Changes to Payroll Reporting

Changes in Payroll and Reporting for 2010
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Who’s Your Amazing Payroll Guy!

There have been some sweeping changes made to payroll reporting as a result of the Hire Act of 2010. This legislation was created and passed to provide incentives to employers to add employees.

These incentives are significant.

In 2010, you will have a “holiday” from the employer portion of the social security tax (6.20%) for any qualified employee hired after 02-03-2010. A qualified employee is any employee who:

• begins employment with you after February 3, 2010, and before January 1, 2011;

• certifies by signed affidavit, or similar statement under penalties of perjury, that he or she has not been employed for more than 40 hours during the 60-day period ending on the date the employee begins employment with you;

• is not employed by you to replace another employee unless the other employee separated from employment voluntarily or for cause (including downsizing); and

• is not related to you. An employee is related to you if he or she is your child or a descendent of your child, your sibling or stepsibling, your parent or an ancestor of your parent, your stepparent, your niece or nephew, your aunt or uncle, or your in-law. An employee also is related to you if he or she is related to anyone who owns more than 50% of your outstanding stock or capital and profits interest or is your dependent or a dependent of anyone who owns more than 50% of your outstanding stock or capital and profits

In other words, if this employee is hired and works the remainder of the year, and has wages of $20000 for the remainder of the year, you will save: 1240.00 in employer taxes for that employee in 2010. The accounting for these savings is done on your form 941 return done each quarter.

Is your head spinning yet? We have your back!

Here at Go-payroll.com, we have modified the payroll to handle these changes in the law.

In 2011, those employees qualified under the Hire Act, who remain employed for 52 weeks, and whose wages meet certain criteria, will qualify you for a $1000 tax credit on your corporate income taxes. Your tax professional can assist you in determining the additional criteria that must be met.

Be not afraid! The Go-payroll.com payroll system will track these employees for you and provide reporting in 2011 as to who qualifies for the credit.

Another massive change for employers and other business people was buried in the Health Care reform legislation. Starting with tax year 2012, businesses will have to issue 1099MISC forms to ANYONE whom they pay more than $600 in a year, regardless of whether they are a corporation or not. The IRS is attempting to reduce the monumental amount of unreported income that happens when 1099s are not filed.

We’re already on the case. Our ability to process your 1099s for you has been available for years. So don’t worry, just let us handle it. We already process and print hundreds of 1099s each year for our customers.

As we are fond of saying around here, “see how it feels to have and AMAZING payroll guy!”

Who Are Your Customers?

This article will focus on the idea of knowing your customers and knowing what your ideal customer looks like so that you can aim your marketing efforts at attracting that very type of customer.

Every so often it is useful to evaluate your customer base versus your current business plan. It may be that one or more of your regular customers no longer fit the criteria you have established for your ideal customer.

In our business, software development and on line payroll, we look for people who:
• Need our products and services
• Understand the value of excellent customer service and are willing to pay for it
• Help us constructively improve our products and services
• Do what they say they’re going to do
• Pass the “Grief to Revenue” evaluation

Any marketing effort will attract a variety of prospective customers to your door. Some of those will not be qualified to be your customer. Think about that. Not everyone is qualified to be your customer. This is indeed an interesting concept, and one that bears a great deal of your attention.

Do you have customers that complain about every bill? Do those same people who complain about the bill also make unreasonable demands on your time? Do they then string you out to 120 days before paying you? I contend that there is no customer that is worth that sort of treatment. It is wise to try to determine in advance if any of these behaviors will show themselves before entering into a relationship with the prospective customer.

In addition to preventative customer evaluations, it is wise to review existing customer relationships from time to time in order to make sure that these relationships are still working for you.

There are times when long-term customer relationships can have an adverse effect on your business. For example, a customer may become increasingly demanding over time, citing the long term relationship as a rationale for the increased demands. Or a customer may resist your attempts to modify how you do business. Many people do not like change. And since the evolution of a business, especially a high-tech business like mine dictates frequent change, we find that periodically some customers will be resistant to that change. We have updated our accounting software frequently in the 26 years we have been in business. And at every major update, we have had people that insisted on staying with the older versions. Over 4 or 5 major rewrites of the software, it can become an expensive and time-consuming proposition to continue to support and modify the older versions.

As a business grows, often we hire people to do jobs that we have handled ourselves in the past. For example, I have always handled customer support, and customers like talking to the ‘guy who wrote the software’. Delegating customer support to a new employee will cause some resistance on the part of some customers.

You must be cautious here to pay attention to what customers are saying. It can be a big mistake to simply make a number of new rules and expect all customers to accept them without question. Separating reasonable objections from frivolous and self-serving ones can be a real challenge, but one we must all undertake if we wish to maintain a quality customer base.

So as always, the most important aspect of maintaining good customer relations is to PAY ATTENTION, PAY ATTENTION, and PAY ATTENTION SOME MORE!!
Matt Cantillon
04-21-2010

On Being an Employer

10 Things about Becoming an Employer

You have elected to expand your small business and hire a new employee. This will mean that you have to do payroll for the first time. It is important that you bear several things in mind as you venture into the world of withholding taxes, 941 Forms and W2s. Here are 10 things you need to be aware of.

1. You need an Employer Identification Number from the IRS. If you do not already have one (for example you are a sole proprietorship), you need to apply for the EIN. You will not be able to report wages or pay employment taxes without this number. Here is a handy link to the IRS that will tell you all you need to know about applying for an EIN:

http://www.irs.gov/businesses/small/article/0,,id=97860,00.html

2. You should register as an employer in the state in which you do business. This is likewise critical. You will need to make sure that you are registered to pay withholding taxes for the state, as well as being registered to pay unemployment insurance. These days, most every state has a one stop web site for new employers.

3. Be aware that some states have additional taxes beyond the standard withholding tax and unemployment tax. For example, California requires withholding for disability insurance, as does Rhode Island. Some states also have county and city income tax that needs to be withheld from your employees’ pay. Your state’s one stop web site will usually provide this information for you.

4. Make sure you are familiar with the federal wage and hour regulations, minimum wage requirements, and also those of your state. Some states have minimum wages that are higher than the federal minimum, and in these cases the state’s rate supersedes the federal. It is crucial to follow these regulations. You do not want to get caught up in any kind of wage and hour audit.

5. Make sure you have your employees fill in a form W-4, an I-9 form, and provide proper identification that documents that they are legal residents of the U.S.

6. You will likely be required to report new hires to your state’s department of labor. Make sure you do this when required.

7. When you do payroll, you will withhold a certain amount of Federal Withholding tax, FICA tax (Social Security), Medicare Tax and state taxes as well. You will be required to deposit the federal, FICA and Medicare taxes, along with the matching FICA and Medicare amounts that you are required to pay. When these deposits occur depends on how large your payroll is. For small, one and two person payrolls, you will likely be able to deposit quarterly or monthly.

8. You will also need to file quarterly payroll reports. These include federal form 941 and at least one state income tax return and state unemployment return. These will usually be due within 30 days of the end of each calendar quarter.

9. You will need to provide each employee with a form W-2 by January 31 each year, detailing the wages and taxes for the prior year. In addition, you will need to file these forms to the federal and state governments.

10. If by now your head is spinning, welcome to the world of being an employer.
It is a lot to keep track of. Being an employer is serious business, and missing any of the required steps can result in penalties, extra taxes, and sometimes worse.

One possible way to deal with these details in an efficient manner is to hire a payroll processor, or an on-line payroll service.
These companies can handle all the details for you. They can remind you when taxes are due, and provide you your quarterly and annual returns.
We are such a company. Pay us a visit at:

http://www.go-payroll.com

and see how we can, for a very reasonable monthly fee, turn the dizzying world of being an employer into a simple and easy to manage part of your business. We’re the ‘Amazing Payroll Guys!”