Payroll Tips

Worker's Compensation Insurance

Most employers must provide Workers Compensation Insurance.  Failing to provide it can result in large fines. Check with your insurance agent; do you have the proper insurance?

Pay Your Kids

You may be able to save tax by hiring your children to work for you. A dependent can earn $5,950 in earned income without paying any federal income tax. However, if the child has any unearned income, such as interest income, he or she may have to pay tax even though there is no tax on the wages.

Pay Your Spouse

If you employ your spouse, you may be able to set up a medical reimbursement plan that allows you to deduct your hospital insurance and medical bills as business expenses instead of as itemized deductions. Your spouse may also qualify for other fringe benefits.

Paydays

In deciding when to pay your employees, allow adequate time between the cut-off date and the time the checks must be issued. Usually, this is four days to one week.

Application Blanks

Have a supply of employment application blanks. If anyone inquires about a job, have him or her complete an application blank even though you may not have any openings at that time. You may have an opening later, and you must protect yourself from discrimination charges.

W-4s and I-9s

Have these forms on file for all of your employees. The W-4 is used to determine withholding, and the I-9 is proof of citizenship.

Avoid Penalties

Penalties can be quite expensive, and they are not tax deductible. The government uses penalties to help ensure things are completed correctly and in a timely manner.

New Hiring Notice

Whenever you hire a new employee, send the state a new hiring notice within 20 days of the employee start date.

Employee versus Independent Contractor

Know the difference between an Employee and an Independent Contractor. Misclassifying an employee as an independent contractor can result in fines and penalties for you.

Keep Good Employees

Do not make promises you cannot keep. Set up a system that enables you to keep your good employees. Find out what motivates them.  There is no one item that will work for all people.

Fringe Benefit Programs

Choose your fringe benefit programs based on what will fit your needs and your employees' needs. Fringe benefit programs can be expensive, and you cannot be all things to all people.