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Old 08-21-2012, 04:13 PM
LawnSite Senior Member
Join Date: Feb 2007
Location: Missouri
Posts: 306
I do mine on a free website. I'm sure there are others and I really should look because the site runs slow, but it does get the job done.

Basically it is a payroll tax calculator that will create pay stubs and give you a print out of the taxes witheld from a check. I still hand write my checks though, so I just print out two copies of the pay stubs. One for the guys and one for my records. At the end of each quarter, I bring by stubs into my CPA and he files it for me.

For people new to this as I was at the begining of last year. A couple pointers.

1. Payroll taxes don't work like your annual taxes for your business or personal taxes. They must be payed monthly or quarterly depending on your total payroll tax obligation for all employees. I believe the number is $2,500. If you exceed that for a given quarter, you are supposed to pay monthly. I can tell you from experience in 2011, it is extremely expensive to pay the penalties, and late fees on payroll taxes. I didn't realize they had to be paid quarterly and it hurt bad at the end of the year.

2. If you have multiple employees or even one for that matter, open a seperate account to put the witheld tax money in each week or bi-weekly when you actually write the checks. This will help keep your accounting straight since the money is already spent, it takes it out of the general account. Then when it comes time to write the checks to Fed/State/Unemployment/'s not a huge burden.

3. Let a CPA file the actual paperwork. It's cheap insurance that everything is being done correctly. The penalties and interest are far more expensive than what a CPA costs. It also lets you lay down at night with one less worry on your mind, which we all already have enough of.

4. If you have employees, pay them as employees. Sub-contractors that receive 1099's have a set of guidelines that must be followed to be considered a sub vs. employee. I've had a couple guys come work for me that were being payed "cash" and it works out much better in the long run to do this legit. The guys were making more money working for cash, but when it comes time for a reference from the previous employer, it isn't going to happen. It also cost me hourly with social security matching, unemployment, and work comp the same as those guys were making in cash, if not more. Explain to employees though that they will at least have social security benefits later in life and if you get hurt on the job, you actually have the ability to collect work comp benefits.

Of course I have a few guys that might work a day here and there that get paid cash but my main guys get paid the right way. This also goes back to laying down at night with one less worry on you mind that the IRS is going to clean you out.
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