Employer Payroll Playbook

As an employer, it is important to make a good understanding of your payroll functions and payroll responsibilities, especially your tax obligations, because a negligence in payroll taxes is costly and sometime even cause more serious penalties.

1. Hiring Responsibilities:

• Verify work eligibility and identity of employees by completing the I-9.

• Record employees’ names and Social Security numbers (SSNs) from Social Security cards.

• Report all newly hired employees to the appropriate state agency.

• Obtain Form W-4 (Federal & State) from each new employee and obtain new Form W-4 if change to withholding is necessary

These steps need to be done ASAP once you decide to hire a new employee. It is important to collect form I-9, W-4 and SSN card from your employees before the first paycheck being processed. .Hiring an unauthorized alien is illegal and may cost you $500 of penalty per case (or more based on situation). knowingly and intentionally continuing to employ an unauthorized alien is a more serious situation. It could subject to up to $3000 penalty and six months in prison in a worst situation.

2. 94X Filing and Withholding Responsibilities:

• Withhold federal income tax, and employee’s share of Social Security and Medicare taxes with each payroll.

• File Form 941 quarterly or file Form 944 or Form 943 annually and pay tax with return if not required to deposit.

• Reconcile Forms 941, 944, or 943 annually with Forms W-2 and W-3.

• File Form 940 annually to report FUTA tax.

• Make timely deposits of all withheld income tax, withheld and employer Social Security taxes, withheld and employer Medicare taxes and employer FUTA tax.

• File Form 945 annually for any nonpayroll income tax withholding.

A late payment may subject to penalty and interest and usually they are expensive. Even if an employer outsources payroll and employment tax functions, he or she is still liable for those taxes generally. Failure to process payroll tax timely and properly is costly. In some worst case, it may cause a criminal situation.

3. W2&W3 and Others:

• Furnish each employee a Form W-2 annually.

• File Copy A of Forms W-2 and the transmittal FormW-3 annually with the Social Security Administration (SSA).

• Give annual notice to all employees concerning Earned Income Tax Credit.

• Pay employees above minimum wage, overtime, and other federally mandated laws.

• Furnish nonemployees a Form 1099-MISC annually.

Employer is responsible to process W2 and deliver the form W2 to your employees at the end of each year. Also as mentioned before, employers are responsible to report all employees’ name, SSN and total wages to the Social Security Administration (SSA) at the end of the year. .

Last but not least, TDC will provide unparalleled payroll assistance to control the payroll reporting risk and improve the payroll management efficiency.

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