a #1 statement regarding employee eligibility qualification and two others, all under the heading: HIRING EMPLOYEES:
- Form I-9: You must be able to verify the eligibility of employees to work in the United States. The IRS also respectfully requests (requires) that you actually have the proper paperwork which, of course, you obtained prior to hiring. This basically means that if the IRS should choose to audit a particular return or returns, you would be expected to have the proper paperwork in a file. By the way, the file would be labeled something like USCIS Form I-9. The IRS offers a few comments. Just in case you didn’t make that trip, we left the IRS site for you and take you there. You can, of course, pull out one of your completed I-9s and just glance over it. If you’re obsessed with this subject, the Department of Justice also has something to say.
- Form W-2: Another payroll services job in your small business requires you to get each employee’s name and Social Security Number and to enter them on Form W-2. The IRS leaves it to your discretion as to whether or not you photocopy the social security card. Sounds simple, but the IRS goes on to remind you not to accept an ITIN in place of an SSN for employee identification. Difference? The ITIN begins with the numeral 9. The IRS and Social Security Administration sort of tag team you on this, but both are willing to offer more info. IRS here and SSA here.
- Form W-4: The IRS says you should have a Form W-4 on file for each employee. Interesting. If for some reason, the person who is responsible for getting new hire paperwork hasn’t received the new hire’s signed W-4 (which is effective by the first wage payment), the IRS certainly doesn’t care. You simply withhold taxes as if the employee were single with no allowances. That’ll get the new employee’s attention in a hurry. Also interesting, straight from the mouth of the IRS, “If employees claim exemption from income tax withholding, they must give you a new Form W-4 each year.” Many small businesses, especially those with satellite facilities, let this slip by. No change, don’t worry. Wrong. Ever thought about the IRS, in an audit situation, taking the stand that you must prove that you did not allow the IRS to be underpaid? This could, of course, apply if your employee were audited. No need to set yourself up for issues.
Other basic requirements of your small business payroll services include your benefit options. As a small business owner, you may feel as though you and your other two employees don’t actually have employee benefits. You are, after all, a small business. Think again.
Benefits are generally categorized into two groups:
- Fringe Benefits can include such things as mileage, holiday turkeys, Athletic facilities, educational assistance and cell phones, and can include any number of other things. These fringe benefits can also help encourage employees to stay and enjoy working for your business. The IRS has general and special rules which could involve your Benefits Department. Don’t have one? Same person who collects W-4s? The IRS has fringe benefit info.
- The second group lumps together the major stuff, health insurance, workers’ comp and when it comes to these Employee Benefits, the IRS has information which, if titled as a feature length movie, might be “Everything You Ever Wanted to Know About BIG Benefits, But Were Afraid to Ask.” Click Afraid to Ask for the IRS overview. Be brave and click Dept of Labor for their weigh-in on Unemployment Insurance. Click OWCP for a mind-boggling study of Workers’ Comp. Are you up for Health Plans? No. OK, how about just COBRA.
How do you really feel about handling your own payroll services? Do you have more fun running your restaurant, your pharmacy or your shop? Do you really want to do your payroll services after hours? Do you really want to leave the family reunion early? Payroll Services. Part of your business. We can help.
Consider again the difference between tax preparation and tax filing. Tax preparation is ongoing and produces information that presents your business to the IRS properly, to your best advantage. That is called tax filing.
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