Employee Deductions

This spring will be the first time I'll have an employee on the books. I know nothing about how to take the appropriate deductions from his paycheck and I'd hate to pay an accountant just for 1 employee. I'm afraid of screwing up and being hit with penalties. I'm sure I can do it if only I knew WHAT to do.

Looking for some facts on how much social security, uemployment insurance, federal and state deductions I have to take. I've looked at the gov't websites, but there isn't specific information. Do you know where I can find a chart or something?

The state sent me the booklet with tear out stubs to submit my payments with. Do I have to send it in weekly or can I do it monthly?

Please let me know if I forgot any other important "must-do's".

You could use quickbooks software to run your business, and they have some fee-based payroll services to help you get things straight. Check them out at www.quickbooks.com

I use Paychex. It costs about $30 per pay period, and they handle every bit of that paperwork........the taxes are withdrawn from your bank account. www.paychex.com

I'd rather pay them, know its done right, and focus my attention on my business. Imagine how much time you would waste ( time is money) trying to figure all that out.

QuickBooks is the way to go.

Blends right into the rest of your accounting. They have a templete and all you need to do is set up the employees information. Then each pay period enter in the information hours, etc.

Does all of the deductions and prints out the check. Can also do your 941 and 940 statements for you as well as printing out W2's and 1099's.

Dave Olson

Put your person through a temp service will save you alot of hassels. Example you pay them $10.00 the temp service bills you $13.00 saves you the hassel from all the figuring on what to pay the GOVT. Plus if he doesn't work out you can fire him or her with out a reason.

Charlie

We use the Quickbooks Deluxe Payroll service. Less hassle for me. I try not to deal with taxes and the like. I would much rather pay a CPA to handle taxes, and a payroll service for payroll items.

Beth

Quickbooks is definitely the way to go with just one employee. Are you also an employee or just paying the one guy with deductions? If you're setup as a corporation you might consider paying yourself the same way with deductions and everything, just because it's a direct write off for the corporation. Are you paying workers comp on the guy? If you are, which you should be, you need to also consider whether or not to remain within the workers comp system yourself. You have the right as a company owner or officer of a corporation to exempt yourself from workers comp, at least you do here in PA, by submitting an Executive Officers Declaration. Something to consider if you hadn't thought of it before, just make sure you've got your own disability insurance or something as a backup in the event you would get hurt on the job.

Personally, if I was as lost as you sound right now, I'd ask a few people you know for the name of a good accountant and sit with them and have them help you set all this stuff up. You might spend a few hundred bucks for their time, but at least you'd know you were on the right track.

Hey Charlie, do you do this with your employees through a temp agency? The only reason I ask is I've looked into it and $3 an hour for their fee seems like you are getting one heck of a deal. For a $10/hour employee, the average cost I've found is around $17 to $18 an hour to have the temp agency run the paperwork for you with their workers comp and everything else. Seems like a great idea, but that's a heck of a premium to pay for the "convenience" of having them run your paperwork for you.

Around here that is the going price $3.00 extra . Shop around. I do this all my employees. You have to remember the cost of living is different around the country. I live is Wi.


Charlie

Temps are great when you are in the off season but get a construction clean up job or something and you need labor. You want them for a specific job but are not tied to them.

For full time permanent employees, we don't use temps though....

Basically what Charlie is talking about is also called "employee leasing". Essentially, you still find your own employees, screen them, full time or part time, whatever you want. You send them over to the temp agency and they actually hire them and put them on their payroll and then you just have them working for you like any other employee. You get a bill each week from the agency and you pay them instead of your employees. For all intents and purposes the employee is yours, but legally they work for the temp agency. Some temp agencies even offer your employees health and life insurance at discounted rates by grouping them with their other staff. What's also nice is if there's ever a problem, you can fire them on the spot and just notify the temp agency. The benefit to you is in the obvious decrease in paperwork along with not having to worry about workers comp, unemployment, tax filings, and getting sued for wrongful termination. The disadvantage is that it does cost a little more to do this since the agency obviously needs to make a profit in order to handle their services. You also need to find a temp agency willing to take on the risks associated with our workers using acids, climbing ladders, etc.

I've looked into this extensively after reading about it originally in Inc. Magazine a few years ago. In the mid 90's employee leasing became a huge part of the trend towards outsourcing administrative functions within companies to cut costs. A lot of small and mid-sized companies essentially outsourced their entire HR and Payroll departments to outside vendors/agencies. The agency benefits from economies of scale by consolidating larger groups of employees under their umbrella and adding a small administrative charge per labor hour worked. Administratively, it really doesn't cost them much more to manage 500 employees versus 1,000 employees and it saves them money by leasing them back to us because they eliminate the costs associated with continuously finding new assignments for those employees.

Our problem has been that we haven't been able to locate a local agency willing to do this at a reasonable cost because of most of our work being in the restoration field and the types of acids we use. I have been looking into it again recently, so we may try it this year.

Anybody else ever try this with your employees?