Employee Tax Withholding

Discussion in 'Business Operations' started by cutman2000, Aug 20, 2012.

  1. cutman2000

    cutman2000 LawnSite Member
    Messages: 218

    How hard is it to do employee tax withholding(state,fed,etc.)? Bank of America will do it for me, for a monthly fee(Withholdings and Payroll). I have a software that can do it, but I'd have to buy the tax table and install it. I don't have a clue on maintaining this, so any help would be appreciated. Thanks.
  2. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Messages: 3,465

    Have them do it the first year or find a payroll company to do it. If your doing it yourself and make a mistake ,get the checkbook out to pay the penalty to the govt.
  3. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Messages: 4,373

    Buy Quickbooks. Learn how to properly record your revenues and expenses.

    Sign up for the Payroll Service. Their work comp through Hartford was some of the cheapest I could find.

    Both payroll taxes and work comp are deducted weekly when I do payroll.
  4. cutman2000

    cutman2000 LawnSite Member
    Messages: 218

    I don't want to buy QB if the software I have will work. No reason to buy/learn another system, right? Preferable.

    Hartford works with Bank of America?
  5. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Messages: 4,373

    I believe Quickbooks works with Hartford exclusively to auto withdraw the work comp weekly.

    Most of the time your work comp will be done with yearly estimates.

    At the end of the year, you will do an audit that pertains to the amount of hours worked/wages paid.

    The biggest problem for me was snowplowing. I cannot predict the amount of snow we will get. 2 years ago we had a snowfall that was near the most ever. Last year we had 22".

    Our average is 55".

    The Quickbooks deal helps with cash flow. I don't have a large payment at the beginning of the policy period and then hope for a refund. OR I don't have to get a report from the audit that I owe another $2,500 before I write the next policy's check of $4,000.

    GSPHUNTER LawnSite Senior Member
    Messages: 311

    I do mine on a free website. Paycheckcity.com 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/etc...it'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.
  7. llr5296

    llr5296 LawnSite Member
    Messages: 5

    Not sure if my advise is good advise but here is my experience with this. I am currently going through a sh storm with the irs. If you are not large enough to afford a company to do these things for you or hire someone in the office, you have got to get a program that does it for you. I use QB with payroll. It tells you exactly what you owe & all you have to do is click on a button and it creates checks for you. You have to be on the spot with this, its hard to do the field work & then come in & spend hours in the office on the computer & books. At least it was for me. To make it easier, get you electronic filing pin with the IRS. All you have to do then is login & do a payment online. All this being said, if you are large enough to have someone do this for you, that's exactly what you need to do. Not sure what your goal is for your company, but its a lot easier to focus on you growing you company with somebody else doing the back end stuff.

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